ANTIDUMPING AND 

COUNTERVAILING 

DUTIES

Management 

Enhancements 

Needed to Improve 

Efforts to Detect and 

Deter Duty Evasion

Report to Congressional Requesters

May 2012

GAO-12-551

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-551, a report to 

congressional requesters

May 2012

ANTIDUMPING AND COUNTERVAILING DUTIES

Management Enhancements Needed to Improve 

Efforts to Detect and Deter Duty Evasion

Why GAO Did This Study

The United States imposes AD/CV 

duties to remedy unfair foreign trade 

practices, such as unfairly low prices or 

subsidies that cause injury to domestic 

industries. Examples of products 

subject to AD/CV duties include honey 

from China and certain steel products 

from South Korea. Importers that seek

to avoid paying appropriate AD/CV 

duties may employ methods of evasion 

such as illegally transshipping an 

import through a third country to 

disguise its true country of origin or

falsifying the value of an import to 

reduce the amount of duties owed, 

among others. AD/CV duty evasion 

can harm U.S. companies and reduces 

U.S. revenues. CBP, within the 

Department of Homeland Security, 

leads efforts to detect and deter AD/CV 

duty evasion. 

GAO was asked to examine (1) how 

CBP detects and deters AD/CV duty 

evasion, (2) factors that affect CBP’s 

efforts, and (3) the extent to which 

CBP tracks and reports on its efforts. 

To address these objectives, GAO 

reviewed CBP data and documents; 

met with government and private 

sector representatives in Washington, 

D.C.; and conducted fieldwork at three 

domestic ports.

What GAO Recommends

To enhance CBP’s efforts to address 

AD/CV duty evasion and facilitate 

oversight of these efforts, GAO makes 

several recommendations, including 

that CBP create a policy and a 

mechanism for information sharing 

among ports regarding the use of 

higher bond amounts and develop and 

implement a plan to track and report on 

these efforts. CBP and the Department 

of Commerce generally concurred with 

GAO’s recommendations.

What GAO Found

U.S. Customs and Border Protection (CBP) detects and deters evasion of 

antidumping and countervailing (AD/CV) duties through a three-part process that 

involves (1) identifying potential cases of evasion, (2) attempting to verify if 

evasion is occurring, and (3) taking enforcement action. To identify potential 

cases of evasion, CBP targets suspicious import activity, analyzes trends in 

import data, and follows up on allegations from external sources. If CBP identifies 

a potential case of evasion, it can use various techniques to attempt to verify 

whether evasion is occurring, such as asking importers for further information, 

auditing the records of importers suspected of evasion, and inspecting shipments 

arriving at ports of entry. If CBP is able to verify evasion, its options for taking 

enforcement action include (1) pursuing the collection of evaded duties, (2) 

imposing civil penalties, (3) conducting seizures, and (4) referring cases for 

criminal investigation. For example, between fiscal years 2007 to 2011, CBP 

assessed civil penalties totaling about $208 million against importers evading 

AD/CV duties.

Two types of factors affect CBP’s efforts to detect and deter AD/CV duty evasion. 

First, CBP faces several external challenges in attempting to gather conclusive 

evidence of evasion and take enforcement action against parties evading duties. 

These challenges include (1) the inherent difficulty of verifying evasion conducted 

through clandestine means; (2) limited access to evidence of evasion located in 

foreign countries; (3) the highly specific and sometimes complex nature of 

products subject to AD/CV duties; (4) the ease of becoming an importer of 

record, which evaders can exploit; and (5) the limited circumstances under which 

CBP can seize goods evading AD/CV duties. Second, gaps in information 

sharing also affect CBP efforts. Although communication between CBP and the 

Department of Commerce (Commerce) has improved, CBP lacks information 

from Commerce that would enable it to better plan its workload and help mitigate 

the administrative burden it faces in processing AD/CV duties—an effort that 

diminishes its resources available to address evasion. Additionally, CBP has 

encouraged the use of larger bond amounts to protect AD/CV duty revenue from 

the risk of evasion, but CBP has neither a policy nor a mechanism in place for a 

port requiring a larger bond to share this information with other ports in case an 

importer withdraws its shipment and attempts to make entry at another port to

avoid the higher bond amount. 

While CBP has made some performance management improvements, it does not 

systematically track or report key outcome information that CBP leadership and 

Congress could use to assess and improve CBP’s efforts to deter and detect 

AC/CV duty evasion. First, CBP cannot readily produce key data, such as the 

number of confirmed cases of evasion, which it could use to better inform and 

manage its efforts. Second, CBP does not consistently track or report on the 

outcomes of allegations of evasion it receives from third parties. As GAO 

reported in March 2011, the Government Performance and Results 

Modernization Act of 2010 underscores the importance of ensuring that 

performance information will be both useful and used in decision making. Without 

improved tracking and reporting, agency leadership, Congress, and industry 

stakeholders will continue to have little information with which to oversee and 

evaluate CBP’s efforts to detect and deter evasion of AD/CV duties.

View GAO-12-551. For more information, 

contact Alfredo Gomez at (202) 512-4101 or 

gomezj@gao.gov.
Page i GAO-12-551 Antidumping and Countervailing Duties

Letter 1 

Background 2

CBP Uses a Three-Part Process to Detect and Deter AD/CV Duty 

Evasion 7

External Obstacles and Gaps in Information Sharing Hamper CBP 

Efforts to Address Evasion 13

CBP Has Made Some Performance Management Improvements but 

Does Not Systematically Track or Report on Its Efforts to Detect 

and Deter Evasion 25

Conclusions 30

Recommendations for Executive Action 31

Agency Comments and Our Evaluation 32

Appendix I Objectives, Scope, and Methodology 34

Appendix II Comments from the Department of Homeland Security 36

Appendix III Comments from the Department of Commerce 38

Appendix IV GAO Contact and Staff Acknowledgments 39

Table

Table 1: Top 5 Countries with Most U.S. AD/CV Duty Orders in 

Place, as of March 2012 5

Figures

Figure 1: Key Steps in the Import Process 3

Figure 2: Methods Commonly Used to Evade AD/CV Duties 7

Figure 3: CBP Techniques for Attempting to Verify Evasion at 

Different Points in the Import Process 10

Figure 4: Boxes of Chinese Wood Flooring Brought into the United 

States through Evasion 12

Contents
Page ii GAO-12-551 Antidumping and Countervailing Duties

Figure 5: Facility in Thailand Falsely Described as Honey 

Manufacturing Plant 15

Figure 6: Unliquidated Entries Subject to AD/CV Duties Stored in 

File Room at a U.S. Port of Entry 20

Figure 7: Missing Data on Civil Penalties CBP Imposed between 

Fiscal Years 2007 and 2011 for AD/CV Duty Evasion, as of 

February 2012 28

Abbreviations

AD antidumping

CBP U.S. Customs and Border Protection

CV countervailing

Commerce Department of Commerce

ICE U.S. Immigration and Customs Enforcement

NTAG National Targeting and Analysis Group

STB single transaction bond

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.
Page 1 GAO-12-551 Antidumping and Countervailing Duties

United States Government Accountability Office

Washington, DC 20548

May 17, 2012

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

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

duties to remedy unfair foreign trade practices that cause injury to 

domestic industries. Importers that seek to avoid paying appropriate 

AD/CV duties may attempt to evade them through methods such as 

illegally transshipping an import through a third country to disguise its true 

country of origin or falsifying the value of an import to reduce the amount 

of duties owed, among others.1

In response to your request for a review of CBP’s efforts to address 

AD/CV duty evasion, this report examines (1) how CBP detects and 

deters evasion, (2) factors that affect CBP’s efforts to detect and deter 

evasion, and (3) the extent to which CBP tracks and reports on its efforts.

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. U.S. Customs and Border Protection (CBP), within the 

Department of Homeland Security, leads U.S. efforts to detect and deter 

AD/CV duty evasion. Congress and domestic industries have expressed 

concern that unscrupulous actors continue to find ways to evade duties, 

leaving U.S. industry at risk.

To address these objectives, we reviewed a range of documents and data 

from CBP related to its efforts to detect and deter AD/CV duty evasion, 

such as annual planning and reporting documents; internal memos and 

other documents; and data on products subject to AD/CV duties, 

allegations of evasion from external sources, and enforcement outcomes. 

 

1

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

improperly declare goods that are subject to AD/CV duties to avoid payment of such

duties. 

