U.S. Customs and Border Protection (CBP) has issued new interim regulations for CBP’s Trade Remedy Law Enforcement Directorate (TRLED) to investigate claims of “evasion” of antidumping and countervailing duty orders under the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). The interim regulations enter into force on August 22, 2016.

Click hereto access the proposed regulations.

The adoption of these regulations opens the door for U.S.-based manufacturers and wholesalers to begin filing petitions against competing importers and may quickly lead to a significant expansion of trade measures, penalties, and other enforcement actions against importers – importers must be aware that the threshold necessary for a filing before the CBP is relatively low. The TFTEA is expected to result in increased administrative burdens to importers of products that are, or may be, subject to AD/CVD measures.

Description of the New Regulations

The TFTEA identifies a broad scope of practices that may be considered “evasion.” Evidence of intent to evade is not required. As defined in the statute and regulations, “evasion” refers to entering merchandise into the customs territory of the United States for consumption by an act or omission that is material and false, and which results in antidumping or countervailing duties being reduced or not applied to or collected on such merchandise.

Examples of evasion identified in the regulations include:

– misrepresentation of merchandise’s true country of origin (e.g., through fraudulent country of origin markings on the product itself or false sales);

– false or incorrect shipping and entry documentation; and

– misreporting of the merchandise’s physical characteristics.

Investigations are intended to follow a strict time table. When the CBP receives properly filed allegations from interested parties, notably from the domestic industry protected by the antidumping and countervailing orders, or receives requests from Federal agencies for an investigation, the statute requires CBP to take certain actions within specified timeframes. Investigations must be completed within 300 to 360 days after initiation.

The temporal scope of the imports subject to investigation is those made within one year prior to the receipt of an allegation or request for an investigation. However, at its discretion, CBP may also investigate any other entries of such imports.

CBP is authorized to investigate through questionnaires issued to importers, foreign producers and exporters, and foreign governments. The questionnaires are subject to on-site “verification” by CBP. Failure to respond to the best of the respondents’ ability can result in the application of “adverse inferences.”

Affirmative determinations of evasion will result in:

– suspension of “unliquidated” entries of the covered merchandise subject to the determination;

– extension of the period for liquidating the “unliquidated” entries of covered merchandise that entered before the initiation of the investigation;

– when necessary, notification to the U.S. Department of Commerce (DOC) of the determination and request that DOC determine the appropriate duty rates for such covered merchandise;

– requirement that imports of the covered merchandise post cash depoists and assess duties on the covered merchandise; and/or

– additional enforcement measures, including (but not limited to) modifying CBP proccedures for identifying evasion, reliquidating entries, and referring the matter to Immigration and Customs Enforcement (ICE) for possible civil or criminal investigation.

The statute and regulations also provide for the imposition of similar “interim measures” within 90 days of initiation of the investigation, where there exists a “reasonable suspicion” of “evasion.”

The statute and regulations also provide for both administrative and judicial review of final determinations.

Public Comments

The CBP is currently accepting comments on the proposed through October 21, 2016. We will continue to monitor developments of these regulations and other customs and international trade issues.