CBP Sets High Bar for Launching EAPA Evasion Investigations on Importers

NEW YORK -- Allegations of antidumping or countervailing duty evasion under CBP’s new Enforce and Protect Act (EAPA) regulations must include a complete theory of evasion to trigger an investigation, said Carrie Owens, acting director of operations for CBP’s new EAPA division, at the Court of International Trade Judicial Conference on Nov. 21. Simply saying that prices are too low, AD/CVD rates are high or a product is being shipped through a third country, and concluding that evasion must be occurring, is not enough to meet CBP’s legal standard -- that an allegation “reasonably suggest” an importer is evading duties -- to trigger an EAPA investigation, she said.

For example, even if an importer is bringing in merchandise that is subject to a cash deposit rate of 200 percent, an allegation that says only that importing goods at such a high rate is impossible unless there were some sort of evasion scheme would not be enough to meet the standard, Owens said. Though few, some companies manage importing products at such a high rate, she said. The allegation would have to include additional information, such as that the company does not have enough assets to cover the duties once they are assessed, said Owens, who is also chief of the entry process and duty refunds branch at CBP’s Office of Regulations and Rulings.

CBP recently came under criticism from Wheatland Tube for rejecting the domestic producer's EAPA allegation (see 1610190029). Wheatland said the bar for launching an investigation is too high by requiring the allegation to prove, rather than to allege, evasion. Without access to confidential CBP import data, Wheatland had no way of meeting such a standard, it said, noting that it had urged CBP to review its entry data for evidence of evasion.

However, CBP does not have the time to investigate evasion when it gets a complaint, nor would entry data in itself prove evasion was occurring, Owens said, without reference to Wheatland. By law, CBP only has 15 business days from when it receives an allegation to decide whether to initiate an EAPA investigation, she said. It’s also often impossible to determine whether a type 01 consumption entry should have been filed as a type 03 entry subject to AD/CVD duties from entry documentation alone, she said. Tariff subheadings often include both subject and non-subject merchandise, she noted.

Despite comments from industry that CBP should institute an administrative protective order (APO) process in EAPA investigations (see 1610260026), APO procedures will likely not make it into CBP’s final regulations, Owens said. Unlike for the Commerce Department, which uses APOs to guarantee confidentiality in AD/CVD proceedings, Congress did not authorize APOs in EAPA investigations, she said. And although the Federal Communications Commission uses APOs despite a lack of explicit authorization, CBP’s situation is different because APO provisions were at one time included in the Trade Facilitation and Trade Enforcement Act’s EAPA provisions, but Congress decided to remove them, Owens said.