Presenting a live 90-minute webinar with interactive Q&A Minimizing Risks When Importing Goods Subject to Antidumping and Countervailing Duties Leveraging Trade Remedies, Recent CIT Decisions and Significant Rules Changes TUESDAY, SEPTEMBER 29, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Damon V. Pike, President, The Pike Law Firm , Decatur, Ga. Alexander H. Schaefer, Counsel, Crowell & Moring , Washington, D.C. P . Lee Smith, King & Spalding , Washington, D.C. Diane A. MacDonald, Baker & McKenzie , Chicago The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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MINIMIZING RISKS WHEN IMPORTING GOODS SUBJECT TO ANTIDUMPING AND COUNTERVAILING DUTIES September 29, 2015
Speakers – Diane A. MacDonald Baker & McKenzie, Chicago, IL diane.macdonald@bakermckenzie.com – Damon V. Pike The Pike Law Firm, Decatur, GA damon@thepikelawfirm.com – Alexander H. Schaefer Crowell & Moring LLP, Washington, DC aschaefer@crowell.com – P. Lee Smith King & Spalding, Washington, DC lsmith@kslaw.com 6
Trade Remedies Background – Antidumping Duties: Additional duties applied to imported merchandise that has been found to be (1) sold at unfairly low prices, and (2) injuring or threatening to injure a U.S. industry – Countervailing Duties: Additional duties applied to imported merchandise that has been found to (1) benefit from unlawful government subsidies, and (2) be injuring or threating to injure a U.S. industry. – The Key: It’s a Retrospective System 7
AD/CVD: The Two Layers of Risk – Layer 1: The “Known Unknown” – Risks identified but not quantified Never mind the details – RATES CHANGE! And your deposit at the time of entry may be VERY different from the ultimate assessment Case Study: Wooden Bedroom Furniture – Layer 2: The “Unknown Unknown ” – Latent risk of surprise incorporation into a case The recent phenomenon of expanding scope definitions (Case Study – Aluminum Extrusions) The not-so-recent phenomena of circumvention and transshipment (Case Study – Tapered Roller Bearings) 8
The Risk Amplification Act of 2015 – AD/CVD duty rates for companies that don’t cooperate or are found to be part of the “PRC - wide entity” are already high – over 400% in extrusions (initially)! – Particularly true in cases involving China, which has been the primary AD/CVD target in recent years – Recent legislation has amplified importers’ risks by expanding the Commerce Department’s latitude in calculating adverse rates 9
WHAT IS AD/CV DUTY EVASION – Evasion Refers To Actions That Evade Full Payment Of AD/CV Duties – Entries Subject To AD/CV Duties Are Type 3, Rather Than A Typical Type 1 Entry – Evasion Occurs When An Importer – Fails To Declare Merchandise In An Entry To Be Subject To AD/CV Duties (Or A Type 3 Entry) And – Fails Pay The Required AD/CV Duty Cash Deposit – CBP And The U.S. Government In General Have Become Increasingly Concerned With AD/CV Duty Evasion 10
THE U.S. GOVT IS CONCERNED – CBP Has Identified Combating AD/CV Duty Evasion As A Priority Trade Issue – The Government Accountability Office (“GAO”) Reported That From 2007 To 2011, CBP Assessed Penalties For Evading AD/CV Duties Of $208 Million – The GAO Reported That Immigration And Customs Enforcement (“ICE”) Investigations Led To 28 Criminal Arrests, 85 Indictments, And 37 Criminal Convictions During Fiscal Years 2007 Through 2011 – Staff For U.S. Senator Wyden Published A Report Titled “Duty Evasion: Harming U.S. Industry And American Workers” On November 8, 2010 11
TYPES OF EVASION SCHEMES 12
