GAO-12-131R Antidumping and Countervailing Duties 

November 2, 2011 

The Honorable Ron Wyden 

Chairman, Subcommittee on International Trade, Customs and Global 

Competitiveness 

Committee on Finance 

United States Senate 

The Honorable Olympia Snowe 

United States Senate 

Subject: Options for Collecting Revenues on Liquidated Entries of Merchandise 

Evading Antidumping and Countervailing Duties

The United States imposes antidumping and countervailing (AD/CV) duties to 

remedy unfair foreign trade practices that cause injury to domestic industries. 

Evasion of AD/CV duties weakens protections for U.S. industry and reduces U.S. 

revenues.1

 U.S. Customs and Border Protection (CBP) sometimes detects such 

evasion after the merchandise has been “liquidated,” i.e., the goods have entered 

commerce and the agency has completed processing the entry.2 You requested 

that we examine CBP’s options for attempting to collect revenues in such cases.3

In this report, we examine (1) options available to CBP to assess revenues on 

entries of goods subject to AD/CV duties that entered the United States through 

evasion and have already been liquidated and (2) factors that affect the amount of 

revenues collected by CBP through the use of these options.4

To address these objectives, we interviewed knowledgeable officials from CBP 

and the Department of Commerce (Commerce). In addition, we collected and 

reviewed relevant agency data and documents, laws, and regulations. We 

conducted this performance audit from February 2011 to November 2011 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

 

1

In this report, we use the term “evasion” to refer to any activity whereby companies, through means such as 

misclassification, undervaluation, or falsification of country of origin, improperly declare goods that are subject 

to AD/CV duties to avoid payment of such duties. 

2

CBP regulations define liquidation as the final computation or ascertainment of duties on entries for 

consumption or drawback entries. 19 C.F.R. § 159.1. 

3

In this report, we use the term “revenues” to refer to funds due to the U.S. government, including but not 

limited to duties and penalties. 

4

GAO is currently conducting a separate, in-depth review of U.S. efforts to detect and deter evasion of AD/CV 

duties. 

United States Government Accountability Office

Washington, DC 20548 
Page 2 GAO-12-131R Antidumping and Countervailing Duties 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit 

objectives and that the data we collected were sufficiently reliable for our 

purposes. 

Results in Brief 

CBP has three options for assessing revenues on liquidated entries brought in 

through evasion of AD/CV duties: reliquidation, duty demands, and penalties. Two 

factors that can influence which of these options CBP will use in a given instance 

are (1) how much time has elapsed since the entry was liquidated and (2) whether 

Commerce has issued liquidation instructions conveying the applicable final duty 

rate. 

Two key factors affect the amount of revenues CBP collects on liquidated entries 

brought in through evasion of AD/CV duties. First, the amount of duties or 

penalties CBP ultimately collects may be lower than the amount initially assessed, 

due to successful protest or petition by the importer. Second, CBP faces difficulty 

in collecting revenues from importers that may be unscrupulous, difficult to locate, 

or outside of U.S. jurisdiction. 

Background 

The process for importing products into the United States involves several different 

private parties, as well as the U.S. government. Exporters are companies that ship 

goods manufactured or produced in foreign countries to the United States. 

Importers may be companies that purchase the products from exporters or simply 

may be responsible for facilitating the importation of the goods.5 The importer of 

record is responsible for paying all estimated duties, taxes, and fees on those 

products when they are brought into the United States.6 Importers of record are 

also required to secure the payment of their financial obligations (generally by 

obtaining a bond).7

The United States and many of its trading partners have established laws to 

remedy the unfair trade practices of other countries and foreign companies that 

cause injury to domestic industries. U.S. laws authorize the imposition of AD 

duties on products that were “dumped” (i.e., sales at less than normal value) and 

CV duties on products exported to the United States that were subsidized by 

 

5

See 19 C.F.R. § 101.1 for the CBP regulatory definition of “importer.” 

