• Senate Finance Committee Holds Hearing On Duty Evasion; ENFORCE Act Introduced
  • June 2, 2011 | Authors: Gilbert B. Kaplan; Jeffrey M. Telep; Taryn Koball Williams
  • Law Firm: King & Spalding LLP - Washington Office
  • In response to growing concerns from U.S. manufacturing companies, the Senate Finance Subcommittee on Trade held a hearing on May 5th to explore the problems and possible solutions related to the evasion of antidumping and countervailing duties. Representatives from companies producing pipe and tube, honey, and inner-spring mattresses gave first-hand accounts of the significant harm caused to their respective industries by customs fraud and duty evasion by U.S. importers and foreign exporters. They also provided examples of the types of duty circumvention schemes they have encountered, which include transshipment of U.S.-bound merchandise through third countries, false declaration of the country-of-origin to U.S. Customs and Border Protection, misclassification of the imported product, and smuggling.

    Senator Ron Wyden of Oregon, who chaired the hearing, noted that evasion of antidumping and countervailing duties costs the American people billions of dollars and undermines the relief that U.S. companies have won as a result of successful antidumping or countervailing duty cases. He also criticized the job that officials at Customs and Border Protection and Immigration and Customs Enforcement have done by failing to address these evasion problems. He noted that “while agencies are dragging their feet to enforce our trade laws, the country's domestic manufacturers are being hammered by foreign trade cheats.” Ranking Subcommittee Member, Senator John Thune of South Dakota also criticized the lax enforcement of U.S. trade remedy laws, and pointed to massive duty evasion affecting honey and furniture producers in his state.
    Officials from Customs and Border Protection, Immigration and Customs Enforcement, and the Department of Commerce also testified. They defended their enforcement efforts by pointing to examples of arrests, convictions, and jail sentences resulting from customs fraud investigations, but also stated that criminal convictions for customs fraud are costly and time consuming, and impose very high evidentiary thresholds.

    To deal with the duty evasion problem, Senator Wyden announced at the hearing his intention to introduce a bill entitled the ENFORCE Act. The bill would provide a specific procedure for Customs and Border Protection to investigate duty evasion and to impose the duties that should have been paid.

    The ENFORCE Act was introduced in the U.S. Senate on May 26, 2011.