 
 

Page 2 GAO-12-551 Antidumping and Countervailing Duties

We also met with officials in CBP’s Offices of International Trade, Field 

Operations, and Intelligence and Investigative Liaison; U.S. Immigration 

and Customs Enforcement (ICE); and the Departments of Commerce 

(Commerce) and the Treasury, as well as a coalition of U.S. industries 

affected by AD/CV duty evasion. Additionally, we conducted fieldwork at 

the ports of Miami, FL; Seattle, WA; and Los Angeles, CA; as well as the 

National Targeting and Analysis Group for AD/CV duty issues in 

Plantation, FL. See appendix I for a complete description of our 

objectives, scope, and methodology.

We conducted this performance audit from June 2011 to May 2012 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, 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.

The process for importing products into the United States involves several 

different private parties, as well as the U.S. government. These private 

parties include exporters, carriers, and importers, among others. 

Exporters are companies that sell goods manufactured or produced in 

foreign countries to the United States. Carriers are companies that 

transport the goods to the United States. Importers may be companies 

that purchase the goods from exporters or simply may be responsible for 

facilitating the importation of the goods.2 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.3

 

2

See 19 U.S.C. § 1484, which identifies persons who have a right to make entry.

Importers of 

record are also required to obtain a general bond to secure the payment 

3

19 U.S.C. § 1505.

Background 

The U.S. Import Process
 

Page 3 GAO-12-551 Antidumping and Countervailing Duties

of their financial obligations.4 CBP is responsible for, among other things, 

managing the import process (see fig. 1); collecting the duties, taxes, and 

fees assessed on those products; and setting the formula for establishing 

importers’ general bond amounts.5

Figure 1: Key Steps in the Import Process

 

4

In addition to paying estimated duties, taxes, and fees when products enter the country, 

importers also are generally required to provide a bond to help ensure that the 

government can recover additional duties, taxes, or fees that may be owed. See 19 C.F.R. 

§§ 113.62 and 142.4 for CBP bonding requirements. In general, the importer is required to 

obtain a bond equal to 10 percent of the amount the importer paid in duties, taxes, and 

fees over the preceding year (or $50,000, whichever is greater). GAO and CBP both have 

expressed concern that this general bond inadequately protects AD/CV duty revenue. See 

GAO, 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).

5

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).
 

Page 4 GAO-12-551 Antidumping and Countervailing Duties

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 imports that were “dumped” (i.e., sold at 

less than normal value)6 and CV duties on imports subsidized by foreign 

governments.7 As we reported in March 2008,8 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 Commerce is responsible for calculating the appropriate AD/CV 

duty rate.10 CBP is then responsible for collecting the estimated AD/CV 

duties when goods enter the United States, and subsequently processing 

the final AD/CV duties (called “liquidation”) when instructed by 

Commerce.11

A wide range of imported goods are subject to AD/CV duties, such as 

agricultural, chemical, steel, paper, and wooden products. Each set of 

AD/CV duties—detailed in an AD/CV duty order—is for a type of product 

from a specified country. The written “scope” of each AD/CV duty order 

describes the specific type of product that is subject to the duties. The 

duty order also lists one or more Harmonized Tariff Schedule codes 

Liquidation may result in providing importers with a refund 

or sending an additional bill.

 

6

According to Commerce, the “normal value” is generally the price the foreign firm 

charges for a comparable product sold in its home market. Under certain circumstances, 

the normal value may also be the price the foreign firm charges in other export markets or 

the firm’s cost of producing the merchandise, taking into account the firms selling, general, 

and administrative expenses, and profit. If the producer is located in a non-market 

economy country, normal value is based on producer’s factors of production using values 

in a “surrogate” market economy country.

7

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.

8

GAO-08-391. 

9

The process and time frame for determining AD/CV duties is established by law in title 19 

of the United States Code, sections 1671 – 1677n. 

1019 U.S.C. §§ 1671d, 1673d. 

1119 U.S.C. §§ 1500, 1505. 

The United States Imposes 

AD/CV Duties on a Variety 

of Imported Goods
 

Page 5 GAO-12-551 Antidumping and Countervailing Duties

associated with the product.12 There are duty orders in place for some 

types of products from several countries. For example, there are currently 

AD duty orders on frozen warmwater shrimp from five countries—Brazil, 

China, India, Thailand, and Vietnam. For some other types of products, 

there is a duty order in place on only one country, such as saccharin from 

China. As of March 2012, there were 283 AD/CV duty orders in effect, 

with more duty orders on products from China than from any other 

country (see table 1).13

Table 1: Top 5 Countries with Most U.S. AD/CV Duty Orders in Place, as of March 

2012

Country

Number of U.S. 

AD/CV duty 

orders in place

Examples of product types subject to AD/CV 

duties

China 114 Honey, saccharin, frozen warmwater shrimp, 

steel wire hangers

India 23 Mushrooms, matchbooks, frozen warmwater 

shrimp

Taiwan 16 Steel pipes, ribbons, plastic bags

South Korea 14 Steel pipes, steel plates, diamond sawblades

Japan 13 Steel bars, steel plates, cement

Source: GAO analysis of Commerce data.

 

12The Harmonized Tariff Schedule of the United States is the primary resource used by 

CBP for determining tariff classification for goods imported into the United States. It 

classifies a good by assigning a 10-digit tariff classification number, based on such things 

as its name and use, providing CBP detailed information to identify items entering the 

United States. While tariff codes are used for convenience and customs purposes, the 

written description of an order is dispositive when determining which merchandise should 

be subject to AD/CV duties.

13These 283 AD/CV duty orders include 234 AD duty orders and 49 CV duty orders. 
 

Page 6 GAO-12-551 Antidumping and Countervailing Duties

Importers that seek to avoid paying appropriate AD/CV duties may 

attempt to evade them by using a variety of techniques. These techniques

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 (see fig. 2).14

 

14Transshipment is the movement of goods from a country of origin to a country of 

ultimate destination through an intermediate country. According to CBP, transshipment is 

legal and commonly used in the ordinary course of business. However, transshipment of 

merchandise for the purpose of circumventing trade laws—including AD/CV duty laws—is 

illegal.

According to CBP, importers sometimes use more than one evasion 

method at a time to further disguise the fact that they are importing goods 

subject to AD/CV duties. Because the techniques used to evade AD/CV 

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

Evasion of AD/CV Duties
 

Page 7 GAO-12-551 Antidumping and Countervailing Duties

Figure 2: Methods Commonly Used to Evade AD/CV Duties

CBP detects and deters AD/CV duty evasion through a three-part process 

that involves (1) identifying potential cases of evasion, (2) attempting to 

verify if evasion is occurring, and (3) taking enforcement action.

CBP begins its detection of AD/CV duty evasion by identifying potential 

instances of evasion, using two primary sources of information: import 

data and allegations from external sources. Import data is generated from 

CBP Uses a ThreePart Process to Detect 

and Deter AD/CV 

Duty Evasion
 

Page 8 GAO-12-551 Antidumping and Countervailing Duties

the documents submitted by importers as part of the import process. 

Allegations are collected electronically through e-Allegations, an online 

system created by CBP in 2008. CBP also collects allegations via other 

means (such as telephone and e-mail, among others) and stores them in 

the e-Allegations system. As of September 2011, there were almost 400 

allegations related to AD/CV duty evasion in the e-Allegations system, 

mostly from sources associated with affected industries.15

To look for anomalies that may be indicators of evasion, CBP personnel 

at both the local and national levels conduct targeting, analyze trends in 

import data, and follow up on allegations from external sources.16

• being filed under the same tariff code as a product that is subject to 

AD/CV duties but not being declared as subject to such duties,

Local 

targeting and analysis is conducted by CBP personnel stationed at more 

than 300 ports of entry, while national targeting and analysis is conducted 

by officials at CBP headquarters and its National Targeting and Analysis 

Group (NTAG) for AD/CV duty issues located in Plantation, FL. CBP 

officials explained that most of their targeting involves identifying entries 

filed under the Harmonized Tariff Schedule codes associated with a given 

product that is subject to AD/CV duties and then examining the import 

documentation for those entries for anomalies that may suggest evasion 

is occurring. Examples of such anomalies in import documents include, 

but are not limited to

• listing a country of origin that is not capable of producing the goods 

(or the quantity of the goods) imported—a potential indicator of illegal 

transshipment, and

• showing a monetary value for the goods imported that appears to be 

too low for the quantity or weight of goods imported—a possible sign 

of undervaluation.

 

15CBP received allegations from congressional sources, Commerce, and anonymous 

parties, among others.

16In this report, we use the term “targeting” to refer to the synthesis and use of information 

from a variety of sources to identify shipments that may be a potential risk for AD/CV duty 

evasion.
 

