On Tuesday, the Chairman of the House Ways & Means Subcommittee on Trade, Pat Tiberi (R-OH), introduced H.R. 1907, the “Trade Facilitation and Trade Enforcement Act.” The proposed legislation includes several measures that would substantially strengthen the federal government’s ability to prevent and deter fraudulent trade, while increasing consumer confidence in the market.
The Trade Facilitation and Trade Enforcement Act is of particular importance to the U.S. shrimp industry. In response to the Southern Shrimp Alliance’s request for relief from unfairly-traded imports in 2003, U.S. importers and foreign exporters have implemented numerous and varied schemes to evade payment of antidumping duties on shrimp imports, especially those originating from China. More recently, in response to increased efforts by the U.S. Food and Drug Administration (FDA) to stop shrimp contaminated with banned antibiotics from entering this market, large volumes of shrimp have been shipped to the United States with false declarations regarding the producer of the shrimp or its country of origin.
“The Southern Shrimp Alliance is thrilled with the Customs reauthorization legislation that has been introduced in the House,” noted John Williams, Executive Director of the Southern Shrimp Alliance. “The proposed legislation is a testament to the tireless work of Rep. Charles Boustany (R-LA) and his staff towards ensuring fair trade in shrimp. The thousands of men and women who earn their living in the shrimp industry in Louisiana, the rest of the Gulf of Mexico, and the South Atlantic owe Mr. Boustany a huge debt of gratitude for his unwavering commitment to eliminating trade fraud.”
Over the last several years, the U.S. Department of Commerce (Commerce), U.S. Customs and Border Protection (CBP), U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), NOAA Law Enforcement, the FDA, and the U.S. Department of Justice have worked with the Southern Shrimp Alliance to directly address trade fraud. The extraordinary efforts of these federal agencies have led to significant, sustained improvements in the marketplace for shrimp in the United States for all law-abiding participants, including U.S. importers and foreign suppliers.
Nevertheless, unscrupulous actors continue to target the U.S. market with new and more sophisticated schemes to circumvent U.S. law. The Trade Facilitation and Trade Enforcement Act introduced by Chairman Tiberi augments the ability of CBP and Commerce to respond to trade fraud. The proposed legislation would also improve coordination between federal agencies responsible for the regulation of imports.
The House Ways & Means Committee is expected to consider the Trade Facilitation and Trade Enforcement Act today. The Southern Shrimp Alliance strongly supports enactment of this legislation.
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BACKGROUND
HOW THE “TRADE FACILITATION AND TRADE ENFORCEMENT ACT” IMPROVES ENFORCEMENT:
Title IV of the “Trade Facilitation and Trade Enforcement Act” is comprised of the “Preventing Recurring Trade Evasion and Circumvention Act” (“PROTECT”). Championed by Rep. Charles Boustany (R-LA), PROTECT improves and expands upon the capacity of U.S. Customs and Border Protection (“CBP”) and the U.S. Department of Commerce (“Commerce”) to address fraudulent trade.
With regard to CBP, PROTECT creates a “Trade Remedy Law Enforcement Division” within the agency’s Office of International Trade that is dedicated to preventing and investigating evasion of antidumping and countervailing duty orders. The Division would also be principally responsible for coordinating and directing CBP activity in response to circumvention of trade remedies and, further, organizing cooperation between and amongst federal agencies to effectively respond to trade fraud. In addition to tasking the Division with building cooperative efforts, PROTECT facilitates increased information sharing amongst federal agencies by clarifying the circumstances in which information relevant to evasion can be shared between CBP, Commerce, and the U.S. International Trade Commission (“ITC”).
PROTECT requires the Division to be the primary point of contact within CBP for evasion allegations, requiring feedback regarding the status of any investigation and the ultimate resolution of the matter to those that filed allegations. PROTECT clarifies that the Division may issue questionnaires to seek information in furtherance of an investigation and, if a party refuses to cooperate, may draw adverse inferences from the refusal to cooperate. PROTECT additionally directs CBP to enter into agreements with foreign countries in order to facilitate overseas investigations of evasion.
