As an importer, understanding and mitigating exposure to antidumping duties (ADD) and countervailing duties (CVD) is critical. These duties can be substantial—sometimes reaching double or even triple digits. Proper due diligence helps avoid unexpected liabilities and supports informed business planning.
Understanding ADD and CVD
ADD and CVD are imposed to counteract unfair trade practices:
· Antidumping Duties (ADD): Applied when foreign companies sell goods in the U.S. at “less than fair value” (below their home market price).
· Countervailing Duties (CVD): Levied when foreign governments provide unfair subsidies to exporters, distorting competition.
U.S. Enforcement Process
The U.S. Department of Commerce (DOC) and the International Trade Commission (ITC) oversee ADD/CVD cases:
- DOC determines if dumping or unfair subsidies exist and calculates duty rates.
- ITC assesses whether imports harm or threaten U.S. industries.
- If both agencies confirm violations, Customs and Border Protection (CBP) collects duties.
Importers must post cash deposits equal to estimated ADD/CVD amounts until final duty assessments are made.
Key Considerations for Importers
1. Scope Determinations
· Products subject to ADD/CVD are defined by written scope descriptions, not just HS classifications.
· The DOC issues scope rulings to clarify ambiguous cases. If uncertainty exists, importers may request a ruling.
· Example: The aluminum extrusions order from China has led to 60+ scope rulings and 25 court decisions due to its complexity.
2. Liability and Compliance Risks
· CBP can retroactively bill importers for unpaid duties, sometimes years after importation.
· Importers must submit a non-reimbursement certificate to confirm the exporter has not repaid ADD. Failure to do so results in double the assessed duties.
· Evasion tactics (e.g., transshipment, false origin claims) lead to penalties—importers are ultimately liable.
3. Current ADD/CVD Landscape (as of March 2017)
· 586 active orders covering 224 products from 59 countries.
· Top affected countries: China (26.8%), India (7.7%), South Korea (6.3%), Taiwan (5.3%), Japan (4.1%).
· Common impacted goods: metals, minerals, chemicals, and industrial inputs—though any product may be targeted.
Best Practices for Compliance
1. Proactive Monitoring & Analysis
· Check CBP’s ACE portal for active ADD/CVD cases.
· Review Federal Register notices, scope rulings, and court decisions for relevant products.
· Train classification analysts to flag potential in-scope items.
2. Supply Chain Integrity
· Ensure Purchasing teams understand ADD/CVD risks.
· Verify supplier legitimacy—some exporters falsify origin or route goods through third countries to evade duties.
3. Broker & Entry Management
· Establish business rules with customs brokers to catch potential ADD/CVD hits before submission.
· Conduct retroactive entry audits to identify missed duties.
Recent Regulatory Developments
· Enforce and Protect Act (EAPA) of 2015: Strengthens CBP’s ability to investigate ADD/CVD evasion (e.g., transshipment, misdeclaration).
· 2017 Executive Order: Requires CBP to assess risks for importers with a history of non-payment, potentially mandating higher bonds or penalties.
· GAO Findings (2015): $2.3 billion in uncollected ADD/CVD—prompting stricter enforcement under the 2018 budget.
Conclusion: Mitigate Risks Through Preparation
ADD/CVD compliance demands vigilance. Non-compliance can lead to significant financial penalties and operational disruptions. By staying informed, conducting thorough product assessments, and fostering cross-departmental awareness, importers can minimize risks and ensure compliance.
Stay proactive—your business depends on it.
Sources:
[1] U.S. Government Accountability Office (GAO) Report (2015)
[2] President Trump’s 2018 Budget Proposal
[3] Executive Order on Trade Enforcement (March 31, 2017)
For further guidance, consult CBP’s ACE portal or seek legal expertise in trade compliance.
This article is for informational purposes only and does not constitute legal advice.