By Nathaniel Maandig Rickard of Pickard, Kentz and Rowe (LLC)
In October 2016, U.S. Customs and Border Protection (“CBP”) issued a letter explaining that the agency would not be initiating an investigation under the Enforce and Protect Act (“EAPA”) of alleged evasion of the antidumping duty order on circular welded carbon quality steel pipe from China. This proved to be both the first and last notice of non-initiation of an EAPA investigation issued by CBP. Since then, CBP has yet to issue another notice of non-initiation and has, as of January 30, 2023, published information regarding the initiation of a remarkable 207 EAPA investigations of alleged evasion.
Of the EAPA investigations conducted by CBP, the agency issued a final affirmative determination of evasion in 151 of the investigations. CBP ultimately rejected allegations of evasion in just 10 of the investigations conducted by the agency. According to CBP’s public reporting, another 41 EAPA investigations have been initiated and are ongoing, with interim measures being imposed during the pendency of the proceeding, while another five of the EAPA investigations initiated have resulted in scope referrals to the U.S. Department of Commerce.
CBP’s EAPA investigations have involved a wide array of different products. In total, CBP has initiated investigations on merchandise subject to thirty-four different antidumping or countervailing duty orders. The largest number of EAPA investigations have involved thermal paper (33), followed by quartz surface products (31), wire hangers (25), wooden cabinets and vanities (21), aluminum extrusions (16), xanthan gum (12), glycine (10), hardwood plywood (9), butt-weld pipe fittings (8), cast iron soil pipe (5), diamond sawblades (5), steel grating (4), and steel trailer wheels (3). CBP has also initiated two investigations of alleged evasion under the orders on amorphous silica fabric, cast iron soil pipe fittings, aluminum sheet, stainless steel flanges, and wooden bedroom furniture. CBP has further conducted investigations of imports of activated carbon, cased pencils, steel wheels, chassis and subassemblies, circular welded pipe, forged steel fittings, fresh garlic, frozen warmwater shrimp, hydrofluorocarbon blends, magnesia carbon brick, cast iron pipe fittings, oil country tubular goods, polyethylene retail carrier bags, and uncovered inner spring units.
CBP’s investigations have overwhelmingly involved the transshipment of merchandise, where goods that are subject to a trade remedy are exported to the United States accompanied by false claims as to where they were manufactured. Transshipment was the sole type of evasion alleged in 153 of the agency’s EAPA proceedings. Another forty-two involved allegations of both transshipment and misclassification of merchandise, where goods are falsely described as products outside the scope of the antidumping or countervailing duty order. Eighteen of CBP’s EAPA investigations were of allegations related purely to product misclassification. Finally, two of CBP’s EAPA investigations involved allegations that the importer had falsely claimed that the producer or exporter of the merchandise was a company that benefitted from a lower antidumping or countervailing duty rate than the actual producer or exporter.
The affirmative determinations of evasion reached by CBP have overwhelmingly been upheld by the agency’s Office of Regulations and Rulings (“ORR”) when a party to the investigation has elected to seek an administrative review. As of January 30, 2023, CBP has published information regarding the agency’s conduct of fifty-five administrative reviews. Of these reviews, the agency’s final affirmative determination was upheld in forty-nine of them. ORR reversed CBP’s initial determination as to evasion in five instances and issued one mixed administrative review determination that partially upheld and partially reversed an affirmative evasion determination.
ORR’s public reporting also indicates that in four of the administrative reviews where it upheld CBP’s affirmative evasion determination, the U.S. Court of International Trade remanded the agency action back to CBP for further consideration. On remand, CBP reversed the initial affirmative evasion determination in three of four cases, and upheld its original determination of evasion in the fourth. Nevertheless, these cases represent a very small fraction of the total number of affirmative evasion determinations issued by CBP.
Regardless of the metric used, in the six-plus years that the agency has administered EAPA, CBP has confirmed the claims of domestic industries regarding pervasive evasion of antidumping and countervailing duty payment. These concerns were what led U.S. producers to advocate for improved tools for responding to evasion in the first instance. Administering EAPA, CBP’s efforts have established that unlawful evasion is a commonly-utilized tactic by U.S. importers to maintain access to unfairly-traded imports, to the detriment of U.S. industries that have invested substantial resources into obtaining trade relief. In addition to enhancing the effectiveness of these trade remedies, CBP’s enforcement successes have also vastly improved the collection of duties owed to the U.S. government, generating revenue greatly in excess of the cost of operating the EAPA administrative system.