CBP Expected to Publish New Regulations on ADD/CVD Evasion
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
Pursuant to the newly-enacted Trade Facilitation and Trade Enforcement Act (the “Act”), U.S. Customs and Border Protection (“CBP”) is expected to publish regulations later this month detailing new procedures for CBP investigations into allegations of antidumping and countervailing duty evasion.
The anticipated regulations have the potential to significantly alter the CBP enforcement landscape. The regulations will not only be enforced by a newly-created Trade Remedy Law Enforcement Division but also will allow for private entities to force CBP’s hand in initiating an investigation into alleged evasion.
The Act provides that CBP must open an investigation if it receives an allegation reasonably suggesting that evasion is taking place. Allegations can be made by various interested parties such as manufacturers, producers, exporters or importers of the covered product. Trade unions and business associations are also specifically defined as “interested parties” under the Act. This process will provide domestic parties in antidumping and countervailing duty proceedings with an opportunity to participate directly in enforcing trade remedies rather than simply initiating them.
CBP has 90 days after opening an investigation to decide whether there is a “reasonable suspicion” of evasion and, upon an affirmative determination, has the authority to suspend liquidation of covered merchandise entered after the investigation began and extend the liquidation period of previously-entered unliquidated entries. CBP will also be able to require single entry bonds, additional security or even cash deposits. Notably, the Act specifically allows CBP to consider a party’s failure to cooperate with its investigation as an “adverse inference.”
CBP must then make a final determination within 300 days of initiating the investigation (CBP has the option to delay a final determination by a maximum of 60 days). If CBP determines that a party evaded antidumping or countervailing duties, CBP can retroactively assess the evaded duties on unliquidated entries, require cash deposits, initiate a penalty action or refer the matter for a criminal investigation. Importantly, CBP does not need to establish a lack of “reasonable care” in order to find evasion. CBP needs only to establish that a company has not deposited the correct antidumping or countervailing duty.
The Act provides the opportunity for an administrative appeal with CBP within 30 days of the final determination as well as a subsequent appeal to the Court of International Trade within 30 days of CBP’s administrative review.
Increased Enforcement in Area of Antidumping and Countervailing Duties Expected
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
Earlier this week, the Government Accounting Office issued a report entitled “Antidumping and Countervailing Duties: CBP Action Needed to Reduce Duty Processing Errors and Mitigate Nonpayment Risk."
In the first paragraph, the GAO observes as follows:
“GAO estimates that about $2.3 billion in antidumping (AD) and countervailing (CV) duties owed to the U.S. government were uncollected as of mid-May 2015, based on its analysis of AD/CV duty bills for goods entering the United States in fiscal years 2001–2014. U.S. Customs and Border Protection (CBP) reported that it does not expect to collect most of that debt”. GAO found that most unpaid AD/CV duty bills “were concentrated among a small number of importers, with 20 accounting for about 50 percent of the $2.3 billion uncollected. CBP data show that most of those importers stopped importing before receiving their first AD/CV duty bill. As GAO has previously reported, the U.S. AD/CV duty system involves the retrospective assessment of duties, such that the final amount of AD/CV duties an importer owes can significantly exceed the initial amount paid at the estimated duty rate when the goods entered the country.”
Their summary recommendation is as follows: “GAO recommends that CBP (1) issue guidance to collect and analyze data on a regular basis to find and address the causes of AD/CV duty liquidation errors…; (2) regularly conduct a comprehensive risk analysis that considers likelihood as well as significance of risk factors related to duty nonpayment; and (3) take steps to use its data and risk assessment strategically to mitigate AD/CV duty nonpayment consistent with U.S. law and international trade obligations. CBP concurred with all three recommendations.”
This report, coupled with recent trade regulation giving Customs greater enforcement power likely portends a possible significant uptick in ADD/CVD enforcement. The full report can be accessed at: http://www.gao.gov/products/GAO-16-542.
In light of these developments, this would be an opportune time for companies to review their operations for potential unidentified antidumping duty / countervailing duty liabilities.
