Agencies Believe Strengthening International Agreements to Improve Collection of Antidumping and Countervailing Duties Would Be Difficult and Ineffective

The United States and many of its trading partners have enacted laws to remedy the unfair trade practices of other countries and foreign companies that cause injury to domestic industries. U.S. law authorizes the imposition of additional duties on importers to remedy these unfair trade practices. Specifically, antidumping (AD) duties are imposed on imports that are "dumped" in the United States (i.e., sales in the U.S. market at less than the market price in the item's home market) and countervailing (CV) duties are imposed on imports that are subsidized by foreign governments. Importers are responsible for paying all duties, taxes, and fees on products when they are brought into the United States (including AD/CV duties). Importers can be located either domestically or overseas. Since fiscal year 2001, U.S. Customs and Border Protection (CBP), which is responsible for collecting import duties, has been unable to collect hundreds of millions of dollars in AD/CV duties. In March 2008, we reported that over $600 million in AD/CV duties were uncollected. Our analysis revealed four key factors contributing to uncollected AD/CV duties: (1) the retrospective component of the U.S. AD/CV duty system, (2) "new shipper" reviews, (3) insufficiency of CBP's standard bond requirements for importers, and (4) minimal information required from importers. We identified two sets of options for Congress and agencies to consider in attempting to improve the collection of AD/CV duties. One option was to eliminate the retrospective component of the U.S. AD/CV duty system and make it prospective; the other was to adjust specific aspects of the current U.S. AD/CV duty system while retaining its retrospective nature. Under the current U.S. AD/CV duty system, importers pay cash deposits equal to the estimated AD/CV duties at the time of importation, but the final duty amount is determined much later and may exceed the amount of cash deposited. On average, this process takes more than 3 years, during which importers could cease operations or become unable to pay additional duties. To address this situation and help improve the collection of AD/CV duties, we suggested several improvements to Congress and executive branch agencies. As a result, this report describes agencies' views on (1) obstacles (if any) to strengthening international agreements to help the United States collect AD/CV duties from importers without attachable assets in the United States and (2) whether strengthened international agreements would improve duty collection.