Senate Committee Approves AD/CV Duty Evasion Bill

The Senate Finance Committee July 18 gave its approval to a modified Enforcing Orders and Reducing Customs Evasion (ENFORCE) Act, S-1133, which would establish new procedures for investigating claims that foreign manufacturers are evading anti-dumping and countervailing duty orders to better enforce trade laws and prevent illegal imports. Text of the bill is (here). The legislation is part of the Congressional Democrats' "Make it in America" agenda, a push to add U.S. manufacturing jobs.

(See ITT's Online Archives 12071003 for summary of the "Make it in America" agenda.)

CBP currently can take enforcement action against the evasion of AD/CV orders, including civil penalties against importers who attempt to evade such orders. Current law doesn't establish a set of specific procedures for interested parties and other Federal agencies to notify CBP of good faith allegations of evasion and a specific process for CBP to take action to prevent evasion, according to a Senate Finance summary of the bill (here).

The bill would require the CBP commissioner to initiate an investigation within 10 business days of receipt of a proper allegation or referral that reasonably suggests that merchandise covered by an AD/CVD order is entering the U.S. through evasion. The Commissioner may accept allegations by U.S. producers of, or further processors of merchandise that is like or most similar to, merchandise covered by the AD/CVD order who allege that such covered merchandise is entering the U.S. Referrals may be submitted to the Commissioner by other federal agencies and requires the Commissioner to make a determination by 270 calendar days after the date of initiation.

If CBP determines merchandise entered through evasion, CBP would then:

• (1) suspend the liquidation of any unliquidated entries of the covered merchandise that is the subject of the allegation entered between the date of initiation and the date of the determination;
• (2) extend the period for liquidating any unliquidated entries of merchandise that entered before the initiation of the investigation;
• (3) notify the Department of Commerce of the determination and request that Commerce determine the appropriate duty rates for such covered merchandise;
• (4) require importers of such covered merchandise to post cash deposits and assess duties on the covered merchandise as directed by Commerce;
• (5) take such additional enforcement measures as the Commissioner deems appropriate, including modifying CBP’s procedures for identifying future evasion, requiring a deposit of estimated duties on future entries, and referring the matter to U.S. Immigration and Customs Enforcement for civil or criminal investigation.

To make sure duties can be collected on entries of covered merchandise made during the pendency of an investigation, the proposal sets forth an “interim measures” mechanism. This means the Commissioner shall determine within 90 calendar days of initiation of an evasion investigation whether there is a reasonable suspicion of evasion. If the Commissioner decides there is a reasonable suspicion, the Commissioner shall:

• (1) suspend the liquidation of any unliquidated entries of the covered merchandise entered after the date of initiation;
• (2) extend the period for liquidating any unliquidated entries of merchandise that entered before the initiation of the investigation;
• (3) take any additional measures necessary to protect the ability to collect appropriate duties, which may include requiring a single transaction bond or posting cash deposits with respect to entries of covered merchandise. If the Commissioner determines that the merchandise being investigated poses a health or safety risk, CBP will notify the appropriate Federal agencies of that risk.

The bill would also give 30 business days for the U.S. producer who made the allegation of evasion or the importer of the covered merchandise alleged to have entered by evasion to request de novo administrative review by the Commissioner after notification of a determination. The proposal also amends the Tariff Act of 1930 to provide that determinations of evasion made under newly-created section 517 shall be subject to judicial review once any administrative review of the determination has been completed. The effective date of the proposal would be 180 days after the date of enactment

Two amendments, one from Ranking Member Sen. Orrin Hatch (R-Utah) on CBP appropriations and one from Sen. Debbie Stabenow (D-Mich) on CBP intellectual property rights enforcements, were withdrawn so they could be considered as part of a CBP reauthorization. Hatch said he expects the committee to take up a reauthorization bill "this year."

(See ITT's Online Archives 11052734 for summary of a Congressional subcommittee hearing on the ENFORCE Act)

The markup, which was still going at press time, included a lengthy debate over the merits of the Miscellaneous Tariff Bill (MTB) and an amendment to revamp the MTB process. Sen. Jon Kyl (R-Ariz.) pushed for the committee to consider legislation recently introduced by Sens. Rob Portman (R-Ohio) and Claire McCaskill (D-Mo.) that would change the MTB process. The committee voted against consideration of the amendment. The markup reviewed several pieces of trade legislation, including giving Russia permanent normal trade relations (PNTR) and a third country fabric provision of AGOA.

(See ITT's Online Archives 12071619 for summary of the mark up and the legislation being reviewed.)

(The MTB, typically passed by every congress to suspend tariffs on certain products, has faced recent objections, especially from Republicans, over whether MTB violates a congressional ban on earmarks. See ITT's Online Archives 12061429 for summary of the McCaskill-Portman bill.)