FDA Updates Draft Guidance on Premarket Safety Notifications for Dietary Supplement Industry
Food & Drug Administration
The U.S. Food and Drug Administration today issued a revised draft guidance to improve dietary supplement companies’ new dietary ingredient (NDI) premarket safety notifications to the agency. These notifications help the agency identify safety concerns before products reach consumers.
Under the Dietary Supplement Health and Education Act (DSHEA), the manufacturer or distributor must notify the FDA at least 75 days before beginning to market a dietary supplement that contains a new dietary ingredient (one that was not marketed in the United States before Oct. 15, 1994), unless the NDI is used in the food supply without chemical alteration. Dietary supplements are considered adulterated if they contain an NDI not used in the food supply and the required notification has not been submitted to the FDA 75 days before marketing.
The FDA estimates that there are more than 55,600 dietary supplements on the market, and that 5,560 new dietary supplement products come on the market each year. However, the agency has received fewer than 1,000 NDI notifications since DSHEA was passed in 1994. An initial draft guidance, “Dietary Supplements: New Dietary Ingredient Notifications and Related Issues,” was released in 2011. After considering the feedback received on that draft, the FDA revised the draft guidance to clarify several important points that were misunderstood or not fully explained, to describe the public health significance of the recommendations, and to request additional comment before publishing a final guidance.
“This revised draft guidance is an important step forward in the agency’s work to protect public health from potentially dangerous new dietary ingredients,” said Steven Tave, acting director of the FDA’s Office of Dietary Supplement Programs. “Notification of new dietary ingredients is the only pre-market opportunity the agency has to identify unsafe supplements before they are available to consumers. The revised draft guidance is intended to improve the quality of industry’s new dietary ingredient reporting so the FDA can more effectively monitor the safety of dietary supplements.”
Over the past three years, the FDA has taken numerous actions on dietary supplements, including action on several products containing new dietary ingredients that pose safety concerns and should have been the subject of an NDI notification but were not, such as Acacia rigidula.
In December 2015, the agency announced the creation of the Office of Dietary Supplement Programs, elevating the program from its previous status as a division under the former Office of Nutrition, Labeling and Dietary Supplements (now Office of Nutrition and Food Labeling). As part of that action, the agency reaffirmed its commitment to remove from the market products that contain potentially harmful pharmaceutical agents, are otherwise dangerous to consumers, or are falsely labeled as dietary supplements; enforce the dietary supplement good manufacturing practices regulation; and take action against claims that present a risk of harm to consumers (such as egregious claims of benefit in treating serious diseases) or economic fraud.
A manufacturer may choose to implement the recommendations in a draft guidance before the guidance becomes final.
The FDA encourages public comments on the revised draft guidance during the 60-day comment period.
The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.
Cargo Dips at the Port of Long Beach - Port of Long Beach
July volumes mark slow start to holiday peak season
Container volume at the Port of Long Beach was down 7.7 percent in July compared to the same month in 2015, when harbor terminals handled a record amount of cargo.
Dockworkers moved 637,091 twenty-foot-equivalent units (TEUs) last month. Imports totaled 325,608 containers, a 5.9 percent year-over-year decrease. Exports numbered 142,812 TEUs, a slight drop of 0.7 percent. Empties decreased to 168,671, 15.9 percent lower than July 2015, the Port’s strongest July on record.
Due to continued market uncertainty and high inventory levels, the traditional holiday peak season is off to a slow start and several national forecasts have been revised downward to reflect this softness in cargo movement. Coming off a record year in 2015 – the third-highest in the Port’s history – volumes at the Port of Long Beach are down 1.9 percent through July.
With an ongoing $4 billion program to modernize its facilities this decade, the Port of Long Beach is building the Port of the Future by investing in capital and service improvements that will bring long-term, environmentally sustainable growth.
Cotton Board Rules and Regulations: Adjusting Supplemental Assessment on Imports (2016 Amendments) - U.S. Department of Agriculture
Effective Date: This direct rule is effective October 4, 2016, without further action or notice, unless significant adverse comment is received by September 6, 2016.
