U.S. Customs and Border Protection’s Fiscal Year (FY) 2018 Report to Congress, Antidumping and Countervailing Duty Enforcement Actions and Compliance Initiatives: FY 2017, has now been publicly released by the Department of Homeland Security.
The report confirms that the antidumping and countervailing duty laws have become increasingly important for American industries, with antidumping and countervailing duty cash deposits reaching $1.5 billion in FY2017. As shown in the chart below, the amount of antidumping and countervailing duties deposited at the border with imports has grown in each of the last seven years, with cash deposits in FY2017 nearly five times what they were in FY2010.
However, at the same time as these trade remedy laws have increased in significance, the obstacles to CBP’s collection of assessed antidumping and countervailing duties have grown as well. As shown in the chart below, CBP reports that the amount of uncollected antidumping and countervailing duties stood at $3.1 billion at the end of FY2017, up from $1.0 billion in FY2010.
The uncollected antidumping and countervailing duties reported during each fiscal year reflect cumulative totals. An analysis of when these uncollected duties were initially liquidated demonstrates that the problem has significantly worsened over the last few years. The chart below breaks out reported uncollected duties by fiscal year liquidated and shows that between FYs 2014 and 2016, uncollected duties totaled over $300 million annually.
While the FY2017 report appears to show that uncollected duties declined to $221 million in liquidated duties in FY2017, this likely reflects a lag time in reporting. In its FY2016 report to Congress, CBP reported uncollected duties of $163 million in liquidated duties in FY2016. That figure was substantially revised in the recently released FY2017 report, more than doubling to $337 million.
The severity of the undercollection problem is clearly apparent when the amount of uncollected duties in each fiscal year is compared to the total amount of liquidated antidumping and countervailing duties in each of those same fiscal years. Using figures included in CBP’s reports to Congress going back to FY2010, the table below summarizes the amount of antidumping and countervailing duties that the agency reported liquidating in each fiscal year and subtracts out the uncollected duties reported for each of those fiscal years in the FY2017 report. As the table shows, CBP has only managed to collect approximately half of assessed antidumping and countervailing duties over the last eight fiscal years for which data are available. In two of the eight fiscal years – FY2010 and FY2014 – the amount of uncollected duties were greater than the amount of duties that CBP collected.
In its report, CBP explains that antidumping duty orders on six different products from China account for roughly 81 percent ($2.5 billion) of the uncollected duties. However, the agency also cautioned that the risk of undercollection is broadly applicable to a wide range of antidumping and countervailing duty cases:
“While certain AD/CVD cases account for a disproportionate share of all uncollected AD/CVD debts, any AD/CVD case (such as magnesium) with a large amount of importations, low cash deposit duty rates, and high final duty rate could result in significant uncollected duties due to the lack of security from the low initial cash deposit duty rate.”
In discussing its response to the challenge of uncollected duties, CBP emphasized its continuing exploration of options to enhance bonding requirements “to mitigate the risk of nonpayment that certain importers present . . . .” CBP explains that the agency has utilized its authority to require single transaction bonds as well as increase continuous bond requirements on importers of goods subject to antidumping and countervailing duty orders. In FY2017, CBP reports that it “identified 237 continuous bonds used by AD/CVD importers, which needed to be increased,” and that, in result, the agency demanded additional security of $61.5 million in continuous bond amounts.
However, CBP’s discussion of its approach to bonding also appears to indicate that it must coordinate with other agencies to augment its requirements:
“CBP met several times throughout FY 2017 with the Commerce and Treasury Departments, and USTR to discuss options to adjust bonding requirements to mitigate the risk of nonpayment. CBP will continue its dialogue with other agencies to jointly develop new ideas on bonding and other measures to increase AD/CVD collections.”
To the extent that the foregoing implies that CBP’s options to address the risk of uncollected duties through bonding have been limited by interagency requirements, this would seem to indicate that Congress’s oversight authority regarding the operation of antidumping and countervailing duty laws should again focus on the efforts and involvement of the Treasury Department in support of CBP’s collection activities.