6

19 U.S.C. § 1505. 

 

7

See 19 C.F.R. § 142.4 for CBP bonding requirements. 
Page 3 GAO-12-131R Antidumping and Countervailing Duties 

foreign governments.8 The U.S. AD/CV duty system is retrospective, in that 

importers initially pay estimated AD/CV duties at the time of importation, but the 

final amount of duties, reflecting the actual amount of dumping or subsidization, is 

not determined until later.9 

Two key U.S. agencies are involved in assessing and collecting AD/CV duties 

owed. Commerce is responsible for calculating the appropriate duty rate for the 

merchandise subject to AD/CV duties. CBP is responsible for, among other things, 

collecting duties, taxes, and fees on those products and setting the formula for 

establishing importers’ bond amounts.10 Commerce issues an AD/CV duty order 

after conducting an initial AD/CV duty investigation on a product. The AD/CV duty 

order instructs CBP to collect cash deposits at the time of entry on all merchandise 

subject to the order.11 The merchandise also can be subject to an administrative 

review by Commerce 12 months after the issuance of the AD/CV duty order.12 At 

the conclusion of the administrative review (typically about 18 months after the 

review’s initiation), the final duty rate, also known as the liquidation rate, is 

established for all relevant merchandise. Once Commerce establishes a final duty 

rate, it communicates the rate to CBP through liquidation instructions, and CBP 

instructs staff at each port of entry to assess final AD/CV duties on all relevant 

products. The liquidation process is complete and the entries are liquidated when 

CBP issues a supplemental bill or a refund, depending on whether the final rate is 

higher or lower than the cash deposit rate.13 As we reported in March 2008, the 

 

8

The legal authority for the imposition of these duties was created by the Tariff Act of 1930, June 17, 1930, 

c.497, Title VII. AD duties are authorized in 19 U.S.C. § 1673 and CV duties are authorized in 19 U.S.C. § 

1671. 

9

The United States is the only major user of AD/CV trade remedies that uses a retrospective system to assess 

AD/CV duties. Other countries use a prospective system and collect final AD/CV duties at the time of entry. 

1019 U.S.C. § 1500. Legal authority over customs revenue functions is vested in the Secretary of the Treasury 

and, under Treasury Order 165, was delegated to the U.S. Customs Service. In March 2003, the U.S. 

Customs Service was transferred to the Department of Homeland Security, and authority over customs 

revenue functions was delegated to the Department of Homeland Security. 68 Fed. Reg. 10777-01 (Mar. 6, 

2003). 

11Among other things, the order specifies the products subject to the order and indicates the rates applicable 

to the individually investigated exporters and producers and a catchall rate for other exporters and producers 

that did not receive a specific rate. 19 C.F.R. § 351.211. 

12An administrative review may be requested by an interested party, exporters of products subject to the 

AD/CV duty order, importers, the U.S. domestic industry, or the government of producing or exporting 

countries. 19 C.F.R. § 351.213(b); 19 U.S.C. § 1677(9). If no administrative review is requested, the estimated 

AD/CV duties importers paid when merchandise entered the country become the final duties, and CBP 

liquidates the entry. 19 U.S.C. § 1675; 19 C.F.R. § 351.212(c). 

13If the cash deposit rate is equal to the liquidation rate, CBP does not issue a refund or a supplemental bill 

and the entry is liquidated “as entered.” In addition, importers can protest the supplemental bill, which can add 

up to 24 months to the liquidation process. If an importer does not pay the bill, CBP requests payment from 

the surety (insurance) company that underwrote the bond the importer provided when the products entered 

the United States. 
Page 4 GAO-12-131R Antidumping and Countervailing Duties 

process of liquidating entries subject to AD/CV duties takes 3 years on average 

from the time the merchandise enters the country.14 

According to CBP reporting, companies can use a variety of techniques to evade 

AD/CV duties. These include illegal transshipment to disguise a product’s true 

country of origin, undervaluation to falsify the price of an import to reduce the 

amount of AD/CV duties owed, and misclassification of merchandise such that it 

falls outside the scope of an AD/CV duty order, among others. As CBP has 

reported, evasion of AD/CV duties undermines U.S. AD/CV duty laws—the intent 

of which is to level the economic playing field for U.S. industry—and deprives the 

U.S. government of revenues it is due. Because these methods of evading AD/CV 

duties are clandestine activities, the amount of revenue lost as a result is 

unknown. 

