Key Notes:

  • Regulations establish formal procedures for initiating investigations, investigation procedures, and administrative review of CBP determinations
  • Public comments may be filed until October 21, 2016

On August 22, 2016, U.S. Customs and Border Protection (CBP) issued long-awaited interim regulations to establish procedures for investigating claims of evasion of antidumping (AD) and/or countervailing duty (CVD) orders (see 81 Fed. Reg. 56477). These procedures are the result of the enactment of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTE Act), which updates numerous aspects of CBP’s operations for the first time in more than a decade (see our previous publication, “Long-Awaited Customs Law Strengthens Enforcement of Trade Remedy Orders and Intellectual Property Rights and Introduces Other Significant Changes,” February 29, 2016).

The TFTE Act contained at Title IV the Prevention of Evasion of Antidumping and Countervailing Duty Orders (better known as the “Enforce and Protect Act of 2015,” or EAPA), which established a formal process for CBP to investigate allegations of the evasion of AD/CVD orders. Evasion refers to entering merchandise into the customs territory of the United States forconsumption by an act or omission that is material and false, and that results in AD or CVD duties being reduced or not applied to or collected on such merchandise.CBP is responsible for ensuring that the appropriate duties are collected on imports of merchandise.

Under prior laws, CBP could take enforcement actions against the evasion of AD/CVD orders, but there had long been frustration and complaints from affected U.S. industries that private parties who submitted allegations of evasion were not afforded any opportunity to participate in the investigation. Further, CBP had no obligation to notify parties that submitted allegations of evasion as to the outcome of CBP’s review. Implementation of the EAPA and the interim regulations creates a new framework for CBP to investigate allegations, allow interested parties to participate, and provide more transparency to the process and eventual outcome of an investigation.

Investigating Claims of Evasion of AD/CVD Duties

The new regulations, which will be set forth in the Code of Federal Regulations at 19 C.F.R. Part 165, will:

  • Allow interested parties to file, or another federal agency to refer, evasion allegations for investigation;
  • Require CBP to take certain actions within specified time frames. Once a properly filed allegation is received, CBP must decide to initiate an investigation within 15 days. Interested parties will be notified within five days if CBP chooses not to pursue an investigation, and all parties will be notified within 95 days if an investigation has begun. CBP must issue its determination within 300 days (or 360 days for extraordinarily complicated cases) as to whether there is substantial evidence that merchandise covered by an AD/CVD order entered the United States through evasion;
  • Allow referrals to the Department of Commerce when CBP cannot determine whether the merchandise at issue is within the scope of the applicable AD/CVD order (thus, tolling the investigative process while Commerce reviews the matter);
  • Establish investigation procedures for CBP, including the use of questionnaires, and making adverse inferences against the importer, foreign producer, exporter or interested party for any failure to cooperate and provide requested information to the best of its ability;
  • Set forth requirements for the submission of factual information and allow for CBP to conduct verifications of such information in the United States as well as in foreign countries as necessary to make its determination;
  • Provide interim measures to ensure that appropriate duties are collected during the investigation. No later than 90 days after initiating an investigation, if “reasonable suspicion” exists to support the allegation of evasion, CBP will (1) suspend the liquidation of unliquidated entries of the covered merchandise entered after the date of initiation; (2) extend the period for liquidating the unliquidated entries of covered merchandise that entered before the initiation of the investigation; and (3) take any additional measures necessary to protect the ability to collect appropriate duties;
  • Provide greater transparency by requiring that written submissions be served on all parties to the investigation and that, when any business proprietary information is submitted, a public version must also be provided for the administrative record; and
  • Specify requirements for requesting an administrative review of any initial determination by CBP and allowing parties up to 30 days after the initial determination to, in essence, appeal the determination.

Affirmative Determinations of Evasion

If CBP makes an affirmative determination of evasion, the interim regulations state that CBP will (1) suspend theliquidation of unliquidated entries of the covered merchandise that is subject to thedetermination; (2) extend the period for liquidating the unliquidated entries of coveredmerchandise that entered before the initiation of the investigation; (3) when necessary, notify the Department of Commerce of the determination and request that Commerce determine the appropriate duty ratesfor such covered merchandise; (4) require importers of covered merchandise to post cash depositsand assess duties on the covered merchandise; and/or (5) take such additional enforcementmeasures as CBP deems appropriate, including (but not limited to) modifying CBP’s proceduresfor identifying future evasion, reliquidating entries as provided by law, and referring the matterto U.S. Immigration and CustomsEnforcement (ICE) for possible civil or criminal investigation.

Despite the immediate implementation of these regulations, they are interim in nature and CBP is accepting public comments until October 21, 2016 for this matter (Docket Number USCBP-2016-0053). Comments may be filed using the Federal eRulemaking Portal or by mail to Trade and Commercial Regulations Branch, Regulations and Rulings, Office of Trade, U.S. Customs and Border Protection, 90 K Street, N.E., 10th Floor, Washington, D.C. 20229-1177.