Commerce recently amended its regulations governing the security required following an affirmative preliminary determination in antidumping or countervailing duty (“AD/CVD”) proceedings. Prior to this amendment, Commerce only required that importers post a bond to cover the potential antidumping or countervailing duty liability in AD/CVD proceedings. Importers will no longer be able to import under bond following preliminary determinations in AD/CVD proceedings. Instead, importers will be required to post cash deposits to secure this potential liability. The new regulation takes effect on November 2, 2011 and applies to all investigations initiated on the basis of petitions filed on or after this effective date.

Commerce’s amendment is the result of one of many changes designed to strengthen the agency’s administration of the AD/CVD laws. Commerce’s amendment was in support of President Obama’s National Export Initiative (“NEI”). Commerce announced numerous proposals on August 26, 2010 to strengthen the AD/CVD law and support the NEI.

Under Commerce’s prior policy, importers could post a bond to secure potential antidumping or countervailing duty liability on entries subject to an AD/CVD investigation. Thus, the importers were not paying cash deposits on each entry. Certain importers would enter merchandise under bond, but fail to pay the full amount of the duties once due. Customs would attempt to collect the full amount of the duties from the bond, but the bond amount would not be large enough to cover the importer’s liability. The posting of cash deposits rather than bonds will make importers directly responsible for the payment of AD/CVD duties, as opposed to Customs collecting from a bond covering numerous entries when an importer failed to pay. Further, the change will reduce some of the burdens that CBP faces when trying to collect AD/CVD duties.

Some commentators argued, the change would be burdensome for the importers because their cash flow would be negatively impacted. Commerce, however, has always had the authority to require cash deposits, and requiring such deposits is permissible under the WTO Agreements and is the practice of many WTO members. In the past, Commerce chose to allow importers to have a bonding privilege. It appears Commerce made this regulatory change, in part, due to certain importers’ failure to pay their full AD/CVD liabilities.