Page 9 GAO-12-551 Antidumping and Countervailing Duties

Once CBP identifies a potential instance of evasion, it can use a variety of 

techniques at different points in the import process to attempt to verify if 

evasion is occurring. These include, but are not limited to, the following:

• targeting additional shipments made by the importer of record and 

conducting further data analysis to look for other anomalies that may

be evidence of evasion;

• requesting that the importer provide further information, such as 

product invoices and other documents that can help CBP understand 

the transactions involved in producing and importing a good and 

ascertain if evasion occurred;

• sending referrals to ICE to initiate criminal investigations and gather 

evidence of evasion from foreign countries, such as by visiting 

production facilities overseas and collecting customs documents from 

foreign counterparts;

• performing cargo exams to inspect shipments arriving at ports of 

entry;

• collecting samples of products potentially brought in through evasion 

and conducting laboratory analysis of these samples to attempt to 

identify their true country of origin and other technical details that can 

help CBP determine if the products should be subject to AD/CV 

duties; and

• auditing importers suspected of evading AD/CV duties by collecting 

company records (such as purchase orders, shipping documents, and 

payment records) and examining them for discrepancies.

Figure 3 shows where in the import process CBP typically uses these 

techniques.
 

Page 10 GAO-12-551 Antidumping and Countervailing Duties

Figure 3: CBP Techniques for Attempting to Verify Evasion at Different Points in the Import Process

In cases where CBP is able to verify evasion, its options for taking

enforcement action to deter evasion include (1) pursuing the collection of 

evaded duties, (2) imposing civil penalties, (3) conducting seizures, and 

(4) referring cases to ICE for criminal investigation. As we discuss later in 

this report, CBP lacks complete data on the amount of evaded duties it 
 

Page 11 GAO-12-551 Antidumping and Countervailing Duties

has pursued and collected in cases of evasion. From fiscal years 2007 to 

2011, CBP assessed 252 civil penalties totaling about $208 million 

against 237 importers that evaded AD/CV duties.17 Over the same period, 

CBP also made 33 seizures related to AD/CV duty evasion, with a total 

domestic value of nearly $4 million. In instances where CBP suspects that 

criminal laws may have been violated, it can refer cases to ICE for 

criminal investigation.18

CBP officials we met with during our review provided examples of how 

they had recently identified potential cases of evasion, verified that 

evasion was occurring, and then taken enforcement action. For instance, 

officials at one port described an effort they initiated following the 

imposition of CV duties on wood flooring from China. Through a targeting 

operation using the tariff code for wood flooring, the officials determined 

that, since the imposition of CV duties on Chinese wood flooring, only 15 

of 165 importers with a history of bringing goods from China into their port 

under the tariff code for wood flooring had begun properly declaring their 

shipments as entries subject to AD/CV duties—a potential sign of 

evasion.

Between fiscal years 2007 and 2011, ICE 

investigations of AD/CV duty evasion led to 28 criminal arrests, 85 

indictments, and 37 criminal convictions.

19

 

17Under 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. Importers can challenge the penalties assessed by petitioning 

CBP. The $208 million penalty amount cited here does not include penalties CBP imposed 

under 19 U.S.C. § 1595a (importation contrary to law).

Subsequently, by conducting cargo exams on several of the 

suspected importers, the officials were able to verify that the suspected 

Chinese goods were, in fact, wood flooring, and therefore should have 

been declared as subject to AD/CV duties (see fig. 4). At the time of our 

visit, these officials stated that they had collected over $200,000 in unpaid 

duties from importers that had attempted to evade the AD/CV duties on 

18ICE officials told us that they may also initiate investigations on the basis of allegations 

of evasion received from industry parties. 

19As discussed later in this report, some products that are subject to AD/CV duties fall 

under the same tariff codes as other products that are not subject to AD/CV duties. 

Consequently, the tariff code for an entry may be insufficient for CBP to determine 

whether or not the entry is subject to AD/CV duties; additional information may be needed.
 

Page 12 GAO-12-551 Antidumping and Countervailing Duties

wood flooring and were also preparing to assess civil penalties on 14 

importers.

Figure 4: Boxes of Chinese Wood Flooring Brought into the United States through 

Evasion

At another port we visited, CBP officials described a case that began with 

an anonymous fax alleging evasion of the AD duties on steel nails from 

China. After reviewing import data, the officials were able to confirm that 

the importer named in the allegation had brought an entry of steel nails 

into their port and that the importer’s broker had filed the entry as not 

subject to AD duties. Because the AD duty order on steel nails from 

China provides an exemption for roofing nails, the port officials then sent 

a formal request for information to the importer to ask for a sample of the 

steel nails imported, which the importer provided.20

 

20Port officials describing this case stated that since they requested a sample after the 

product had already made entry, the importer could have easily provided a fake sample 

instead of what was actually imported, but did not do so.

The port officials sent 

the sample to a CBP laboratory to determine if the nails provided were 

roofing nails or not. After the laboratory determined that the sample nails 
 

Page 13 GAO-12-551 Antidumping and Countervailing Duties

were not roofing nails, the port officials concluded that the steel nails were 

subject to the AD duty order and, consequently, should have been 

declared as such. The officials subsequently told us that this would result 

in a penalty against the importer and that 34 additional entries by the

importer at six ports were also under review for evasion.

Two types of factors affect CBP’s efforts to detect and deter AD/CV duty 

evasion. First, CBP faces several external challenges in attempting to 

gather conclusive evidence of evasion and deter parties from evading 

duties. Second, although interagency communication has improved, and 

CBP has encouraged the use of higher bonding requirements to protect 

revenue, gaps in information sharing with Commerce and within CBP may 

limit the effectiveness of these initiatives.

Several challenges mostly outside of CBP’s control impede its efforts to 

prove that evasion has occurred and deter parties from evading AD/CV 

duties. These challenges include (1) the inherent difficulty of verifying 

evasion conducted through clandestine means; (2) limited access to 

evidence of evasion located in foreign countries; (3) the highly specific 

and sometimes complex nature of products subject to AD/CV duties; 

(4) the ease of becoming an importer of record, which evaders can 

exploit; and (5) the limited circumstances under which CBP can seize 

goods brought in through evasion.

CBP officials we met with stated that verifying evasion of AD/CV duties is 

one of the agency’s most challenging and time-consuming trade 

enforcement responsibilities. As these officials emphasized, proving that 

evasion is occurring is a key precondition for taking enforcement action 

against importers evading AD/CV duties. However, because AD/CV duty 

evasion is inherently deceptive and clandestine in nature, it can be 

extremely difficult for CBP to gather conclusive evidence to prove that 

evasion is occurring. According to CBP, not only can different methods of 

evasion be employed at once—often involving the collusion of several 

parties, including the manufacturer, shippers, and importer— but entities 

engaging in evasion are using increasingly complex schemes. In 

particular, CBP officials identified the growing use of illegal transshipment 

as a key concern, noting that the Internet has made it very easy for 

importers to find companies willing to transship goods subject to AD/CV 

duties through third countries to mask the goods’ true country of origin. 

Because such schemes often involve adding false markings and 

packaging designed to mimic legitimate production in other countries, it 

External Obstacles 

and Gaps in 

Information Sharing 

Hamper CBP Efforts 

to Address Evasion

CBP Faces Challenges 

Mostly Beyond Its Control 

in Proving Evasion Has 

Occurred and Taking 

Deterrent Action

Verifying Evasion of AD/CV 

Duties Is Inherently Difficult 

and Time-Consuming
 

Page 14 GAO-12-551 Antidumping and Countervailing Duties

can be very difficult for CBP to determine a product’s country of origin 

through visual inspection or through reviews of shipping documents. 

Undervaluation can be similarly difficult to prove, according to CBP, 

especially if the producer and importer collude to create false values.

In addition to being inherently difficult, verifying evasion of AD/CV duties 

can also be very time-consuming. According to CBP, it can easily take 

over a year or more to collect the evidence needed to verify a potential 

case of evasion. For example, CBP’s ability to target additional shipments 

from an importer suspected of evading duties hinges on whether or not 

importation is ongoing. However, CBP documentation notes that 

shipments of some goods may be seasonal in nature, resulting in months 

of inactivity until the next shipment can be targeted. Additionally, in cases 

where CBP requests additional information from the importer, the 

importer has 30 days in which to respond to the request, but CBP can 

extend the deadline in additional 30-day increments if the importer fails to 

respond or needs more time to gather the required information. Similarly, 

according to CBP, it typically takes up to 30 days to conduct a laboratory 

analysis of a product sample, but it can take up to 120 days if, for 

instance, new analytical methods need to be developed. CBP officials 

stated that their audits of importers suspected of evading AD/CV duties 

are also time-consuming in nature, taking nearly 8 months to complete on 

average. Given these timelines— and the fact that CBP may need to use 

several such verification techniques to successfully prove a single case of 

evasion—the process of proving evasion may become quite lengthy.