CBP Has Three Options to Assess Revenues on Liquidated Entries Evading 

AD/CV Duties 

CBP has three options at its disposal to assess revenues on liquidated entries 

brought in through evasion of AD/CV duties: reliquidation, duty demands, and

penalties. Two factors that can influence which of these options CBP will use in a 

given instance are as follows: 

 how much time has elapsed since the associated entry liquidated, and 

 whether Commerce has issued liquidation instructions conveying the 

applicable final duty rate. 

Reliquidation. In instances where CBP determines that a liquidated entry was 

subject to error in the amount of duties, taxes, or fees assessed, it has the 

authority to “reliquidate” the entry and assess the correct amount owed within 90 

days of the date of liquidation.15 Reliquidation can be used to correct a variety of 

revenue-related errors, including cases where CBP determines that merchandise 

subject to AD/CV duties was brought into the United States through evasion. If 

CBP discovers, after an entry is liquidated, that the merchandise was brought in 

through evasion, it can attempt to collect the duties by reliquidating that entry. 

However, in order to assess AD/CV duties in that instance, CBP must first receive 

liquidation instructions establishing the final duty rate from Commerce. Because 

the process of establishing a final rate under the U.S. retrospective system can be 

lengthy, CBP officials stated that they are unlikely to receive liquidation 

instructions for that merchandise within the 90-day reliquidation period. According 

to CBP officials, there would be little advantage to extending the 90-day time limit 

because an expanded window does not significantly increase the probability that 

 

14GAO, Antidumping and Countervailing Duties: Congress and Agencies Should Take Additional Steps to 

Reduce Substantial Shortfalls in Duty Collection, GAO-08-391 (Washington, D.C.: Mar. 26, 2008). 

1519 U.S.C. § 1501. 
Page 5 GAO-12-131R Antidumping and Countervailing Duties 

they would receive liquidation instructions in time from Commerce. In addition, an 

expanded window would affect all instances of reliquidation, most of which are not 

related to AD/CV duties. CBP also stated that some industry parties would likely 

oppose an expanded window for reliquidation given the possibility of a longer 

period of uncertainty about their financial liabilities. 

Duty demands. If CBP determines that a liquidated entry subject to AD/CV duties 

was brought in through evasion, and CBP no longer has the authority to reliquidate 

(i.e., more than 90 days have passed since liquidation), it can issue a duty 

demand for the amount of duties owed.16 According to CBP, duty demands are 

ordinarily issued in connection with penalty assessments, which are discussed 

next. Depending on the nature of the violation, CBP can issue a duty demand up 

to 5 years after the date of alleged violation or after the discovery of fraud.17 

Penalties. CBP can assess penalties against a person who evades AD/CV 

duties.18 As with duty demands, the statute of limitations for CBP to commence the 

imposition of penalties is 5 years from the date of alleged violation or from the 

discovery of fraud. Penalties assessed in cases of evasion of AD/CV duties can 

lead to revenue assessments that are much higher than the amounts assessed 

through reliquidation or duty demands.19 

Two Factors Affect the Amount of Revenues Collected on Liquidated Entries 

Evading AD/CV Duties 

Two key factors affect the amount of revenues CBP collects through its three 

options for assessing revenues on liquidated entries brought in through evasion. 

First, the amount of duties or penalties CBP ultimately collects may be lower than 

the amount initially assessed, due to successful protest or petition by the importer. 

For example, CBP officials explained that an importer can protest a duty 

 

1619 U.S.C. § 1592(d). 

17The statute of limitations for duty demands varies by the type of violation. For fraud, CBP has up to 5 years 

from the time it discovers the fraud. For negligence and gross negligence, CBP has up to 5 years from the 

date of alleged violation. 19 U.S.C. § 1621. 

