Key Issues > Duplication & Cost Savings > GAO's Action Tracker > Antidumping and Countervailing Duties (2011-81)
international icon: Art Explosion

International Affairs: Antidumping and Countervailing Duties (2011-81)

Congress could pursue several options to improve collection of antidumping and countervailing duties.

Action:

Congress could eliminate the retrospective component of the U.S. antidumping and countervailing duty system and, instead, treat the antidumping and countervailing (AD/CV) duties assessed at the time the product enters the country as final.

Progress:

As of January 2020, Congress has not enacted legislation to eliminate the retrospective component of the U.S. AD/CV duty system. Since its 2008 report, GAO has conducted additional work and made other recommendations to improve duty collection within the retrospective system, and recognized the strengths and weaknesses of the retrospective component of the U.S. AD/CV duty system. For example, in recent years, the U.S. Customs and Border Protection (CBP) has taken steps to strengthen the retrospective system of collecting AD/CV duties, including taking actions based on recommendations found in GAO's 2016 report (GAO-16-542). GAO's November 2019 report (GAO-19-50R) also noted that CBP has developed and is implementing a risk-based framework to mitigate risk by using statistical models to identify risk factors associated with importers at greater risk for AD/CV duty nonpayment. In the November 2019 report, GAO also examined steps taken by the Department of Commerce and CBP to address reported weaknesses in the AD/CV duty system.

GAO has closed this action as not addressed and will no longer track implementation.

Implementing Entity:

Congress

Action:

Congress could choose to provide the Department of Commerce (Commerce) the discretion to require companies applying for a new shipper review to have a greater volume of imports before establishing an individual antidumping and countervailing duty rate.

Progress:

Addressed. In March 2008, GAO first suggested that Congress enact legislation to provide Commerce with the authority to establish, at its discretion, a minimum amount or value of imports from companies requesting a new shipper review. Companies apply for new shipper reviews to attempt to receive an individual duty rate that is lower than the rate they would otherwise have to pay. However, new shippers could be assigned an individual duty rate based on as little as one sale. Such limited sales volumes allow new shippers to construct artificial transactions in a way that eliminates dumping but would not be possible if they were required to make a larger number of sales. The limited number of sales required for a new shipper review thus could have allowed pricing behavior that leads to significant underestimation of the final duty rate. On February 24, 2016, President Obama signed Public Law 114-125, the Trade Facilitation and Trade Enforcement Act of 2015. The law requires that new shipper rates be based on bona fide sales. It also requires that Commerce, in determining whether a given new shipper’s sales were bona fide, consider, among other factors and depending on the circumstances surrounding the sales, whether such sales were made in commercial quantities. According to Commerce, with respect to new shipper reviews, the law eliminates the ability for a new shipper to receive its own individual antidumping or countervailing duty rate based on just one sale.

Implementing Entity:

Congress

Action:

To better manage the antidumping and countervailing (AD/CV) duty liquidation process, Customs and Border Protection (CBP) should issue guidance directing the Antidumping Countervailing Duty Centralization Team to (1) collect and analyze data on a regular basis to identify and address the causes of liquidations that occur contrary to the process or outside the 6-month time frame mandated by the statute, (2) track progress on reducing such liquidations, and (3) report on any effects these liquidations may have on revenue.

Progress:

As of February 2020, CBP had taken some steps to collect and analyze data on instances when it has not liquidated—concluded the entry review process and assessed final duties, taxes, fees, and other charges—during the 6-month time limit established by law.

CBP has also taken steps to record when certain types of premature liquidations occur, but according to CBP officials, it does not track these liquidations on a year-to-year basis or analyze this data. In fiscal year 2017, CBP added a new premature-liquidation question into its self-inspection process worksheet to help managers identify problems and take corrective actions. Premature liquidations can occur when CBP erroneously applies the initial duty rate on an AD/CV duty entry and assesses duties, taxes, fees and other charges before receiving the final duty rate from the Department of Commerce.

CBP does not collect or analyze data on the effects of deemed and premature liquidations on revenue. According to CBP, capturing and analyzing data on premature and deemed liquidations is labor intensive. Instead, CBP said that it is focusing on improving compliance with the liquidation process. For example, CBP has (1) updated its AD/CV duty handbook to provide detailed instructions for managing the liquidation process according to standards and time frames; (2) centralized the processing of entries through its 10 Centers of Excellence and Expertise, rather than through its ports of entry; and (3) developed information systems to help manage identifying and processing appropriate AD/CV entries.