According to CBP and ICE officials, they have limited access to evidence 

located in foreign countries that can be vital to proving that evasion has 

occurred, particularly in cases of illegal transshipment. These officials 

explained that collecting customs documents from foreign counterparts or 

gaining access to facilities in a foreign country listed as the country of 

origin for a suspicious entry can help them prove that the goods in 

question originated elsewhere. For example, ICE officials investigating a 

case concerning Chinese honey suspected of being illegally transshipped 

through Thailand helped determine that evasion occurred, in part by 

visiting the sites in Thailand where the honey was allegedly produced and 

determining that the facilities were not honey manufacturing plants (see 

fig. 5). Similarly, CBP laboratory scientists explained that their ability to 

use chemical analysis to determine whether an importer falsely declared 

a good’s country of origin is contingent on gathering reference samples 

from as many countries as possible for comparison purposes.

Limited Access to Evidence of 

Evasion Located in Foreign 

Countries Hampers Efforts to 

Prove Evasion 
 

Page 15 GAO-12-551 Antidumping and Countervailing Duties

Figure 5: Facility in Thailand Falsely Described as Honey Manufacturing Plant

To collect information located outside of U.S. jurisdiction, CBP and ICE 

need to obtain the permission of host nation governments. However, both 

CBP and ICE explained that the level of host nation cooperation varies. 

According to ICE, even when the United States has bilateral agreements 

in place to share customs information, the extent of information shared by 

foreign counterparts varies by country. For example, ICE officials stated 

that although most of their investigations of evasion involve goods from 

China—with which the United States has a customs cooperation 

agreement in place—they have never received permission to visit 

facilities in China as part of their investigations. Similarly, according to 

ICE officials, although the United States has bilateral agreements with 

several countries that are thought to be common transshipment points—

such as Indonesia, India, and the Philippines—ICE’s ability to visit these 

and other countries during the course of investigations depends on 

factors such as each country’s political climate, the nature of its bilateral 

relationship with the United States, and the extent to which the host 

nation government has ties to the company or industry under 

investigation. CBP laboratory scientists have also had mixed results in 

gaining access overseas. They noted that the Indonesian government 

recently allowed them access to collect samples of shrimp from 

Indonesian producers. However, the Malaysian government initially gave 

them approval to visit honey and shrimp producers in their country but 

ultimately rescinded its approval without explanation. CBP officials also 
 

Page 16 GAO-12-551 Antidumping and Countervailing Duties

noted that although the U.S. free trade agreement with Singapore—

another country thought to be a common transshipment point—allows for 

cooperation on customs issues, the agreement explicitly excludes matters 

related to AD/CV duties.

According to CBP officials, the highly specific and complex nature of 

some products subject to AD/CV duties can make it extremely difficult to 

identify evasion. As noted earlier, most of CBP’s targeting for potential 

evasion involves examining entries that have the same Harmonized Tariff 

Schedule codes as products subject to AD/CV duties in order to look for 

any not filed as subject to AD/CV duties. For example, to target potential 

evasion of the AD duties on saccharin from China, CBP can examine 

entries from China that have the tariff code for saccharin and determine if 

any have been filed as not subject to AD/CV duties. However, in some 

cases, no unique tariff code exists for the specific products that 

Commerce investigated and issued a duty order for; rather, these 

products fall under the same tariff code as a broader category of products 

that are not subject to AD/CV duties. Consequently, the tariff codes listed 

on a given entry may be insufficient for CBP to determine if goods 

imported as part of that shipment are subject to AD/CV duties; additional 

information may be needed. An example is petroleum wax candles from 

China, which are subject to AD duties. Because there is no specific tariff 

code for petroleum wax candles—only one for candles—CBP cannot 

conclude, absent other evidence, that an entry from China under the tariff 

code for candles is petroleum wax candles, as it may be another type of 

candle that is not subject to AD duties. Instead, CBP has to turn to other 

means of verification to attempt to gather conclusive evidence that the 

entry is petroleum wax candles and, therefore, subject to AD duties. For 

example, CBP may decide to ask the importer for additional information, 

such as product invoices containing further details on the type of candles 

imported. CBP may also target additional shipments of candles and 

potentially collect a sample for laboratory analysis. However, as 

described earlier, each of these steps would take additional time, 

lengthening the verification process.

According to CBP officials, the complex nature of some products covered 

by AD/CV duty orders can also make it difficult for CBP personnel to 

visually identify the products during cargo exams. For instance, CBP 

officials stated that AD/CV duty orders on steel typically cover steel 

products with a certain chemical composition—an aspect that cannot be 

determined through visual inspection. Another example is the AD/CV duty 

order on honey, which applies not only to natural honey and flavored 

honey, but also to honey blends that contain more than 50 percent natural 

Specificity and Complexity of 

Products Subject to AD/CV 

Duties Complicate CBP Efforts 

to Identify Evasion
 

Page 17 GAO-12-551 Antidumping and Countervailing Duties

honey by weight—a characteristic that cannot be ascertained by sight 

alone. In such cases, CBP personnel can extract a sample from the 

shipment and send it for laboratory analysis. However, CBP laboratory 

scientists stated that chemical analysis does not always return a definitive 

judgment of whether or not a product sample analyzed should fall within 

the scope of an AD/CV duty order. For example, chemical analysis of a 

honey blend can return inconclusive results if certain additives are 

present in the blend. CBP officials stated that CBP cannot take 

enforcement action without conclusive proof of evasion. 

Entities engaging in evasion can exploit the ease of becoming an importer 

of record, impeding CBP’s ability to target and take deterrent action 

against them. As noted earlier, importers of record are responsible for 

paying all estimated duties, taxes, and fees on products when they are 

brought into the United States. However, importers seeking to evade 

AD/CV duties can exploit the ease of becoming an importer of record in 

several ways. First, according to CBP officials, companies can easily 

adopt new importer names and identification numbers, making it difficult 

for CBP to track their importing activity and gather evidence needed to 

prove that they are engaging in evasion. CBP officials stated that they 

suspect some importers evading AD/CV duties set up new names and 

identification numbers in advance to have ready for use in anticipation of 

CBP targeting efforts. Second, as our prior work has noted, CBP collects 

a minimal amount of information from companies applying to be importers 

of record, which evaders can take advantage of to elude CBP efforts to 

locate and collect revenues from them.21

 

21

For instance, companies are not 

subject to any credit or background checks before being allowed to import 

products into the United States. Third, foreign companies and individuals 

are allowed to import products into the United States, but CBP can have 

difficulty collecting duties and penalties from foreign importers—especially 

illegitimate ones—when the importers have no attachable assets in the 

United States. For example, as of February 2012, CBP had collected 

about $5 million, or about 2 percent, of the approximately $208 million it 

assessed in civil penalties between fiscal years 2007 and 2011. CBP 

attributed its collection difficulties, in part, to challenges experienced in 

GAO-08-391. 

Evaders Can Exploit the Ease 

of Becoming an Importer of 

Record, Impeding CBP Efforts 

to Target and Deter Evasion 
 

Page 18 GAO-12-551 Antidumping and Countervailing Duties

collecting from foreign importers of record.22

As we have previously reported, CBP or Congress could heighten the 

requirements for becoming an importer of record; however, such action 

could lead to unintended consequences.

CBP officials stated that, due 

to this risk of noncollection, a factor they consider when deciding whether 

or not to impose a penalty against a confirmed evader is whether or not it 

has assets in the United States.

23

CBP is able to seize goods imported through evasion under limited 

circumstances. CBP officials explained that unlike goods that are illegal to 

import, such as those violating import safety or intellectual property laws, 

goods imported through evasion are not necessarily illegal to import. 

Specifically, according to CBP, although misclassification and 

undervaluation are commonly used evasion schemes, U.S. trade law 

limits the seizure of shipments that are misclassified or undervalued.

Heightened requirements 

could include mandatory financial or background checks. However, 

performing these checks would create a significant new burden on CBP, 

which would need to conduct or oversee these financial or background 

checks. Additionally, it is possible that, to ensure fairness, the heightened 

requirements would be imposed on all importers. Given that the vast 

majority of importers comply with customs laws and pay their duty 

liabilities, such a broad approach may not be cost-effective and could 

potentially restrict trade.

24

 

22As our prior work indicates, another factor that can lead the amount of penalties CBP 

ultimately collects to be lower than the amount initially assessed is successful petition by 

an importer. See GAO, Options for Collecting Revenues on Liquidated Entries of 

Merchandise Evading Antidumping and Countervailing Duties, 

By 

contrast, CBP is permitted to seize shipments brought in through other 

forms of evasion, such as through falsifying the country of origin of goods 

(illegal transshipment) or failing to declare goods on entry documents 

GAO-12-131R

(Washington, D.C.: Nov. 2, 2011). 

23GAO-08-391. 

