$2.3 Billion in Duties Uncollected by Customs, GAO Says

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By Rossella Brevetti

Aug. 16 — U.S. Customs and Border Protection (CBP) continues to face challenges in efforts to collect dumping and countervailing duties with an estimated $2.3 billion in duties uncollected, the Government Accountability Office said.

The GAO findings prompted two key lawmakers to call for effective implementation of a new law giving the agency additional authority over duty evasion by importers.

“By not fully collecting unpaid AD/CV [antidumping and countervailing] duty bills, the U.S. government loses a substantial amount of revenue and compromises its efforts to deter and remedy unfair and injurious trade practices,” the GAO's Aug. 15 report said.

Customs is designing a pilot program to review entries for risk factors related to duty non-payment, a Customs spokeswoman said Aug. 16 via e-mail. “The pilot program will include the development of a risk-based methodology pertaining to country of origin and other risk factors to identify high-risk entries. CBP will use the data and results from the pilot program to implement a targeting approach to review all future entries that could pose a high risk of non-payment,” the e-mail said.

During fiscal years 2001 through 2014, unpaid AD/CV duty bills totalled about $2.3 billion as of May 12, 2015, the GAO said. Customs said that it doesn't expect to collect most of that amount because it has exhausted all collection efforts

The report said that, on average, Customs collected duties owed for about 90 percent of AD/CV bills issued but only collects about a third of the total dollar amount owed. Twenty importers account for about 50 percent of the $2.3 billion owed. Top products associated with duty non-payment include honey, wooden bedroom furniture, crawfish tail meat, pure magnesium ingot, fresh garlic and preserved mushrooms.

New Tools

“With the historic passage of the Trade Facilitation and Trade Enforcement Act of 2015, Congress took significant steps toward enhancing the security of our borders and stopping unfair trade,” Senate Finance Committee Chairman Orrin Hatch (R-Utah) said Aug. 16 in an e-mailed statement. “The GAO report shows that more can be done, including by ensuring that CBP uses all the tools available to collect unpaid anti-dumping and countervailing duties.”

Congress set up a number of new oversight tools to make sure U.S. trade laws are effectively enforced, Hatch said. “I intend to closely monitor implementation of these new laws so that the playing field is fair for the American worker.”

“It is unacceptable that $2.3 billion in antidumping and countervailing duties owed to the U.S. Government by foreign companies who have violated our trade laws still hasn’t been collected by U.S. Customs and Border Protection,” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said Aug. 15. Brady said the customs bill gave the administration additional tools on duty evasion, with an Aug. 22 deadline for new regulations. The administration should “immediately implement procedures” following the GAO's recommendations, he said.

High-Risk Imports

The GAO urged Customs to use risk assessment strategically to crack down on unpaid duties by identifying entries with heightened risk and take appropriate action. Customs should issue guidance to its antidumping and countervailing duty centralization team to find and address the causes of AD/CV duty liquidation errors and conduct a comprehensive analysis on new or changing risks related to nonpayment, the GAO said.

Customs concurred with the recommendations but said the GAO's statistical methodology may have yielded results understating the impact of evasion relating to high-risk imports from China. Customs said that it initiated a risk analysis assessing both the likelihood and significance of risk factors related to AD/CV duty collection. Customs will use the analysis to develop a model to identify, and take appropriate action to mitigate, the risk from entries posing a greater risk of nonpayment of final AD/CV duties, according to the report.

Retrospective Problem

Shortfalls in duty collections has been a long-standing problem. The GAO in a previous report said the retrospective duty collection system, under which the final amount of duties could exceed the cash deposit the importer makes at the time of entry, was partly to blame (144 ITD, 7/28/08; 79 ITD, 4/24/08).

American Association of Exporters and Importers President and Chief Executive Officer Marianne Rowden told Bloomberg BNA in an Aug. 16 e-mail that Customs will continue to be “severely handicapped” in collecting antidumping and countervailing duties as long as Congress clings to a retrospective duty collection system. Rowden is a long-time critic of the retrospective system and wants it abolished.

The GAO again identified the retrospective system as a challenge for duty collections. Enhanced bonding efforts undertaken by Customs to improve duty collections have had limited results. Customs formed a five-person duty collections team, but recently it has been challenged by staffing turnover and unfilled positions, the report said.

To contact the reporter on this story: Rossella Brevetti in Washington at rbrevetti@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

For More Information

The GAO report (GAO-16-542) is available at http://www.gao.gov/products/GAO-16-542.

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