To fully implement this recommendation, CBP would need to track and analyze data on premature liquidations. It would also need to track and analyze data on the revenue effects of both deemed and premature liquidations. However, CBP has said it does not plan to take these actions because capturing and analyzing this data is too labor intensive. Tracking and analyzing data on premature liquidations would enable CBP to determine its progress on reducing the number of these liquidations. In addition, tracking and analyzing the revenue effects of both deemed and premature liquidations could provide CBP with a means of determining the extent to which it is successfully reducing the effects of these liquidations. Without taking these measures, CBP may not be able to determine the extent to which it is fully addressing the problems posed by deemed and premature AD/CV duty liquidations.

Implementing Entity:

U.S. Customs and Border Protection

Action:

To improve risk management in the collection of antidumping and countervailing (AD/CV) duties and to identify new or changing risks, Customs and Border Protection (CBP) should regularly conduct a comprehensive risk analysis that assesses both the likelihood and the significance of risk factors related to AD/CV duty collection. For example, CBP could construct statistical models that explore the associations between potential risk factors and both the probability of nonpayment and the size of nonpayment when it occurs.

Progress:

As of February 2020, CBP had developed and successfully tested two new statistical models to identify key nonpayment risk factors and predict future nonpayment risk levels, as GAO recommended in July 2016. The risk factors included, but were not limited to, the type of good, country of origin of the good, and whether the importer is from a foreign country. By using historical data from fiscal years 2007 through 2015, CBP demonstrated in one test that it could have predicted over 95 percent of the importers with delinquent AD/CV duty bills in fiscal years 2016 and 2017. CBP anticipates using a model in conjunction with risk-based bonds. CBP requires most importers to post a security, usually in the form of a customs bond, to protect the U.S. government against revenue loss in the event the importer fails to pay its financial obligations. To fully address this recommendation, CBP will need to regularly conduct predictive risk analyses based on these statistical models. By assessing both the likelihood and the significance of risk factors related to AD/CV duty collections, CBP would be better able to identify individual importers at potential risk for nonpayment and take appropriate action to mitigate the risk.

Implementing Entity:

U.S. Customs and Border Protection

Action:

To improve risk management in the collection of antidumping and countervailing (AD/CV) duties, Customs and Border Protection (CBP) should, consistent with U.S. law and international obligations, take steps to use its data and risk assessment strategically to mitigate AD/CV duty nonpayment, such as by using predictive risk analysis to identify entries that pose heightened risk and taking appropriate action to mitigate the risk.

Progress:

As of February 2020, CBP had developed a risk-based framework for setting continuous-entry and single-transaction bond amounts based on new formulas that incorporate nonpayment risk factors identified in its new statistical models, as GAO recommended in July 2016. CBP requires most importers to post a security, usually in the form of a customs bond, to protect the U.S. government against revenue loss in the event the importer fails to pay its financial obligations. Using the new proposed bond formulas, CBP analyzed fiscal year 2007 through 2017 data (for continuous entry bonds) and fiscal year 2007 through 2018 data (for single transaction bonds) and concluded that the estimated collection rate would have been significantly higher than the collection rate under its existing bond formulas.

However, private sector members of the Commercial Customs Operations Advisory Committee (COAC), which advises the Departments of Homeland Security and Treasury on the commercial operations of CBP, have expressed concern that the proposed supplemental continuous-entry bond formula may result in over-insurance for some importers, which could increase their costs. COAC and CBP also noted that the use of supplemental continuous-entry bonds may require regulatory changes and modifications to CBP’s database. In December 2019, the COAC reported that CBP had agreed to postpone implementing risk-based bonding due to the technology and policy concerns. In September 2019, CBP officials stated that they planned to begin the implementation of risk-based bonding starting with single transaction bonds. To fully address this recommendation, CBP will need to implement a risk-based framework for setting customs bond amounts based on the potential risk to AD/CV duty collections. Using risk-based bonding would enable CBP to better mitigate the risk of nonpayment.

Implementing Entity:

U.S. Customs and Border Protection
  • portrait of
    • Kimberly Gianopoulos
    • Director, International Affairs and Trade
    • gianopoulosk@gao.gov
    • (202) 512-8612