24Under 19 U.S.C. § 1595a, shipments imported contrary to United States classification or 

valuation law, where there are no issues as to the admissibility of the merchandise into the 

Unites States, can only be seized in accordance with 19 U.S.C. § 1592.

Circumstances under Which 

CBP Can Seize Shipments 

Brought in through Evasion 

Are Limited
 

Page 19 GAO-12-551 Antidumping and Countervailing Duties

(smuggling).25 Of the 33 seizures CBP made between fiscal years 2007 

and 2011, at least 28 were related to false country of origin or smuggling. 

For instance, CBP officials at one port seized a shipment of plastic bags 

following a cargo exam that revealed the shipment’s country of origin had 

been falsified. However, as CBP has testified before Congress, entities 

engaging in evasion often use false markings and packaging that make it 

very difficult to determine country of origin through visual examination 

alone, complicating the task of establishing grounds for seizure. 

Moreover, as noted earlier, verifying evasion is an inherently difficult and 

time-consuming process. CBP officials stated that, by the time CBP is 

able to verify an instance of evasion, the associated goods typically have 

already entered the United States and cannot be seized.

Communication between Commerce and CBP has improved since our 

2008 report on AD/CV duties, and CBP has encouraged port officials to 

use higher bonding requirements to protect AD/CV duty revenue when 

they suspect incoming shipments of evasion. However, CBP lacks 

information from Commerce that would enable it to better plan its 

workload and minimize the burden of the U.S. retrospective system on its 

efforts to address evasion. Additionally, CBP has neither a policy nor a 

mechanism in place for a port requiring a higher bond to share this 

information with other ports in case an importer attempts to “port-shop,” 

i.e., chooses to withdraw its shipment and attempts to make entry at 

another port in an attempt to avoid the larger bond requirement.

CBP officials cited the administrative burden of the U.S. retrospective 

system as a factor that diminishes the resources they have available for 

detecting and deterring evasion of AD/CV duties. Under the U.S. 

retrospective system, importers that properly declare their products as 

subject to AD/CV duties (i.e., do not evade) pay the estimated amount of 

duties when products enter the United States, but the final amount of 

duties owed is not determined until later. The documentation for the 

entries remains at the ports while CBP awaits liquidation instructions 

conveying the final duty rate from Commerce. Commerce’s review to 

 

25CBP can also seize goods suspected of evading AD/CV duties if it can prove that the 

goods violate other laws. For instance, CBP officials at one port we visited stated that they 

were able to seize shipments of honey suspected of evasion after a sample they sent to 

the Food and Drug Administration for testing was found to contain a carcinogenic 

substance, thereby violating import safety law—a legitimate reason for seizure.

Interagency 

Communication Has 

Improved and CBP Has 

Promoted Use of Higher 

Bonding Requirements to 

Protect Revenue, but 

Weaknesses in Information 

Sharing Remain

Despite Improved 

Communication with 

Commerce, CBP Lacks 

Information Needed to Mitigate 

Burden of Retrospective 

System on Efforts to Address 

Evasion 
 

Page 20 GAO-12-551 Antidumping and Countervailing Duties

determine the final duty rate—a process that culminates with the issuance 

of liquidation instructions—typically takes up to 18 months to complete 

and can take months or years longer if litigation is involved.26

Figure 6: Unliquidated Entries Subject to AD/CV Duties Stored in File Room at a 

U.S. Port of Entry

At one port 

we visited, CBP officials stated that they had approximately 20,000 

entries awaiting instructions to liquidate for food-related products alone. 

At another port, officials showed us the file room where they store entries

awaiting liquidation instructions (see fig. 6). Moreover, each of the 

thousands of entries subject to AD/CV duties must be liquidated through 

manual data entry, which is resource- and time-intensive and diverts CBP 

personnel from their efforts to detect and deter evasion.

Under U.S. law, CBP has 6 months to liquidate entries from the time that 

it receives notice of the lifting of suspension of liquidation.27

 

26During this review, which is known as an administrative review, Commerce analyzes 

previous imports to determine the actual level of dumping or subsidization for those 

imports and calculate the final duty rate.

According to 

CBP officials, this 6-month deadline can be very difficult to meet, 

2719 U.S.C. § 1504(d). Liquidation of entries subject to AD/CV duties is suspended until 

removed by statute or by court order.
 

Page 21 GAO-12-551 Antidumping and Countervailing Duties

especially when a large volume of imports needs to be liquidated.28

Since our 2008 report, Commerce has taken steps to improve the 

transmission of its liquidation instructions to CBP. We found in 2008 that, 

about 80 percent of the time, Commerce failed to send liquidation 

instructions within its self-imposed deadline of 15 days after the 

publication of the Federal Register notice. Furthermore, we reported that 

the instructions were sometimes unclear, thereby causing CBP to take 

extra time to obtain clarification.

In 

order to begin liquidating entries, CBP must first receive liquidation 

instructions from Commerce.

29

Despite these improvements, CBP officials stated that they lack 

information from Commerce needed to effectively manage their workload. 

Specifically, although CBP and Commerce both characterized their 

interagency working relationship as cooperative, CBP officials stated that 

Commerce does not provide them with advance notice on a regular basis 

before issuing liquidation instructions, impairing their ability to make 

workload decisions that could help mitigate the impact of the liquidation 

process on their efforts to detect and deter evasion. Similarly, we testified 

Consequently, we identified untimely 

and unclear liquidation instructions from Commerce as an impediment to 

CBP’s ability to liquidate entries. In response to our recommendation to 

identify opportunities to improve liquidation instructions, Commerce took 

steps to improve the transmission of liquidation instructions to CBP. For 

instance, Commerce deployed a system for tracking when it sends 

liquidation instructions, which according to Commerce, has greatly 

improved its timeliness. Documentation from Commerce indicates that, in 

the first half of fiscal year 2012, Commerce sent liquidation instructions on 

a timely basis more than 90 percent of the time. In addition, Commerce 

and CBP jointly established a mechanism for CBP port personnel to 

submit questions directly to Commerce regarding liquidation issues. 

According to CBP officials, these steps have improved the ability of port 

personnel to ask Commerce to clarify its liquidation instructions. 

 

28When CBP is unable to complete the liquidation process within 6 months, an entry is 

“deemed liquidated,” and the entry is liquidated at the rate assessed at the time of entry. 

This precludes CBP from attempting to collect any supplemental additional duties that 

might have been owed because of an increase in the AD/CV duty rate. Similarly, it means 

that CBP does not refund money owed to importers as a result of a decrease in the 

AD/CV duty rate, absent a proper protest by the importer.

29GAO-08-391. 
 

Page 22 GAO-12-551 Antidumping and Countervailing Duties

in May 2011 that, without advance notice from Commerce on upcoming 

liquidation instructions, it can be very difficult for CBP to make workforce 

planning and staffing decisions. CBP officials at headquarters and at 

ports we visited stated that liquidation instructions arrive with little warning 

but need to be acted on immediately due to the 6-month deadline for 

liquidating entries. They said that this sudden shift in workload diverts key 

personnel from efforts to address evasion to focus on manually liquidating 

thousands of entries instead. In the absence of advance notice from 

Commerce on upcoming liquidation instructions, CBP attempts to roughly 

estimate where its workload peaks will occur on the basis of the 18-month 

time frame within which Commerce typically completes liquidation 

instructions. However, CBP officials stated that no such estimation is 

possible in cases involving litigation, which are not subject to time frames. 

According to CBP, cases involving litigation are particularly burdensome 

because of the considerable length of time it can take to resolve some 

cases, during which an extremely large number of entries can accumulate 

at the ports—all of which CBP eventually has to attempt to liquidate within 

the 6-month deadline. However, Commerce does not currently inform 

CBP when a court reaches a decision on a case in litigation—information 

that would enable CBP to conduct some workload planning. According to 

CBP officials, since CBP is not a party to such cases, it would be helpful if 

Commerce provided them with some notification once decisions are 

reached. Commerce officials stated that they do not know when courts 

will reach decisions on cases in litigation, but said that they could work 

with CBP to identify opportunities to share information regarding the 

status of litigation.

In response to a CBP request, Commerce recently provided CBP some 

information for the first time to help with workload planning. In June 2011, 

Commerce officials provided their counterparts in CBP headquarters with 

a list of instructions planned for issuance over the next 6 months. CBP 

officials at headquarters acknowledged receiving the list from Commerce, 

stating that, although the list did not address their need to know when 

courts reach decisions on cases involving litigation, they found it useful 

for general workload planning purposes. They noted that they would like 

to receive this type of list from Commerce on a quarterly basis to have 

more up-to-date information on hand to incorporate into their workload 

planning decisions. Commerce officials stated that they would be willing 

to work with CBP to develop a schedule for sharing this list on a regular 

basis.
 

