WASHINGTON, D.C. — Senators Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine) introduced legislation last week to combat the evasion of federal import duties by certain importers and foreign suppliers. If passed, the act will help prevent foreign suppliers of wire hangers and additional products from importing their wares without paying duties mandated by law.
The Enforcing Orders & Reducing Circumvention & Evasion (ENFORCE) Act of 2010 will give the U.S. Department of Commerce (DOC) and U.S. Customs & Border Protection tools to combat illegal schemes to evade special duties imposed after formal determinations of unfair trade practices. Evasion of import duties contributes to the loss of domestic jobs and tax revenues, according to the Coalition for Enforcement of Antidumping & Countervailing Duty Orders, a group of U.S. manufacturers whose products are now subject to countervailing duties.
“We applaud Senators Wyden and Snowe for introducing this vital legislation,” says Joe Downes, spokesman for the coalition and senior vice president of Leggett & Platt Inc. “Illegal duty evasion is a critical problem for all domestic producers and for Commerce and Customs as well. This act will give our key enforcement agencies new tools to stop illegal evasion of our trade laws and help maintain a fair and level playing field for U.S. manufacturers and their workers.”
Existing laws allow U.S. producers to ask DOC and the International Trade Commission (ITC) to investigate imports that are unfairly priced (dumped) or unfairly subsidized and harm U.S. industries' competitiveness. If the government finds imports are dumped and/or subsidized DOC can issue a formal order requiring payment of a special duty to negate the unfair prices or subsidies.
Some importers and foreign manufacturers try to evade these special duties by shipping or repackaging products bound for the U.S. in a third country. Importers also may identify the country of origin falsely or falsify documents to evade duties. For example, the coalition believes a substantial portion of the wire hangers imported into the U.S. are Chinese hangers that have been transshipped through third countries, such as Vietnam, Taiwan and Korea, in violation of an antidumping order against China.
The ENFORCE Act will facilitate closer cooperation and information-sharing between Customs and the DOC to combat these illegal practices, the coalition says, as well as introduce a rapid-response timeline for investigation of alleged evasion.
Separately, the coalition announced that Arturo Huizar-Velazquez and Jesus de La Torre-Escobar, importers of steel wire garment hangers, have been arrested and charged with 55 counts of smuggling, wire fraud, conspiracy and money laundering in connection with the import of Chinese-made hangers to the U.S. via a third country. If convicted, Huizar-Velazquez and de La Torre-Escobar face maximum prison terms of five to 20 years per count, substantial fines and the payment of any applicable dumping duties.
“It just underscores how the legislation would be helpful,” says Fred Waite, counsel with Washington D.C.-based Vorys Sater, representing coalition member M&B Hangers. “The charges filed in San Diego are just the tip of the iceberg when it comes to hangers.”