The law creating CDSOA was repealed by the Deficit Reduction Act of 2005, effective with respect to imports entered on or after October 1, 2007. Nevertheless, since the effective repeal of the program, CBP has disbursed over $1 billion to domestic industries as entries of imports made prior to October 1, 2007 have been liquidated and antidumping and countervailing duties collected.
CDSOA distributions for fiscal year 2013 were the lowest ever made under the program – roughly half of the $119 million distributed in fiscal year 2012. The program no longer has significant meaning for many of the domestic industries that have benefitted from it in the past.
Nevertheless, it would be wrong to conclude that the CDSOA program is simply winding down. In fact, a review of the distributions made by CBP this year provides interesting insight into the operation and mechanics of U.S. trade remedy law.
CBP’s annual report indicates that the vast majority ($60 million) of the duties collected in fiscal year 2013 related to just eight antidumping duty orders: honey from the People’s Republic of China ($13.8 million); hand trucks from the People’s Republic of China ($10.4 million); pure and alloy magnesium from Russia ($7.2 million); frozen warmwater shrimp from the People’s Republic of China ($6.8 million); crawfish tail meat from the People’s Republic of China ($6.7 million); preserved mushrooms from the People’s Republic of China ($5.5 million); orange juice from Brazil ($5.4 million); and fresh garlic from the People’s Republic of China ($4.2 million).
For each of these eight antidumping duty orders, the CDSOA distributions made in this year or the past few years have been substantially higher than those made in earlier years. For example, between 2006 and 2012, only $3.3 million had been distributed on collected antidumping duties from Chinese frozen warmwater shrimp. The CDSOA amount disbursed this year was over twice the collective amount distributed in the prior seven years. Even more starkly, CBP reports distributing no antidumping duties collected on magnesium from Russia between 2006 and 2012 before distributing $7.2 million in 2013.
A comparison of CDSOA distributions with historical clearing account balances demonstrates that for at least three of the antidumping duty orders, the substantial increase in funds disbursed related to the final disposition of antidumping duties deposited with CBP at the time the imports were entered for consumption.
- With respect to shrimp, CBP reported having $8.4 million deposited in the relevant clearing account at the end of fiscal year 2012. After $6.8 million was disbursed in 2013, only $1.2 million remained in the clearing account at the end of fiscal year 2013.
- Similarly, for magnesium from Russia, CBP reported that $6.4 million was deposited in the relevant clearing account at the end of fiscal year 2012. After the sizable distribution amount made this year, no funds were reported as remaining in that clearing account at the end of fiscal year 2013.
- CBP reported that $19.2 million was deposited in the relevant clearing account for orange juice at the end of fiscal year 2012. But after the $5.4 million disbursement this year (compared to the $5.9 million that had been disbursed on that order in the six years spanning 2007 through 2012), no funds were reported as remaining in that clearing account at the end of fiscal year 2013.
- With respect to hand trucks, the $10.4 million disbursed this year exceeded the cumulative total of seven years of disbursements between 2006 and 2012 ($9.6 million). At the end of fiscal year 2012, CBP reported that only $689,468 remained deposited in the clearing account. And after the substantial distribution this year, that amount fell slightly to $520,350.
- For garlic, over $35.5 million in collected duties have been distributed in the last three years, compared to a grand total of $5.9 million in the ten year period from 2001 and 2010. During this time period, the clearing account balances have barely moved: at the end of fiscal year 2010 there was $11.1 million in the account; at the end of fiscal year 2011 it was $9.7 million; at the end of fiscal year 2012 it was up to $10.2 million and remained exactly the same at the end of fiscal year 2013.
- For honey, the $13.8 million disbursed is part of $36.3 million that has gone out to that industry in the past three years. In comparison, only $17.3 million in duties collected on Chinese honey was distributed in the nine year period between 2002 and 2010. But like garlic, during this time period clearing account balances have not changed substantially: at the end of fiscal year 2010 there was $10.8 million in the account; at the end of fiscal year 2011 it was up to $11.2 million; at the end of fiscal year 2012 it was $10.1 million; and at the end of fiscal year 2013 it was $9.5 million.
- For crawfish tail meat, the $6.7 million distributed this year is part of the $21.2 million that has gone out to the domestic industry in the last three years compared to $18 million in the prior six years (2005 through 2010). Another $25.4 million in CDSOA funds was disbursed between 2002 and 2004. Yet the amount in the clearing account at the end of fiscal year 2012 ($2.4 million) was exactly the same as the amount in the clearing account at the end of fiscal year 2013.
- For preserved mushrooms, the $5.5 million was the largest amount ever distributed from this order, with distributions having started in fiscal year 2002. Over the last two years, $8.6 million has been distributed compared to $7.6 million over the first eleven years of CDSOA distributions. And yet the relevant clearing account stood at $434,667 at the end of fiscal year 2011, $416,985 at the end of fiscal year 2012, and at $414,391 at the end of fiscal year 2013.
If the CDSOA disbursements for these five orders are not resulting from final assessments resulting from liquidation of past entries after resolution of court challenges to administrative reviews, where are these funds coming from?
CBP’s annual report, on its own, does not provide an explanation. It is possible that some of these amounts are drawn from recoveries of past CDSOA distributions that were improperly made or additional duties paid above and beyond deposit rates. However, most of the funds are likely to have resulted from final collections on bonds issued by sureties for which there was no corresponding cash deposit that would be reflected in clearing accounts.
If this is true, it is apparent that collection of amounts from the bonds is subject to prolonged administrative processes before CBP that are not transparent to domestic industry beneficiaries of the CDSOA program. For casual observers not involved in the relevant trade remedy litigation, estimating the extent of the amounts potentially involved – and the possibility of future CDSOA distributions – presents a very difficult task. Nevertheless, as the history of CDSOA distributions under these five antidumping duty orders show, the amounts involved may be far more significant than past experience with administrative litigation regarding duty deposits would indicate.