With regard to Commerce, PROTECT gives the agency authority to investigate evasion of antidumping and countervailing duty orders through an administrative process similar to those already conducted by the agency. In response to a petition alleging evasion, Commerce may initiate a formal administrative proceeding to investigate the allegation. In conducting the investigation, Commerce is authorized to release information obtained from CBP to authorized parties under protective order and parties are permitted to place proprietary information obtained from related Commerce proceedings on the administrative record of the investigation. PROTECT calls for formalized cooperation between CBP and Commerce in these investigations, with Commerce required to transmit the administrative record of the investigation to CBP upon completion of the proceeding.
In addition to these provisions, PROTECT establishes as a negotiating objective for future trade agreements the creation of arrangements with foreign countries to increase cooperation in combating evasion and to allow CBP to conduct overseas investigations of evasion. PROTECT requires CBP to submit an annual report to Congress with a detailed description of the agency’s evasion policies and activities and further directs CBP to assign sufficient trained personnel responsible for preventing and investigating evasion.
PROTECT tackles the long history of abuse of the “new shipper” provisions of antidumping and countervailing duty law by eliminating the ability of importers to post bonds during the pendency of “new shipper” proceedings and allowing these proceedings to go forward only if based on bona fide sales. PROTECT also directs the U.S. Government Accountability Office (“GAO”) to submit a report to Congress regarding the effectiveness of the efforts by CBP and Commerce to address evasion.
Outside of PROTECT, the Trade Facilitation and Trade Enforcement Act contains numerous additional provisions that directly enhance the federal government’s capacity to address fraudulent trade. For example, Section 111 codifies the Commercial Targeting Division of CBP with specific targeting and analysis groups dedicated to individual Priority Trade Issues including antidumping and countervailing duties. While continuing to preclude the use of advance cargo information by the Commercial Targeting Division for commercial enforcement purposes, the proposed legislation would permit such information to be used for commercial risk assessment targeting.
The Act would also codify an importer-of-record registration program within CBP, provide the agency with the authority to modify security requirements for new importers, require customs brokers to collect information on the identity of any importer-of-record they are working with, and require CBP to collect additional information and take necessary measures to protect the revenue where non-residents seek to act as importers-of-record. Because fraudulent trade is often formally conducted through paper entities or entities that have no ties to the United States, these proposed measures would make it significantly more difficult to engage in fraud without consequence.
In order to improve trade fraud prevention and detection techniques, Section 104 of the proposed Act requires CBP and ICE to co-develop and provide educational seminars for CBP port personnel and ICE agents regarding the collection of antidumping and countervailing duties, textile transshipment, enforcement of child labor laws, and intellectual property protection. Section 503 requires the ITC to create a web-based import monitoring tool to provide data on the volume and value of imports and requires Commerce to provide on the agency’s website periodic reports on quarterly changes in the volume and value of imports. Section 112 requires the Inspector General of the Department of the Treasury to periodically review CBP revenue protection and enforcement measures, with a particular focus on the collection of antidumping and countervailing duties, along with the adequacy of policies regarding in-bond movements of cargo and the assessment and collection of penalties. Section 102 calls for the GAO to conduct a study to measure the effectiveness of CBP’s trade enforcement activities.
Finally, Section 609 of the proposed Act eliminates the “consumptive demand” exception to the ban on importation of goods made by convict, forced or indentured labor. The “consumptive demand” exception has meant that goods produced through egregious human rights violations may still be imported into the United States if a domestic industry producing the good cannot produce enough to meet all U.S. demand. For products like shrimp, this means that the ban on goods produced through convict, forced or indentured labor does not apply, even where there is clear evidence that the seafood has been produced through use of slave labor. The new law would eliminate this unconscionable loophole.
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ACTION ALERT
The Southern Shrimp Alliance encourages its members and everyone associated with the domestic shrimp industry to reach out to their Senators and U.S. congressmen and women to support H.R. 1907, the “Trade Facilitation and Trade Enforcement Act.”
The enforcement provisions of the proposed legislation would put in place vital enhancements to the federal government’s capacity to prevent and eliminate fraudulent trade. Eliminating fraudulent trade in shrimp is essential to providing the shrimp industry with a level playing field on which to compete against imports.
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RESOURCES
Read the House Ways & Means Committee’s section-by-section summary of the “Trade Facilitation and Trade Enforcement Act”:
https://shrimpalliance.com/wp-content/uploads/2015/04/h.r._1907_section_by_section__042315tr.pdf
Read the “Trade Facilitation and Trade Enforcement Act” as introduced on April 21, 2015:
https://shrimpalliance.com/wp-content/uploads/2015/04/HR-1907.pdf