Page 23 GAO-12-551 Antidumping and Countervailing Duties

CBP has encouraged the use of higher bonding requirements, called 

single transaction bonds (STB), to protect AD/CV duty revenue from the 

risk of evasion; however, it has not ensured that a port requiring an STB 

shares this information with other ports in case an importer withdraws its 

shipment and attempts to make entry at another port to avoid the STB. As 

noted earlier, all importers are required to post a security, usually a 

general obligation bond, when they import products into the United 

States.30 This bond is an insurance policy protecting the U.S. government 

against revenue loss if an importer defaults on its financial obligations as 

well as ensuring compliance with the law.31 However, given CBP’s 

concerns that this general bond inadequately protects AD/CV duty 

revenue, CBP has encouraged port officials to protect additional revenue 

by requiring STBs for individual shipments they suspect of evasion.32

While CBP has encouraged the use of STBs to protect revenue related to 

imports suspected of AD/CV duty evasion, vulnerabilities exist due to 

gaps in port-level information sharing. CBP gives each port the discretion 

The 

amount of the STB is generally one to three times the total entered value 

of the merchandise plus duties, taxes, and fees, depending on the 

revenue risk. According to CBP officials, STBs serve as additional 

insurance in cases where CBP has not been able to collect enough 

evidence before a shipment’s arrival to prove that evasion is occurring, 

but where enough suspicion exists about the shipment to warrant 

protection of the anticipated AD/CV duty revenue. An importer that is 

required to obtain an STB can either choose to post the bond in order to 

enter its shipment, or can opt against obtaining the bond and withdraw its 

shipment. If an importer decides to post the STB, and CBP later confirms 

that AD/CV duties are indeed owed, CBP first tries to collect from the 

importer. However, if CBP is unable to collect from the importer, it can 

collect significantly more money from the surety (insurance) company that 

underwrote the STB than it would typically be able to collect from the 

surety on a general bond, given the larger amount of revenue protected 

by the STB.

 

3019 C.F.R. § 142.4.

3119 U.S.C. § 1623. In general, the importer is required to obtain a bond equal to 10 

percent of the amount the importer paid in duties, taxes, and fees over the preceding year 

(or $50,000, whichever is greater).

32During our review, CBP was unable to provide data on the number of STBs port officials 

have required.

CBP Has Encouraged Use of 

Higher Bonding Requirements 

to Protect Additional Revenue 

from Risk of Evasion, but Gaps 

Exist in Information Sharing
 

Page 24 GAO-12-551 Antidumping and Countervailing Duties

to decide when to require an STB. However, CBP has no policy or 

mechanism in place for ports requiring such a bond to share this 

information with other ports in case an importer attempts to port-shop, 

i.e., chooses to withdraw its shipment and attempts to make entry at 

another port in an attempt to avoid the larger bond requirement. Instead, 

CBP port officials currently rely on informal e-mail and telephone 

communication to notify other port officials of importers potentially 

seeking to port-shop. Officials we met with cited specific instances where 

this informal approach had been ineffective in notifying other ports of 

suspected evasion before the importer could enter the goods at another 

port. For example, CBP officials at one port described a case where an 

importer that decided against posting an STB at their port was able to 

make entry in another port before they were able to e-mail a warning 

about that particular importer to other ports. In another case, an importer 

succeeded in entering a shipment of furniture in Newark after officials at 

the initial port of entry on the West Coast failed to notify other ports that 

the importer had decided to withdraw its entry instead of posting an STB. 

In both cases, CBP port officials suspected evasion but did not take 

additional action in time to warn other ports of entry about the potential for 

port-shopping.

Although CBP is currently formulating policy to guide the use of STBs, the 

policy may not fully address the risk of port-shopping. In February 2012, 

CBP officials stated that they were in the process of completing a policy 

that will further encourage port officials to use STBs and provide them 

with guidance on circumstances under which the use of STBs is 

appropriate.33 Officials stated that the policy will also instruct officials at a 

port requiring an STB to review any other shipments from the importer in 

question before releasing them. They added that they had not yet decided 

whether or not to automatically instruct ports nationwide to conduct the 

same level of review.

 

33Commerce officials stated that they would be willing to assist CBP with this policy. 
 

Page 25 GAO-12-551 Antidumping and Countervailing Duties

While CBP has improved its performance measures for addressing 

AD/CV duty evasion and enhanced its monitoring of STBs, it does not 

systematically track or report key outcome information that CBP 

leadership and Congress could use to assess and improve CBP’s efforts 

to detect and deter AD/CV duty evasion. First, CBP cannot readily 

produce key data on AD/CV duty evasion, such as the number of 

confirmed cases of evasion, which it could use to better inform and 

manage its efforts. Second, CBP does not consistently track or report on 

the outcomes of allegations of evasion it receives from third parties. As 

we have previously reported, internal control is a major part of managing 

an organization and should be generally designed to assure that ongoing 

monitoring occurs in the course of normal operations.34 Furthermore, our 

prior work has noted the need for agencies to consider the differing 

information needs of various users, such as agency top leadership and 

Congress. Specifically, as we reported in March 2011, the Government 

Performance and Results Modernization Act of 2010 underscores the 

importance of ensuring that performance information will be both useful 

and used in decision making.35

In the past year, CBP has made enhancements in the following two areas 

to track its efforts related to combating AD/CV duty evasion:

• CBP has taken steps to improve the performance measures for its 

efforts to detect and deter AD/CV duty evasion. CBP told us that in

fiscal years 2010 and 2011, a majority of the performance measures

for AD/CV duty enforcement either lacked sufficient data or were 

declared to be “not measurable.” For example, CBP considered one 

measure for fiscal year 2011—”analysis completed and enforcement 

alternatives concurred”— too broad to collect data and report on, 

given the large number of CBP offices that conduct analysis and 

enforcement. In another example, CBP did not provide a response to 

the fiscal year 2011 performance measure related to the results of 

cargo exams because, according to CBP officials, cargo exams are 

conducted at the local level and not tracked, creating a dearth of 

 

34GAO, Internal Control: Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).

35See GAO, GPRA Modernization Act Provides Opportunities to Help Address Fiscal, 

Performance, and Management Challenges, GAO-11-466T (Washington, D.C.: Mar. 16, 

2011).

CBP Has Made Some 

Performance 

Management 

Improvements but 

Does Not 

Systematically Track 

or Report on Its 

Efforts to Detect and 

Deter Evasion

CBP Has Improved 

Performance Measures 

and Began Monitoring the 

Use of STBs
 

Page 26 GAO-12-551 Antidumping and Countervailing Duties

reportable data. In addition, CBP was unable to track and assess its 

efforts over time because its measures were inconsistent from year to 

year.

By contrast, CBP’s fiscal year 2012 action plan includes a new set of 

performance metrics with measurable targets consistent from fiscal 

years 2012 through 2017. For example, the performance measure for 

penalties issued has targets to increase the amount of penalties 

issued each year by 10 or 15 percent. There are similar measures 

with targets for increasing the percentage of AD/CV duties collected 

and the number of audits related to AD/CV duties.

• CBP is working to improve its ability to track and report on the use of 

STBs. In June 2011, after finding that CBP could not determine the 

total number of STBs used at the ports, the Department of Homeland 

Security Inspector General recommended that CBP appoint a 

centralized office responsible for reporting STB-related activities and 

monitoring results.36 The Inspector General’s report also 

recommended that CBP automate the STB process to provide 

enhanced tracking ability. CBP concurred with these 

recommendations, stating that it had begun the process of centralizing 

STB-related roles and responsibilities and developing a system to 

automate the STB process. Moreover, one of the new measures in 

the fiscal year 2012 action plan tracks the number of STBs used for 

AD/CV duty evasion.

While CBP has reported anecdotes about its successes in addressing 

AD/CV duty evasion and collects some statistics on its efforts, it lacks key 

data that it could use to assess and improve its management practices 

and that could enhance congressional oversight. Over the past year, CBP 

has publicly reported anecdotes of successful efforts to detect and deter 

AD/CV duty evasion. For example, in testimony before Congress in May 

2011, the Assistant Commissioner for CBP’s Office of International Trade 

described five recent cases where CBP and ICE uncovered instances of 

evasion and penalized those responsible. Similarly, in a report to 

Congress on fiscal year 2010 efforts to enforce AD/CV duties, CBP cited 

eight cases that led to enforcement action against parties engaging in 

evasion. CBP has also produced publicly available videos illustrating a 

 

36Department of Homeland Security Office of Inspector General, Efficacy of Customs and 

Border Protection’s Bonding Process, OIG-11-92 (Washington, D.C.: June 27, 2011).