Summary: The Agricultural Marketing Service (AMS) is amending the Cotton Board Rules and Regulations, decreasing the value assigned to imported cotton for the purposes of calculating supplemental assessments collected for use by the Cotton Research and Promotion Program. This amendment is required each year to ensure that assessments collected on imported cotton and the cotton content of imported products will be the same as those paid on domestically produced cotton.
Direct Final Rule
Brownsville Port of Entry CBP Agriculture Specialists Intercept First in Port Pest in Corn - U.S. Customs & Border Protection
BROWNSVILLE, Texas – Agriculture specialists with U.S. Customs and Border Protection, Office of Field Operations (OFO) at the Veterans International Bridge import cargo lot intercepted a “First in Port” pest in a shipment of fresh corn.
“The interception of this miniscule, yet destructive pest, for the first time at the Port of Brownsville, is an outstanding example of the diligence and dedication of our CBP agriculture specialists in safeguarding the agriculture of the United States,” said Port Director Petra Horne, Brownsville Port of Entry.
The interception occurred on July 27, at the Veterans International Bridge import lot when a shipment of fresh corn was referred to agriculture for inspection. Upon inspection of the corn, CBP agriculture specialists intercepted a pest. The pest was submitted for identification to a U.S. Department of Agriculture (USDA) entomologist who identified it as Oncometopia clarior (Walker) (Cicadellidae) an actionable pest. On July 28, 2016, identifiers with U.S. Department of Agriculture Plant Inspection Station, confirmed the interception of Oncometopia clarior (Walker) (Cicadellidae), as a first time interception at the Port of Brownsville.
Oncometopia clarior (Walker) is a pest not known to occur in the United States. This insect belongs to the Cicadellidae family, commonly known as leafhoppers. Many leafhoppers are serious pests of cultivated plants, and a few act as vectors of plant diseases.
Given the quarantine status of Oncometopia clarior (Walker), the shipment of corn was re-exported to Mexico as a precautionary measure.
CBP Reminds Public that Peyote is a Prohibited Item
U.S. Customs & Border Protection
HIDALGO, Texas—U.S. Customs and Border Protection, Office of Field Operations (OFO) at the Hidalgo International Bridge has recently encountered multiple interceptions of a pain relief cream containing peyote which is a prohibited substance according to federal law.
“It is important that our travelers are aware of what they can bring into the United States from other countries to avoid potential delays,” said Port Director Efrain Solis Jr., Hidalgo/Pharr/Anzalduas Port of Entry.
Some cross border travelers to Mexico seek out a product called peyote gel, which in many cases also contains marijuana, as a remedy for muscle, bone and joint pain. Both peyote and marijuana are Schedule I controlled substances prohibited by federal law.
CBP has been entrusted with enforcing hundreds of laws for more than 40 other government agencies, such as the U.S. Fish and Wildlife Service, the U.S. Department of Agriculture and the Centers for Disease Control and Prevention. CBP is required to examine and hold merchandise on behalf of other government agencies that have the regulatory authority to determine the admissibility of these products. CBP officers enforce all applicable U.S. laws, including against illegal immigration, narcotics smuggling and illegal importation. The products CBP prevent from entering the United States are those that would injure community health, public safety, American workers, children, or domestic plant and animal life, or those that would defeat our national interests. Sometimes the products that cause injury, or have the potential to do so, may seem fairly innocent.
Before leaving for a trip abroad, CBP recommends consulting the Know Before You Go guide to learn which items are prohibited, restricted and which items are permissible. A traveler may also speak to a CBP officer or supervisor at a port of entry about the items they plan to bring back to be sure they're not prohibited or restricted. Prohibited means the item is forbidden by law to enter the United States. Examples of prohibited items are dangerous toys that have lead paint or present a choking hazard, bush meat, or controlled prescription medication like Rohypnol. Restricted means that special licenses or permits are required from a federal agency before the item is allowed to enter the United States.