New Bill Seeks To Improve Trade Remedy Law Enforcement

Monday, October 4, 2010 - 01:00

On August 5, 2010, Senators Ron Wyden (D-OR) and Olympia Snowe (R-ME) introduced legislation to reinforce and strengthen U.S. government enforcement of the trade remedy laws. "The Enforcing Orders and Reducing Circumvention and Evasion (ENFORCE) Act of 2010" (the ENFORCE Act), is expected to receive broad bipartisan support in the Senate. A similar measure is being developed in the House. If enacted, the ENFORCE Act would represent a significant improvement in trade law enforcement and the ability of U.S. Customs and Border Protection (CBP) to address evasion and circumvention.

Currently, U.S. trade remedy laws allow domestic producers to obtain relief from unfair practices of foreign trading partners through the application of antidumping and countervailing duties (AD/CVD). Of course, these forms of relief are only effective to the extent that they are enforced. Many domestic industries have long called for stricter enforcement procedures, because their relief has, in many instances, been effectively foreclosed due to a lack of adequate or timely AD/CVD enforcement by U.S. Customs and Border Protection and the Department of Commerce. In addition, illegal duty evasion schemes have become more pervasive in recent years, as foreign producers and importers use shell companies, false import documents, and transshipment through third countries to avoid lawfully owed duties. Indeed, a growing number of foreign shipping companies openly advertise their ability to help importers evade U.S. antidumping and countervailing duties.

The ENFORCE Act proposes measures to address the most problematic evasion and circumvention schemes of importers and foreign producers who are subject to antidumping or countervailing duties. The provisions of the ENFORCE Act include:

Expanded investigations into trade remedy law evasion. The ENFORCE Act would specifically empower the Commerce Department to investigate evasion allegations in cooperation with CBP. Section 2 of the bill amends existing law to authorize Commerce to conduct investigations into merchandise that has been misrepresented, misreported, or misidentified. This authority would extend to investigations into fraud, transshipment of imports through a third country to avoid payment of duties, and document falsification or mislabeling.

The bill further requires the establishment of clear procedures by which interested parties can submit a petition to CBP alleging AD/CVD evasion and requesting an investigation. CBP then has a set deadline for making a determination. Currently, CBP conducts AD/CVD enforcement investigations without a formal allegation process or investigation deadlines.

Expedited response to evasion. Section 3 of the bill institutes a 60-day deadline in which CBP must make a conclusive determination on petitions containing allegations of AD/CVD evasion (whereas there is currently no deadline for such investigations). If an affirmative preliminary determination is made, the ENFORCE Act would require AD/CVD duties to be collected in cash until the conclusion of the investigation.

Information sharing among government agencies. The ENFORCE Act allows authorized users of business proprietary information which is obtained in a Commerce or International Trade Commission (ITC) investigation to share that information with CBP, as well as between concurrent AD and CVD investigations.

The bill also requires CBP and Commerce to jointly submit an annual report to Congress, describing the number of received petitions alleging AD/CVD evasion, the investigative actions taken with respect to the allegations, and the amount of AD/CVD duties collected as a result of the investigations. Under the ENFORCE Act, the Government Accountability Office (GAO) would also submit a report to Congress on the efficiency and effectiveness of evasion investigation procedures.

Senators Wyden and Snowe and the ENFORCE Act's co-sponsors will seek passage of the bill this year.

Timothy C. Brightbill is a Partner in Wiley Rein's International Trade Practice. He represents clients on all aspects of international trade law and policy including import trade remedies (such as antidumping law, countervailing duty law and safeguards investigations), global trade policy and trade negotiations, international arbitration, export controls (compliance and licensing), climate change policy, customs matters and international e-commerce issues. He can be reached at (202) 719-3138.

Adam H. Gordon is a Partner in the International Trade Practice. Mr. Gordon represents U.S. manufacturers, industries and agricultural groups in antidumping and countervailing duty matters before the U.S. Department of Commerce, U.S. International Trade Commission, U.S. Customs and Border Protection, the U.S. Court of International Trade and the U.S. Court of Appeals for the Federal Circuit. His practice focuses on unfair trade litigation, developing and implementing programs to detect circumvention and enforce trade orders, and assisting clients with complex customs issues related to imports and exports. Mr. Gordon can be reached at (202) 719-7544.

Laura El-Sabaawi is an Associate in the International Trade Practice. She represents clients in a variety of international trade matters, including antidumping and countervailing duty investigations, export controls and sanctions compliance programs and can be reached at (202) 719-7042.

Please email the authors at tbrightbill@wileyrein.com, agordon@wileyrein.com or lel-sabaawi@wileyrein.com with questions about this article.