CBP Lacks Key Data to 

Effectively Manage Its 

Efforts to Detect and 

Deter Evasion
 

Page 27 GAO-12-551 Antidumping and Countervailing Duties

successful case where CBP worked with ICE to arrest and convict an 

importer who evaded the AD/CV duties on wire hangers.

CBP collects some statistics on its efforts to detect and deter AD/CV duty 

evasion but lacks other key data on these efforts. For example, CBP 

provided us with statistics on civil penalties and seizures related to AD/CV 

duty evasion. However, CBP lacks data on

• the total number of confirmed cases of AD/CV duty evasion;

• the total amount of duties assessed and collected for confirmed cases 

of evasion;

• the country of origin, product type, and method of evasion for each 

confirmed case of evasion; and

• the number of confirmed cases of evasion involving a foreign importer 

of record.

CBP attributed this lack of data to the absence of a policy requiring 

officials to record confirmed cases of AD/CV duty evasion. CBP officials 

explained that although CBP has a database in which instances of 

evasion could be recorded, current policy does not require officials to 

record such instances. Consequently, CBP cannot conduct a simple data 

query to identify all confirmed cases of evasion. Without the ability to 

identify cases of evasion, CBP cannot easily access other related data on 

AD/CV evasion that could help improve management decisions and 

oversight. For example, CBP is currently unable to produce data on the 

total amount of duties assessed and collected for confirmed cases of 

evasion—figures that would provide CBP leadership and Congress 

visibility over some of the results of CBP’s efforts to address evasion. 

Similarly, comprehensive data on the country of origin, product type, and 

method of evasion for each confirmed case of evasion could potentially 

help CBP identify trends and shifts in evasive activity and make 

adjustments accordingly.

CBP also lacks complete data on the country of origin and product type 

associated with the 252 civil penalties it imposed for AD/CV duty evasion 

between fiscal years 2007 and 2011 (see fig. 7). CBP attributed these 

missing data items to CBP personnel not recording them in CBP’s 

automated system for tracking penalties. Due to these missing data 

items, CBP lacks a complete picture of the countries and commodities 

involved in its penalty cases—information it could use to guide and 
 

Page 28 GAO-12-551 Antidumping and Countervailing Duties

improve its efforts. For example, CBP could identify which types of 

commodities have led to penalties most often and decide whether or not 

to focus more resources and detection efforts on those types of 

commodities.

Figure 7: Missing Data on Civil Penalties CBP Imposed between Fiscal Years 2007 

and 2011 for AD/CV Duty Evasion, as of February 2012

Note: Percentages do not add to 100 due to rounding.

According to CBP officials, CBP addresses all allegations of AD/CV duty 

evasion it receives, including e-Allegations received online, but it does not 

routinely track or report on the outcomes of these allegations. As a result, 

Congress and industry stakeholders lack information about the outcomes 

of the allegations, which both parties have cited as a cause of concern. 

Data from CBP indicate that it generally assigns allegations to its national 

targeting staff for AD/CV duty issues (i.e., the NTAG) within 2 days of 

receipt. The NTAG then assesses the validity of the allegation using 

targeting and other analytical tools. If the NTAG determines that the 

allegation may be valid, it will typically refer the allegation to the 

appropriate port or to ICE for further investigation and possible 

enforcement action. As of September 2011, CBP had confirmed or 

referred nearly one-quarter of the approximately 400 allegations it 

CBP Does Not 

Consistently Track or 

Report Outcomes of 

Allegations of Evasion
 

Page 29 GAO-12-551 Antidumping and Countervailing Duties

received from 2008 to August 2011. About half could not be validated, 

and another one-quarter were still under analysis.

Although CBP has stated that it addresses all allegations of AD/CV duty 

evasion it receives, it has reported little information to date on the 

outcomes of its efforts to follow up on these allegations. For instance, 

CBP’s report to Congress on AD/CV duty enforcement efforts in fiscal 

year 2010 mentions that CBP has received hundreds of allegations from 

the trade community, but the report includes no information on the 

outcomes of those allegations. In January 2011, in response to a 

congressional request, CBP produced a spreadsheet of the allegations it 

had received since June 2008. CBP officials told us that this spreadsheet 

was created upon request and is not something CBP updates or uses for 

management or policy purposes. While this document lists certain details, 

such as the source of each allegation, and identifies allegations of 

evasion that CBP confirmed as valid, it does not include any information 

on the associated enforcement outcomes. During the course of our 

review, CBP provided us with expanded versions of the spreadsheet in 

response to our request for details on the results of the allegations. 

However, these expanded versions provide little insight into the results of 

the allegations. For instance, the most recent version of the spreadsheet 

that we received, from September 2011, documents the enforcement 

outcome for only one of the 24 allegations labeled as “allegation 

confirmed.” CBP was also unable to determine if the allegations referred 

to ports and ICE by the NTAG were subsequently confirmed as valid or 

resulted in enforcement outcomes.

CBP’s limited reporting on the outcomes of allegations is due, in part, to 

inconsistent, decentralized tracking of such information. CBP officials 

stated that once the NTAG has referred an allegation to a port or to ICE 

for further action, CBP considers the allegation to be closed and may or 

may not follow up to track its outcome. While CBP creates a record within 

its Commercial Allegation and Reporting System for each allegation it 

receives, there is no requirement for either the NTAG or the entity 

receiving the allegation referral to update these records with details on its 

enforcement outcomes. Instead, port officials and ICE store information 

on enforcement outcomes in other data systems that are not linked to the 

Commercial Allegation and Reporting System. CBP officials at 

headquarters told us that aggregating data from these various systems to 

link allegations with their associated outcomes would be difficult and timeconsuming. Additionally, according to ICE, it does not specifically track 

cases generated as a result of allegations referred by CBP. 

Consequently, since ICE cannot identify which of its cases involve 
 

Page 30 GAO-12-551 Antidumping and Countervailing Duties

allegations referred from CBP, it also cannot identify the associated 

outcomes.

An additional cause of CBP’s limited reporting on the outcomes of 

allegations is legal restrictions on the types of information it can share. 

During our review, we met with representatives of a coalition of domestic 

industries affected by AD/CV duty evasion. Some of these 

representatives stated that they had submitted allegations of evasion to 

CBP and expressed frustration that although they had requested updates 

from CBP on the outcomes of the allegations they submitted, CBP had 

not provided them with the information requested. CBP officials attributed 

this, in part, to the Trade Secrets Act, which they said restricts their ability 

to disclose the specific kinds of information requested. Additionally, CBP 

officials stated that they cannot disclose information about allegations 

involving active ICE investigations. Furthermore, CBP does not report on 

the results of its efforts at an aggregate level, which would avoid divulging 

restricted information while keeping key stakeholders informed. CBP 

officials stated that they are currently exploring ways to legally share what 

information they can on allegations with the parties that filed them.

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. While CBP employs a 

variety of techniques to detect and deter such evasion, its efforts are 

significantly hampered by a number of factors primarily beyond its control. 

These include the inherently difficult and time-consuming process of 

uncovering evasive activity conducted through clandestine means, 

inconsistent access to foreign countries that limits CBP’s ability (as well 

as ICE’s) to gather necessary evidence, and the ease with which 

importers attempting to evade duties can change names and identification 

numbers to elude detection. Nonetheless, some improvements have been 

made since we last reported, including better communication between 

Commerce and CBP and CBP’s encouragement of the use of higher 

bonding requirements to protect additional AD/CV duty revenue in 

instances where it suspects evasion. However, CBP lacks information 

from Commerce that it needs to better plan its workload and mitigate the 

impact of the time- and resource-intensive liquidation process on its 

efforts to address evasion. Further, CBP has no policy or mechanism for 

port officials to minimize the risk of port-shopping by notifying other ports 

about their use of higher bonding requirements. Unless these gaps in 

information sharing are closed, these recent initiatives may be 

Conclusions 
 

Page 31 GAO-12-551 Antidumping and Countervailing Duties

compromised, thereby limiting the effectiveness of CBP’s efforts to 

address AD/CV duty evasion.

CBP has also made some improvements in managing its efforts to 

address AD/CV duty evasion, including by developing better performance 

measures and monitoring its use of higher bonding requirements. 

However, it lacks key data on AD/CV duty evasion, including on 

confirmed cases of evasion and penalties, which could help it assess and 

improve its approach to addressing evasion and also inform agency and 

congressional decision makers about its efforts. Moreover, CBP has 

neither tracked nor reported the outcomes of the allegations of evasion it 

has received from third parties. Without improved tracking and reporting, 

agency leadership, Congress, and industry stakeholders will continue to 

have insufficient information with which to oversee and evaluate CBP’s 

efforts.

