This August, the Department of Commerce published in the Federal Register notice of proposed Regulations To Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws. The changes proposed by Commerce to the AD/CVD regulations represent the largest such amendment to the agency’s regulations in twenty years.
These proposed modifications of Commerce’s existing AD/CVD regulations recognize the growing problem of uncollected AD/CVD duties and the need for stronger enforcement of the trade remedy laws by Commerce. Despite the severity of the undercollection problem and the obvious need for regulatory change, comments filed by U.S. importers and their counsel in September and October on the proposed regulations downplay the problems which Commerce seeks to address and vigorously oppose the agency’s efforts to ensure a level playing for U.S. industries.
In comments filed with Commerce, importers aligned with foreign producers take particular aim at the agency’s attempt to remedy well known shortcomings of Commerce’s existing regulations regarding scope inquiries and new shipper reviews. The comments offered by importers with respect to these proposed changes ignore much of the background provided by Commerce in support of an overhaul of regulations that are broken and that do not adequately protect the domestic industry from unfairly traded imports.
The Government Accountability Office and the Congressional Research Service have both identified new shipper reviews as a “key factor” in the growth of uncollected AD/CVD duties for well-over a decade. This is in part due to the fact that new shipper rates have often been based on as few as one shipment that is not comparable to the sales made by the new shipper after completion of the review. Commerce’s proposed changes to the new shipper regulations are a necessary step to reducing abuse of the new shipper review process. While comments filed with the agency label the proposed changes as a “burden,” these comments ignore the vast impact that new shipper reviews have had in weakening the Commerce’s enforcement of AD/CVD orders and contributing to the more than $4.5 billion in uncollected AD/CVD bills. Commerce’s proposed changes to the new shipper review process codify the factors to be considered by the agency when determining whether a sale is bona fide. Commerce further proposes that new shippers provide certifications from the unaffiliated U.S. customer to discourage the filing of meritless new shipper claims.
Other importers commented that Commerce’s current regulations governing scope rulings are “not broken” and do not need to “be fixed.” However, these comments ignore the fact that Commerce’s current regulations encourage importers to delay filing a scope ruling request until it has no further options. Indeed, importers may delay filing a scope ruling request until U.S. Customs and Border Protection flags their entries as potentially within scope and begins requiring cash deposits. By updating its regulations to apply scope ruling applications to all unliquidated entries, Commerce corrects negative incentives that delay the filing of scope ruling applications by importers. Commerce’s proposed regulations explain “that a scope ruling that a product is within the scope of the order is a determination that the product has always been within the scope of the order.” Consistent with this, the proposed regulations also make affirmative scope ruling determinations applicable to any unliquidated entries at the time of the determination. This change helps ensure that AD/CVD duties are enforced on all products subject to the orders and encourages importers to seek a scope ruling at the earliest possible time.
In summary, Commerce’s proposed changes to the regulations governing new shipper reviews and scope inquiries seek to tighten several loopholes that have weakened the efficacy of the U.S. trade remedy laws for decades.
Commerce’s final rulemaking should reject the attempts of importers to weaken the enforcement of the AD/CVD laws. The proposed regulations make important progress towards ensuring that the interests of American workers are protected in accordance with the laws passed by Congress. Notably, the proposed regulations improve Commerce’s ability to address abuse of the new shipper review process and encourage importers to seek scope rulings as soon as possible. These are positive developments for U.S. industries that have been negatively impacted by unfairly traded imports.