Customs, Anti-Dumping, and Enforcement Update: ACE, the Center of Excellence, and Audits. IWPA Convention 2017

Transcription

1 Customs, Anti-Dumping, and Enforcement Update: ACE, the Center of Excellence, and Audits IWPA Convention 2017

2 It s Going to Get Bumpy.. Enforcement/Circumvention Issues (ENFORCE Act) AD/CVD Update (Plywood, Softwood Lumber) Prepare for Government Contacts

3 CBP ENFORCEMENT EMPHASIS

4 Focus on Enforcement Enforcement push to intensify From CBP Annual Report: Audits increased by 20% 300% increase in duty discrepancies found High dollars: Solar: $8 million Ball Bearings: $32 million Focus on securing the Treasury ; enhanced bonds for new importers Cooperate with U.S. industry to improve collection Partnerships with the trade community are also critical to identify unfair trading practices. The trade community provides market intelligence and commodity expertise to identify unfair trading practices or illegal trading activities.

5 2016: New Enforcement Tools Go Live Trade Facilitation and Enforcement Act of 2015: Established Trade Remedy Law Enforcement Division within DHS Provided authority to collect information regarding alleged duty evasion Directed DHS to engage with foreign customs authorities Granted CBP new authority to investigate claims of circumvention related to existing antidumping and countervailing duty orders

6 First Initiation Under Enforce and Protect Act

7 Enforce & Protect Act: First Case CBP initiated investigation based on information provided by a competitor Product was Wire Garment Hangars exported from Thailand. There is an AD/CVD Order on this product from China CBP conducted on-site audit Company did not possess the machines or staff to generate the volume they claimed to be exporting Company officials could not identify any supplier of wire (the raw material) CBP concluded that they were transshipping the merchandise from China and applied the China antidumping rate (PRC-wide is ) retroactively

8 Criminal Penalties re: AD/CVD Fraud CONSPIRACY: 8 Months in Prison & $2.5 Million Fine President of a pool cleaning supply company convicted for conspiring to commit customs fraud for imports of chlorinated isocyanurates (fraud related to AD case involving China). FRAUD: Criminal Conviction & $3 million fine (evasion of AD case on graphite electrodes). Case originally brought under False Claims Act and initiated by competitor 70 Months in Jail for Mexican dry cleaning business evading AD order on Chinese wire garment hangars (country of origin fraud) JAIL; FINES for importers evading $180 million in

9 PLYWOOD/SOFTWOOD LUMBER AD/CVD

10 Chinese Plywood AD/CVD Case Status: Prelim CVD expected April 17; AD June 16 DOC chose 2 mandatory respondents in each case Critical Circumstances Alleged (90 day retroactive suspension of entries & duty demand if DOC agrees; ITC has LAST WORD) ITC Final Phase: Starting soon; coordinated response is key; cabinet makers & other end users are key to

11 Chinese Plywood AD/CVD Lots of Activity to monitor at the DOC New Subsidy Allegations & possible impact on CVD margins (and WHEN?) Claims regarding accuracy of mandatory respondents affiliations with U.S. parties Scope Issues

12 Softwood Lumber from Canada AD/CVD One week behind Plywood Case Status CVD Prelim: April 23 AD Prelim: June 23 DOC chose 4 mandatory respondents in CVD; 4 in AD Critical Circumstances (Alleged in the Petition) Issues relating to differences in provincial subsidies; possible company exclusion process New SLA?

13 Life as Importer of AD/CVD Product Critical Circumstances is big worry But LONG TERM retroactive risk is real story of AD/CVD case

14 Retroactivity (AD) June 16, 2017 (Preliminary AD Notice expected) Dec Dec Dec Dec Period of Review ( POR ) (Defines Covered Imports) Deposit Rates POR 1 POR 2 POR 3 POR 4 DOC Final (Nov. 1) CVD Order (Dec.) X2% X3% July 2020 July 2021 X1 % YYY% ZZZ% July 2022 Assessment YYY% POR 1 Final Result ZZZ% POR 2 Final Result WWW% POR 3 Final Result

15 What to Do? Understand the law Know your company s risk tolerance (stay in the game or exit?) Have robust compliance program; avoid circumvention scams and too good to be true solutions Importers survive and some thrive under AD/CVD orders ( winners and losers )For- Profit Whistleblower??

16 What to Do? DON T SIT ON THE SIDELINES Only companies that participate in ITC and DOC process have right to appeal to the Court of International Trade Parties to CIT appeals can get injunction delaying CBP final action while appeal is pending For-Profit Whistleblower??

17 Where Importers Can Get Justice.

18 Court of International Trade Federal Judges Have The Last Word on DOC Actions For-Profit Whistleblower??

19 Georgetown Journal of International Law??

20 CIT Remands DOC Decisions More than Half the Time! Statistics compiled by the CIT indicate that, between 2007 and 2012, of the 225 appeals filed 51.49%, resulted in at least one remand. Thus, when even?? the highly deferential standard of review is used by the CIT to scrutinize Commerce s decisions, the data confirm that more than half of Commerce s decisions that reach the court are unlawful in some respect. With such a low affirmance rate, Commerce s continued ability to assert itself as master of the dumping laws can reasonably be questioned

21 PREPARE FOR GOVERNMENT CONTACTS

22 Prepare for Government Contacts Company Policy for Notifying Management/GC/Outside Counsel of Government Contacts?? Don t let Gov request for information go unanswered! Routine-sounding Request for Information (Customs Form 28) can blow up into audit or worse if not handled properly Have plan in place to deal with in-person visits (ex, DHS/ICE drop by visits at business, school parking lot, etc.). Prepare for the worst (search warrant). It happens. Call counsel immediately D&O policies; Lacey Act insurance Company speaks with ONE VOICE