Many Open Questions on Coming AD/CVD Evasion Regulations as CBP Works to Meet Statutory Deadlines

Despite a wide range of open questions about new antidumping and countervailing duty evasion enforcement proceedings, CBP fully expects to meet the required deadlines of the customs reauthorization law, said Carrie Owens, chief of CBP’s entry process and duty refund branch. Owens spoke during a panel discussion hosted by the American Bar Association on May 19. The agency is in the process of "furiously drafting" regulations and standard operating procedures related to the implementation of new AD/CVD enforcement measures, required to be implemented by Aug. 23, she said. The agency will also issue an interim final rule that will give some guidance as CBP seeks comments on proposed regulations, Owen said.

Once drafted, the regulations will need to go through interagency review by the Departments of Homeland Security and Treasury, which will likely add some time, said Owens. "We're also going to do it as an interim final rulemaking," allowing CBP to have regulations to work from, she said. "We feel it's justified in the circumstances given the short time frame that we have," she said. Owen said she wasn't sure how long CBP will operate under the interim rule before a final rule is implemented. Section 421 of the Trade Facilitation and Trade Enforcement Act of 2015 requires that CBP begin an investigation if an allegation “reasonably suggests” AD/CVD evasion, and authorizes suspension of liquidation and cash deposit requirements if the agency has after 90 days a “reasonable suspicion” of evasion (see 1602230080).

CBP is also considering how to staff the new Trade Remedy Law Enforcement Division, a new directorate within CBP that was unfunded within the law, she said. That division will be in charge of reviewing allegations and pursuing investigations. CBP is also still working out the allegation submission method and how involved parties will access the public documents, she said. The agency won't have enough to time to put in place a new system to allow for electronic access, she said.

The law provides for a "new administrative proceeding" with several novel features within CBP, she said. It's an "on the record proceeding," which is atypical within CBP proceedings and "is a Commerce concept," she said. Also new to CBP, are "adverse inference" considerations, something more familiar to AD/CVD lawyers than customs lawyers, she said. Following a decision to initiate an investigation, CBP may decide to take "interim measures," which include suspending liquidation, but isn't "a penalty proceeding," she said. Unlike current practice, the importer will be notified and aware it's being investigated, she said. There's some concern that the new law could prove especially difficult for small importers (see 1604250017).

Notably, "you could conceivably have the same kind of inquiry" going on within the Commerce Department and CBP, said Robert Heilferty, deputy chief counsel in the Office of the Chief Counsel for Trade Enforcement and Compliance. It's not clear how that issue will be worked out, but "I'm sure it will be litigated," he said. Provisions within the law on new shippers likely won't mean for much change at the Commerce Department from current practices, Heilferty said. The new law provides more of a "helpful codification" in terms of considerations for determining bona fide sales by new shippers, he said. Senate Finance Committee Trade Counsel Greta Peisch said the new law's provisions on imports made by forced labor don't add any new requirements in terms of due diligence standards, so that issue continues to be based on CBP's interpretation.

Drawback is "trade promotion" and the simplified regulations that are a result of the new law (see 1603010043) should make participation more attractive to companies that had not previously taken part, Owen said. The new law will only affect drawback claims filed after the Feb. 24, 2018 effective date, two years after enactment. After that date drawback filers will be able to file for one year either under the new provisions or under the old provisions, she said. Therefore, the agency will need to devise a way to administer both the new law and the current law for a year, she said. CBP is still working out some specifics on how to handle the "lesser of" calculations on manufacturing and unused drawback in terms of substituting a low value import with a "high value export," said Owen.

Email ITTNews@warren-news.com for a copy of a AD/CVD proceeding flow chart and presentation from the event.