18Under 19 U.S.C. § 1592, irrespective of whether the United States is deprived of lawful duties, CBP can 

impose penalties against any person who, through fraud, gross negligence, or negligence, enters 

merchandise into the United States by a material and false act or a material omission. Alternatively, under 19 

U.S.C. § 1595a, CBP can impose penalties against any person who directs, assists, or is in any way 

concerned in importation contrary to law. 

19Under 19 U.S.C. §1592, CBP assesses penalty amounts based on the cause of action. Civil penalties for 

fraud cannot exceed the domestic value of the merchandise. Civil penalties for gross negligence are not to 

exceed (1) the lesser of (a) the domestic value of the merchandise or (b) four times the lawful duties, taxes, 

and fees of which the United States is or may be deprived, or (2) if the violation did not affect the assessment 

of duties, 40 percent of the dutiable value of the merchandise. Civil penalties for negligence are not to exceed 

(1) the lesser of (a) the domestic value of the merchandise or (b) two times the lawful duties, taxes, and fees 

of which the United States is or may be deprived, or (2) if the violation did not affect the assessment of duties, 

20 percent of the dutiable value of the merchandise. The penalty under 19 U.S.C. § 1595a is equal to the 

domestic value of the merchandise. 
Page 6 GAO-12-131R Antidumping and Countervailing Duties 

assessment. If the importer’s protest succeeds, the duty assessment is cancelled. 

Similarly, CBP officials noted that assessed penalties can be mitigated for reasons 

such as an importer’s successful petition against a penalty or demonstration of 

inability to pay the full amount assessed.20

Second, CBP faces difficulty in attempting to collect money from parties that never 

intended to pay the duties, may be difficult to locate, and have few, if any, assets 

in the United States. As we reported in 2008, importers can disappear, cease 

business operations, or declare bankruptcy—all of which, according to CBP, are 

tactics that “bad actors” may use to avoid paying duties and penalties owed, but 

which may be legitimate actions under other circumstances.21 In addition, CBP 

collects a minimal amount of information from companies applying to be importers 

of record, thereby creating challenges to locating debtors and collecting revenues. 

Furthermore, foreign companies and individuals are allowed to be importers. CBP 

has indicated that its ability to collect from such importers—especially illegitimate 

ones—is limited, particularly in cases where the importers have no attachable 

assets in the United States. As we reported in 2008, many unpaid AD/CV duty bills 

involving a foreign company with no discernable U.S. assets may be classified as 

uncollectible.22

CBP’s information systems do not enable it to generate data on revenues 

assessed and collected through the use of reliquidation, duty demands, and 

penalties on liquidated entries brought in through evasion. However, CBP provided 

some information on the use of these three options related to AD/CV duties. 

Specifically, CBP provided the following information for fiscal years 2009 and 

2010: 

 Reliquidation. CBP reliquidated 111 entries for reasons related to AD/CV 

duties; however, CBP stated that its information systems do not enable it to 

identify which, if any, of these reliquidated entries involved evasion of 

AD/CV duties. Of the approximately $3.7 million assessed during this 

period, CBP collected approximately $572,000. According to CBP, the 

difference between the amounts assessed and collected is due in part to 

successful protests of the duty assessments by importers; the remainder of 

the difference is due to protest decisions that are pending. 

 Duty demands. CBP was unable to provide data on the total number of duty 

demands it issued in cases of evasion of AD/CV duties. CBP officials 

explained that their information systems enable them to only identify those 

 

20According to CBP, penalty mitigation is conducted in accordance with published mitigation guidelines. 

21GAO-08-391. 

