On August 25, 2009, the US Court of International Trade (“CIT”) issued its decision in Fisheries Institute Inc. v. Bureau of Customs and Border Protection that US Customs and Border Protection (“CBP”) acted arbitrarily and capriciously in imposing enhanced bonding requirements on importers of shrimp subject to antidumping duty orders.
In 2004, CBP implemented an enhanced continuous bond requirement for imports of shrimp from India and Thailand subject to antidumping duty orders. Under the enhanced bonding requirement, importers subject to antidumping duties had to maintain a minimum bond equivalent to 100 percent of the antidumping/countervailing duty rate established in the original duty order, or the most recent administrative review, multiplied by the value of imports over the previous 12 months. This requirement was in addition to the basic bond amount equivalent to the greater of US$50,000 or ten percent of the duties, taxes and fees paid during the preceding year, and to the entry “cash deposits” that are required under the US retrospective duty assessment system. CBP argued that the change in the bond requirement was prompted by difficulties in collecting the antidumping duties assessed at liquidation in recent cases involving agriculture and aquaculture imports. Under 19 U.S.C. § 1623, CBP may require continuous bonds in amounts it deems “necessary for the protection of the revenue.”
The National Fisheries Institute and 27 shrimp importers contested individual bond sufficiency determinations in which CBP applied the enhanced continuous bond requirement to their continuous entry bonds. The CIT ultimately determined that CBP acted beyond its role in imposing an “onerous requirement for new bonds with greatly expanded limits of liability” on US importers of shrimp subject to antidumping duties, absent any direction from the US Department of Commerce (“DOC”). The CIT found CBP’s determinations impermissible because they were made according to a formula which required bond amounts for importers of subject shrimp to be set at 100 percent of the duty that would have been owed on the value of subject imports made during the previous year, at the rate determined by the DOC at the time of issuing the order. The CIT reasoned that this formula “essentially require[d] security for twice the antidumping duty liability that [wa]s secured by the cash deposit,” and that CBP applied this formula despite the potential antidumping duty liability estimated by the DOC—the agency with the authority and expertise to make such an estimate. Further, the CIT determined that CBP acted arbitrarily and capriciously in imposing an enhanced bonding requirement solely on US importers of shrimp, even though CBP did not consider whether US shrimp importers pose a greater risk of defaulting on antidumping duties than US importers of other agricultural or aquacultural merchandise subject to antidumping or countervailing duty orders.
Effective April 1, 2009, CBP had withdrawn the enhanced bonding requirement on future shrimp entries in response to an adverse WTO decision. The WTO Appellate Body agreed with two dispute settlement panels that CBP’s application of enhanced bonding requirements to shrimp from Thailand and India ran afoul of US WTO obligations.