COMMITTING EVASION PRESENTS SIGNIFICANT RISKS – Anyone Can Provide Evidence To CBP Through Its E- Allegation Website – CBP Will Conduct A Civil Investigation – CBP Can Include Homeland Security Investigations (“HSI”), Which Is Part Of ICE, For Criminal Investigations – CBP’s Investigations Are Confidential – Tools Used By CBP Can Inform An Importer That It Is Under Investigation 13
HOW CBP INVESTIGATES IMPORTERS – CBP Conducts Investigations In A Variety Of Ways – Import Specialist At A Particular Port Of Entry Can Review Entry Documents And Request Action By The Port Director – Nation-Wide Effort At Under The Guidance Of The Centers Of Excellence And Expertise (“CEE”) – Analysis By The National Targeting And Analysis Group – CBP Can Conduct A Regulatory Audit – CBP Lab Analysis Of Merchandise Suspected Of Misclassification – A Joint Investigation With HSI – Different Types Of Investigations Can Be Conducted In Tandem 14
CBP’S TOOLS – CBP Employs A Number Of Tools To Investigate And Combat Evasion – Open Containers For Physical Investigation – Issue CF-28s Questionnaires To Importers Suspected Of Evasion – Require An Importer To Demonstrate That It Has The Right To Make Entry – A Financial Interest In The Merchandise – Seizure Of Evading Merchandise – Require Additional Bonding 15
OTHER AGENCIES CAN ASSIST CBP – Other Agencies Can Assist In Investigating Evasion – Where The Merchandise Is A Foodstuff, The Food & Drug Administration Can Get Involved – Where The Merchandise Is An Agriculture Good, The Department Of Agriculture Can Get Involved – These Agencies Typically Require Additional Safety Certifications That CBP Can Use To Prove Evasion 16
RESULTS OF INVESTIGATIONS – CBP’s Civil Investigation Can Result In A Determination The Merchandise – was properly entered and the relevant duties were properly paid; – was not properly entered and require that the importer pay the relevant AD/CV duties; or – was not properly entered and the importer deprived the United States of lawful AD/CV duties by fraud, gross negligence, or negligence. 19 U.S.C. 1592. CBP will pursue penalties, with the assistance of the Justice Department in addition to the AD/CV duties evaded – Criminal Actions May Be Pursued With The Assistance Of ICE 17
CRIMINAL ACTIONS ARE POSSIBLE – HSI Can Be Used To Conduct A Criminal Action – Evidence From An Investigation Can Be Used In A Civil Proceeding, Criminal Proceeding, Or Both – HSI Agents Use A Variety Of Tools To Investigate Criminal Actions – CBP & ICE Have Concluded Successful Criminal Actions – Honey; Aluminum Extrusions; Retail Carrier Bags; Wooden Bedroom Furniture 18
PRIVATE ACTIONS – The False Claims Act (“FCA”) Prohibits Submitting False “Claims” To The U.S. Government, Regardless Of Whether Those Claims Are Made Seeking The Payment Of Monies From The Government Or Whether They Relate To A Party’s Obligations To Pay Monies To The Government – The FCA Provides For Treble Damages, Civil Monetary Penalties Up To $11,000 Per False Claim ( e.g. , Per Customs Entry), And Reasonable Attorneys Fees And Costs – The FCA Allows A Private Party Plaintiff — Called A “Relator” — To File A “ Qui Tam ” Action On Behalf Of The U.S. Against A Defendant – Relators Generally Recover From 15 To 25 Percent – Joint Investigations By The Justice Dept., ICE, And CBP 19
Contractual Protection? – Savvy companies try and cover exposure for unforeseen events via contractual terms between buyer and seller. – While a good practice in general and in theory, contractual terms cannot really mitigate risk of ADD/CVD. – First problem: enforcing terms. This is a big challenge everywhere, but especially in China – where most products covered by ADD/CVD originate. – Second problem: when contracts seeks to cover costs of ADD/CVD, this protection is rendered nil because of U.S. rules regarding reimbursement of ADD/CVD. 20
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