To enhance CBP’s efforts to address AD/CV duty evasion and facilitate 

oversight of these efforts, we make the following recommendations:

First, to help ensure that CBP receives the information it needs from 

Commerce to plan its workload and mitigate the impact of the liquidation 

process on its efforts to address evasion, the Secretary of Commerce 

should work with the Secretary of Homeland Security to identify 

opportunities for Commerce to

• regularly provide CBP advance notice on liquidation instructions, and

• notify CBP when courts reach decisions on AD/CV duty cases in 

litigation.

Second, to help minimize the risk of port-shopping by importers seeking 

to avoid higher bond requirements, the Secretary of Homeland Security 

should direct CBP to create a policy and a mechanism for information 

sharing among ports regarding the use of higher bond requirements.

Third, to inform CBP management and to enable congressional oversight, 

the Secretary of Homeland Security should ensure that CBP develop and 

implement a plan to systematically track and report on

• instances of AD/CV duty evasion and associated data—such as the 

duties assessed and collected, penalties assessed and collected, and

Recommendations for 

Executive Action
 

Page 32 GAO-12-551 Antidumping and Countervailing Duties

the country of origin, product type, and method of evasion for each 

instance of evasion—and

• the results, such as enforcement outcomes, of allegations of evasion 

received from third parties.

We provided a draft of this report to the Secretary of the Department of 

Homeland Security, the Secretary of Commerce, and the Secretary of the 

Treasury for their review and comment. We received technical comments 

from the Departments of Homeland Security, Commerce, and Treasury, 

which we incorporated where appropriate. We also received written 

comments from the Departments of Homeland Security and Commerce, 

which are reprinted in appendixes II and III, respectively. The Department 

of the Treasury did not provide written comments. 

In commenting on a draft of this report, the Department of Homeland 

Security concurred with our recommendations addressed to the 

department that CBP (1) create a policy and a mechanism for information 

sharing among ports regarding the use of higher bond requirements and 

(2) develop and implement a plan to track and report systematically 

instances of AD/CV duty evasion and the results of CBP’s enforcement 

actions. 

The Department of Commerce generally concurred with the 

recommendation addressed to the department to work with CBP to 

identify opportunities for Commerce to (1) regularly provide CBP with 

advance notice of liquidation instructions and (2) notify CBP when courts 

reach decisions on AD/CV duty cases in litigation. 

In its response, Commerce stated that both CBP and Commerce receive 

copies of injunctions from the U.S. Court of International Trade and 

attached a copy of a preliminary injunction to demonstrate how both 

agencies are generally served copies of the injunctions. However, when a 

court orders an injunction, such as the one Commerce provided, 

Commerce and CBP are enjoined37

 

37Enjoin means to legally prohibit or restrain by injunction. Black’s Law Dictionary (7th 

ed., 1999).

from issuing liquidation instructions or 

otherwise causing or permitting liquidation of the entries that are the 

Agency Comments 

and Our Evaluation
 

Page 33 GAO-12-551 Antidumping and Countervailing Duties

subject of the litigation. As a result, the injunction does not provide CBP 

with the information it needs to help with workload planning because it is 

not a court action that constitutes notice of the lifting of a suspension of 

liquidation, which would start the 6-month period in which CBP must 

liquidate entries. While an injunction can provide CBP information to help 

with workforce planning, it does not address CBP’s concern for regular 

advance notice of forthcoming liquidation instructions. CBP needs 

information from Commerce on when final court decisions are reached to 

help enable the agency to better plan its workload and help mitigate the 

administrative burden it faces in processing AD/CV duties—an effort that 

diminishes the resources it has available to address evasion.

We are sending copies of this report to the appropriate congressional 

committees, the Departments of Homeland Security, Commerce, the 

Treasury, and other interested parties. In addition, the report is available 

at no charge on the GAO website at http://www.gao.gov.

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

contact me at (202) 512-4101 or gomezj@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this

report are listed in appendix IV. 

Alfredo Gomez

Acting Director, International Affairs and Trade
Appendix I: Objectives, Scope, and 

Methodology

Page 34 GAO-12-551 Antidumping and Countervailing Duties

To examine how the Department of Homeland Security’s U.S. Customs 

and Border Protection (CBP) detects and deters the evasion of 

antidumping and countervailing (AD/CV) duties, we examined agency 

documents that outline CBP’s process and methods for identifying 

evasion of AD/CV duties; reviewed laws and other documents that 

identify the enforcement options CBP uses to deter evasion; and 

analyzed data from CBP and U.S. Immigration and Customs Enforcement 

(ICE) on deterrence activities such as civil penalties, seizures, criminal 

arrests, indictments, and criminal convictions.

To identify factors that affect CBP’s efforts to detect and deter AD/CV 

duty evasion, we examined CBP documents that highlight the challenges 

and the timeline associated with verifying evasion; analyzed data on the 

amount of civil penalties CBP has collected from importers evading 

AD/CV duties; and reviewed legislation governing CBP’s use of seizures, 

internal memos on the use of single transaction bonds, and previous 

GAO reports on AD/CV duties.

To assess the extent to which CBP tracks and reports on its efforts to 

detect and deter AD/CV duty evasion, we reviewed CBP annual plans 

that identify its performance measures for addressing AD/CV duty 

evasion; documents that show CBP’s performance against these 

measures; CBP testimony and videos publicizing successful efforts to 

address evasion; a CBP report to Congress on fiscal year 2010 efforts to 

enforce AD/CV duties; and a report by the Department of Homeland 

Security Inspector General on CBP’s bonding process, including its use 

and tracking of single transaction bonds. Additionally, we analyzed data 

on civil penalties CBP has imposed for AD/CV evasion and allegations of 

evasion received from third parties.

Additionally, in the Washington, D.C., area, we discussed our objectives 

with officials in CBP’s Offices of International Trade, Field Operations, 

and Intelligence and Investigative Liaison; ICE; and the Departments of 

Commerce and the Treasury, as well as a coalition of U.S. industries 

affected by AD/CV duty evasion.

To obtain a more in-depth understanding of U.S. efforts to detect and 

deter AD/CV duty evasion, we conducted fieldwork at the ports of Miami, 

FL; Seattle, WA; and Los Angeles, CA. We selected the port of Miami 

due, in part, to its proximity to CBP’s National Targeting and Analysis 

Group (NTAG) for AD/CV duty issues; the port of Seattle due, in part, to 

the high number of civil penalties it imposed for AD/CV duty evasion over 

the last 5 years; and the port of Los Angeles because it processed the 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-12-551 Antidumping and Countervailing Duties

most imports subject to AD/CV duties, by value, of any U.S. port. At each 

port, we met with officials from CBP and ICE to discuss the efforts they 

undertake to detect and deter AD/CV duty evasion at their port, the 

challenges they face in detecting and deterring evasion, and the process 

they use to track and report the results of these efforts. We also met with 

representatives of the NTAG for AD/CV duty issues in Plantation, FL, to 

discuss their methods for detecting evasion, both through their own 

targeting efforts and through analyzing allegations of evasion they receive 

from third parties.

To determine the reliability of the data we collected on AD/CV duty 

orders, civil penalties, seizures, ICE enforcement outcomes (i.e., arrests, 

indictments, and criminal convictions), and allegations received from third 

parties, we compared and corroborated information from different 

sources; checked the data for reasonableness and completeness; and 

asked agency officials how the data are collected, tracked, and reviewed 

for accuracy. Based on the checks we performed, our discussions with 

agency officials, and the documentation the agencies provided to us, we 

determined that the data we collected were sufficiently reliable for the 

purposes of this engagement.

We conducted this performance audit from June 2011 to May 2012 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, 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.
Appendix II: Comments from the Department 

of Homeland Security

Page 36 GAO-12-551 Antidumping and Countervailing Duties

Appendix II: Comments from the Department 

of Homeland Security
Appendix II: Comments from the Department 

of Homeland Security

Page 37 GAO-12-551 Antidumping and Countervailing Duties
Appendix III: Comments from the Department 

of Commerce

Page 38 GAO-12-551 Antidumping and Countervailing Duties

Appendix III: Comments from the 

Department of Commerce
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 39 GAO-12-551 Antidumping and Countervailing Duties

Alfredo Gomez, (202) 512-4101, or gomezj@gao.gov

In addition to the individual named above, Christine Broderick (Assistant 

Director), Aniruddha Dasgupta, Julia Jebo, Diahanna Post, Loren Yager, 

Ken Bombara, Debbie Chung, Martin De Alteriis, Etana Finkler, and 

Grace Lui made key contributions to this report. Joyce Evans, Jeremy 

Latimer, Alana Miller, Theresa Perkins, Jena Sinkfield, Sushmita Srikanth, 

Cynthia S. Taylor, and Brian Tremblay provided technical assistance.

Appendix IV: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(320882)
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