AIIS shows its voice in recent AMM article

By Paul Ploumis
April 25, 2017 12:30:26 AM

Falls Church, VA (AIIS) – President Trump’s executive order calling for bonding requirements on importers at high risk of evading duties is likely to increase costs on new entrants into the business and on importation of goods from companies that have recently restructured, according to the American Institute for International Steel (AIIS).

Established importers may face “pitfalls” from the president’s order, and the cost of bonding would be “probably high,” Steven Baker, chair of AIIS’s customs committee, said in a press release April 17. Small companies may face similar requirements to large companies, Baker said.

The existing importers may encounter the higher costs if they restructure or establish new subsidiaries, said Baker, a customs and international trade attorney based in Novato, Calif. Imports of low-duty goods may find themselves posting bond or making cash deposits based on the highest applicable duty rates.

“This order will most likely have its most significant impact on importers of goods subject to anti-dumping and countervailing duties that have no prior experience importing such commodities, or have defaulted on or made late payments of such duties assessed against them,” Baker wrote. “Although this might seem to exclude established importers and those with compliant payment records, there are a number of possible pitfalls.”

Trump on March 31 signed the executive order with the intention of improving the compliance rate after an estimated $2.3 billion in imposed duties were uncollected as of 2015. U.S. Steel Corp., Synalloy Corp., American Iron and Steel Institute and other domestic producer interests praised the move, arguing that it would help to stymie fraudulent practices in duty enforcement and slow down the arrival of unfairly traded imports.

The president gave the Department of Homeland Security 90 days to present a plan on how Customs and Border Protection (CBP) should conduct risk assessments on the importers.

Baker wrote that many unpaid duties stem from the “retrospective nature” of the United States trade remedy laws. Duties may be estimated at first and it make take years for the margins to be revised higher. Duties ultimately go unpaid due to many factors.

“The primary ones have been financial inability (bankruptcy or just closing a business) and foreign-based firms that withdraw from doing business in the U.S. leaving few or no U.S. assets against which CBP can collect,” Baker wrote. “Some of these are due to bad business decisions, some to naivete, and some are clearly deliberate manipulation of the system.”

He noted that any additional payments or other measures required after the risk assessment must be “reasonable” and based on demonstrated risk of default, according to World Trade Organization rules.

“Other concerns include the cost of any bonds that would be required—probably high and including collateral of some kind satisfactory to the surety company; whether small companies will face increased requirements not applied to larger ones, and what other ‘appropriate measures’ may be imposed,” Baker wrote.

If Customs ultimately forces all importers to post bond based on the highest duty rates, that may have the unintended consequence of punishing suppliers who were deemed to be dumping or subsidized to a less severe degree than importers of higher-margin goods.

“Lower-rate suppliers … will face higher costs of doing business, even if the rates used on import are finally confirmed in any review investigation and the additional security is eventually released,” Baker wrote.

He urged importers to “be aware of the possibly unexpected ways that such requirements may affect their business.”

Courtesy : AIIS