22GAO-08-391 and GAO, Agencies Believe Strengthening International Agreements to Improve Collection of 

Antidumping and Countervailing Duties Would be Difficult and Ineffective, GAO-08-876R (Washington, D.C.: 

July 24, 2008). 
Page 7 GAO-12-131R Antidumping and Countervailing Duties 

duty demands that are issued without any accompanying penalties. As 

noted earlier, most duty demands are accompanied by penalties; 

consequently, according to these officials, the lack of data on the number of 

duty demands accompanied by penalties leads to significant undercounting 

of the total number of duty demands. The limited data provided by CBP 

show that, during fiscal years 2009 and 2010, CBP issued six duty 

demands related to evasion of AD/CV duties (with no penalties attached). 

These six duty demands totaled approximately $77,000, of which CBP 

collected about $49,000.23

 Penalties. CBP assessed 119 penalties related to evasion of AD/CV duties; 

however, CBP data do not indicate which penalties resulted from instances 

where evasion was detected after liquidation.24 During fiscal years 2009 

and 2010, CBP assessed approximately $63 million in penalties, of which it 

collected about $3 million. According to CBP officials, it is important to note 

that it can take years to collect penalties. Furthermore, the amount that 

CBP ultimately collects may be lower than the amount it originally 

assessed, due, in part, to mitigation decisions that lower the amount of 

penalties owed. 

Concluding Observations 

Evasion of AD/CV duties negatively impacts U.S. domestic industries and deprives 

the U.S. government of revenues. CBP has three options—reliquidation, duty 

demands, and penalties—for assessing revenues in cases where it detects 

evasion of AD/CV duties after the merchandise has already been liquidated. While 

CBP’s ability to use these options is subject to statutory deadline or dependent on 

input from Commerce, the three options collectively provide CBP an array of tools 

for attempting revenue collection if it determines that a liquidated entry was 

brought into the United States through evasion. Regardless of which option CBP 

uses, the amount of duties or penalties it ultimately collects may be lower than the 

amount initially assessed, due to successful protest or petition by the importer. 

Furthermore, CBP may face significant obstacles in collecting assessed revenues 

due to the difficulty of collecting from importers that may be potentially 

unscrupulous, difficult to locate, or outside of U.S. jurisdiction. 

 

23According to CBP officials, the agency collects at least some portion of the duties demanded in every 

instance. CBP attributes this in part to its bonding requirement. Specifically, to protect the U.S. government 

against revenue loss if an importer defaults on its financial obligations, the importer is required to post a 

security, usually a general obligation bond. 19 C.F.R. § 142.4. CBP has set the bond requirement equal to 10 

percent of the amount the importer was assessed in duties, taxes, and fees, over the preceding year (or 

$50,000, whichever is greater). However, this bond requirement may be insufficient to cover the importer’s full 

obligation. 

24In addition, the data do not include penalties CBP imposed under 19 U.S.C. § 1595a (importation contrary to 

law). 
Page 8 GAO-12-131R Antidumping and Countervailing Duties 

Agency Comments 

We provided a draft of this report to the Departments of Homeland Security, 

Commerce, and the Treasury. All three agencies provided technical comments, 

which we have incorporated throughout the draft as appropriate. 

- - - - - 

We are sending copies of this report to interested congressional committees as 

well as the Departments of Homeland Security, Commerce, and the Treasury. In 

addition, the report is available at no charge on the GAO Web site at 

http://www.gao.gov. 

If you or your staff members have any questions about this report, please contact 

me at (202) 512-4347 or yagerl@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page of this 

report. Individuals making key contributions to this report include Christine 

Broderick (Assistant Director), Ken Bombara, Debbie Chung, Aniruddha Dasgupta, 

Martin De Alteriis, Julia Jebo, and Grace Lui. Marc Castellano, Joyce Evans, and 

Cynthia Taylor provided technical assistance. 

Loren Yager 

Director, International Affairs and Trade 

(320834)
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s Web site (www.gao.gov). Each weekday afternoon, 

GAO posts on its Web site newly released reports, testimony, and 

correspondence. To have GAO e-mail you a list of newly posted products, 

go to www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s Web site, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Ralph Dawn, Managing Director, dawnr@gao.gov, (202) 512-4400

U.S. Government Accountability Office, 441 G Street NW, Room 7125

Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs