Importing goods into the United States can provide risks. As the importer of record, the importer is solely responsible for the payment of all duties and taxes due on the imported merchandise, which includes the payment of any antidumping (AD) and countervailing (CVD) duties that may apply. When importing merchandise subject to AD and CVD duties, the level of risk increases significantly because final AD/CVD duties are not known until well after the good is imported. In fact, it may take years before final duties are assessed by the U.S. Customs and Border Protection (“CBP”). As a result, the importer remains vulnerable to increased duty liability long after the good is imported.
Final Duties May Be Significantly Higher Than Deposits at the Time of Entry. When the U.S. Department of Commerce (“Commerce”) issues an AD/CVD duty order following its investigations, the order specifies the products for which importers must pay AD/CVD duties and the duty deposit rates applicable to specific exporters, as well as an “all others” rate (or a country-wide rate in non-market economy cases) for remaining exporters that did not receive a company-specific rate. Commerce may later revise the AD/CVD duty rates for certain exporters if the exporter is selected for an annual administrative review. Commerce then issues instructions to CBP, first to collect cash deposits on new importations and then, after the administrative review is over, to liquidate the entries and assess final duties on the merchandise.
Assessment Errors Can Occur. A common misconception is that no problems will arise after the goods are cleared and enter the United States. For example, importers of products that are subject to AD/CVD orders often assume that the proper AD/CVD rate will be assessed on their imported merchandise, but this is not always the case. Commerce’s liquidation instructions may contain errors. In addition, just because a product is imported from an exporter that has a certain AD/CVD deposit rate (e.g., zero rate) does not mean that the final assessment rate will also be the same for a particular importer of record. This is because Commerce’s liquidation instructions to CBP specify the final AD/CVD assessment rates for specific importers or customers that were identified in the exporter’s sales responses that were reviewed by Commerce. If the importer of record is different than the importer reported by the exporter to Commerce, the importer of record may suddenly find itself liable for the payment of duties that are significantly higher (e.g., at the “all other” or country-wide rate) than anticipated. In such cases, a protest may need to be filed with CBP.
Steps to Reduce the Risk of Surprises. As a buyer, the surest way to avoid AD/CVD problems is to require your foreign supplier to act as the importer of record. Otherwise, importers can alleviate the risk of increased duty liability by (1) conducting a risk assessment of their import database; (2) putting compliance measures in place; (3) maintaining good records of all CBP entry documents for five years after date of entry; (4) verifying the entry documents to ensure that the correct party is listed as the importer of record and the correct foreign manufacturer is listed; (5) responding to any CBP Form 29 Notice of Action regarding an increase in duties owed in a timely manner; and (6) periodically reviewing broker activity. In any case, it would be wise for importers to take a more proactive approach to ensure that proper duties are assessed.