Southern Shrimp Alliance Supports U.S. Customs and Border Protection Efforts to Counter Fraudulent Trade

In comments filed last week with U.S. Customs and Border Protection (CBP), the Southern Shrimp Alliance expressed support for proposed changes to the agency’s “Importer ID Input Record” form (Form 5106).

 

A Form 5106 is required from each “person, business firm, government agency, or other organization” that will file an import entry with the agency and is also required of the “ultimate consignee for whom an entry is being made.”  In practice, the information provided on Form 5106 provides “the basis for establishing bond coverage, release and entry of merchandise, liquidation, and the issuance of bills and refunds.”  In October, CBP proposed to revise the form to gather additional, detailed information about an applicant company and its officers.  The agency asked invited the general public and other federal agencies to comment on the proposed changes.

 

In light of the proliferation of shell-companies acting as importers of record and other entities acting as importers of record with no U.S. presence, the Southern Shrimp Alliance registered strong support for the proposed revisions in detailed formal comments to CBP.

 

The Southern Shrimp Alliance provided an overview of studies and analysis from multiple government agencies demonstrating the threat to trade laws posed by shell-company and non-resident importers.  In particular, these importers have made it difficult to collect assessed antidumping and countervailing duties, contributing to $1.83 billion in unpaid antidumping/countervailing duty bills left open at the end of fiscal year 2013.  For comparison purposes, in all of fiscal year 2013, only $449.8 million in antidumping/countervailing duties was deposited with CBP.  Looking at a four-year period, the U.S. Department of Treasury has found that while antidumping and countervailing duties accounted for only 15 percent of all duties that should be collected by CBP, antidumping and countervailing duties represented 87 percent of all uncollected duties during that period.

 

The Southern Shrimp Alliance also provided case studies from criminal cases of how corrupt businessmen used shell companies as an integral part of their fraudulent trade schemes.  For example, one importer told law enforcement officials that he created a new company with which to import fraudulent honey because of advice that “he should import into the United States using multiple companies to avoid added scrutiny and attention by CBP.”  Another importer caused the formation of three different companies to import Chinese honey transshipped through third countries.  Yet another criminal defendant acted as the U.S. agent for twelve different importers of record “that were controlled by Chinese honey producers and manufacturers” to import Chinese honey while evading payment of antidumping duties.  And yet another civil case documented how U.S. purchasers of aluminum extrusions worked with a logistics company to establish and maintain a shell company importer responsible for merchandise imported in a manner that evaded antidumping duties.

 

Central to each of these schemes was the ability of the participants to conceal links between commonly-operated and/or affiliated companies.  The CBP’s proposed revisions to Form 5106, coupled with the requirement that the party submitting the form certify an understanding that the certifying party may be fined or imprisoned if found to commit deception or fraud on the form, should it make it significantly more difficult for bad actors to conceal links that would otherwise facilitate trade fraud.  In sum, the agency’s efforts to obtain more information about importers simultaneously improves the information available to CBP while further discouraging parties from engaging in fraud.

 

Read the Southern Shrimp Alliance’s Comments to U.S. Customs and Border Protection Regarding Proposed Revisions to Form 5106 here:

https://www.shrimpalliance.com/wp-content/uploads/2014/12/SSA-Comments-on-Form-5106.pdf

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