Antidumping and Countervailing Duties: Congress and Agencies Should Take Additional Steps to Reduce Substantial Shortfalls in Duty Collection
Published: 2008-03-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: U.S. Customs and Border Protection (CBP) has been unable to collect hundreds of millions of dollars in antidumping (AD) and countervailing (CV) duties. The Department of Commerce imposes these duties to remedy injurious unfair foreign trade practices (unfairly low prices or subsidies). The noncollection of AD/CV duties means that the U.S. government has not fully remedied the unfair trade practices and bears a substantial loss of revenue. GAO was asked to examine the (1) nature and extent of uncollected AD/CV duties, (2) factors contributing to uncollected AD/CV duties and steps taken to address these factors, and (3) options for aiding duty collections. To analyze these issues, GAO reviewed CBP data for fiscal years 2001 through 2007, agency documents and reports, and interviewed government officials and private sector representatives
section_title: What GAO Found
paragraphs: While over $600 million in AD/CV duties dating back to 2001 remain uncollected, they are highly concentrated among a few products, countries of origin, and importers. For example, four products account for about 84 percent of the total amount of uncollected AD/CV duties. Also, a relatively small number of importers owe the vast majority of these uncollected duties. In addition, half of the 23,000 unpaid AD/CV duty bills are less than $309, but the average duty bill is more than $26,000 due to a relatively small number of very large bills. According to CBP officials, prospects for collecting a sizeable portion of these bills are slim, because many of the importers have disappeared, have no assets, or have declared bankruptcy. CBP reporting on uncollected AD/CV duties has been critical to congressional and public oversight of CBP's efforts to collect AD/CV duties. However, the law generating this reporting has been repealed. Four key factors contribute to uncollected AD/CV duties, a few of which the U.S. government has partially addressed. First, because the U.S. AD/CV duty system involves the retrospective assessment of duties, the final amount of AD/CV duties an importer owes can significantly exceed the initial amount paid when the goods entered the country. Second, companies that did not previously export products subject to AD/CV duties, i.e., "new shippers," pose two types of risks for collections. For example, new shippers can be assigned an AD/CV duty rate based on as few as one shipment, which can significantly underestimate the final duty rate. Also, importers purchasing from new shippers were able to provide a bond in lieu of a cash payment to cover the initial AD/CV duties assessed. Congress addressed this risk by temporarily requiring all importers to pay initial AD/CV duties in cash. Third, all importers must provide a general bond to secure the payment of all types of duties, but CBP's standard practice for setting the amount of this bond inadequately protects AD/CV duty revenue. CBP addressed this by revising its bonding formula for products subject to AD/CV duties, but the revision has been tested on only one product and faces domestic and international legal challenges. Fourth, CBP collects minimal information regarding importers and does not conduct background or financial checks, which creates challenges to locating importers and collecting AD/CV duties. Two sets of options exist for improving AD/CV duty collection, each of which involves potential advantages and disadvantages. One set of options involves revising U.S. law to eliminate the retrospective component of the U.S. AD/CV duty system by assessing final duties when the product arrives in the United States (i.e., a prospective system). But there would be trade-offs. For example, under a retrospective system, the amount of duties finally assessed reflects the actual amount of dumping by the exporter for the period of review. Under a prospective system, the amount of duties assessed may not match the amount of actual dumping or subsidization. However, in practice, a substantial amount of AD/CV duty bills are not collected under the U.S. retrospective system. The second set of options involves making adjustments within the existing system. For example, Congress could revise the standards for new shipper reviews and CBP could examine the option of revising bonding requirements to protect additional AD/CV duty revenue.

section_title: Letter
paragraphs: Since fiscal year 2001, U.S. Customs and Border Protection (CBP) has  been unable to collect antidumping (AD) and countervailing (CV) duties  imposed to remedy injurious unfair foreign trade practices totaling  hundreds of millions of dollars. These include AD duties imposed on  products exported to the United States at unfairly low prices (i.e.,  dumped) and CV duties on products exported to the United States that  were subsidized by foreign governments. This substantial amount of  uncollected duties has caused concern on the part of Congress and the  domestic industries affected by the dumped or subsidized products. The  noncollection of those duties means that the U.S. government has not fully  remedied the unfair trade practices and has lost out on a substantial  amount of revenue.
The process for assessing and collecting AD/CV duties involves two key  agencies and can take several years. The Department of Commerce  (Commerce) is responsible for calculating the appropriate AD/CV duty  rate. CBP is then responsible for completing the processing of duties  (technically called “liquidating”), which may result in providing importers  with a refund or sending an additional bill.
To help reduce uncollected AD/CV duties, you asked us to examine the  reasons why the duties are uncollected and what the U.S. government has  done to address this problem. In addition, you asked us to identify options  for improving the AD/CV duty system. Specifically, we examined (1) the  extent and nature of uncollected AD/CV duties; (2) the key factors  contributing to uncollected AD/CV duties and the steps taken to improve  the collection of AD/CV duties; (3) interagency communications that affect  the processing of AD/CV duties; and (4) potential options for improving  AD/CV duty collections.
To meet these objectives, we analyzed U.S. government data and reports  and interviewed officials from relevant government agencies and the  private sector. To describe the extent and nature of uncollected AD/CV  duties, we reviewed CBP data on all open, unpaid AD/CV duty bills for  fiscal years 2001 through 2007, as of September 2007. To identify the key  factors affecting CBP’s ability to collect AD/CV duties and the steps taken  to improve collection, we analyzed CBP data; reviewed relevant statutes,  regulations, and agency reports; and interviewed agency officials. We also  analyzed CBP records documenting its efforts to collect AD/CV duties,  reviewed agency reports and legislative changes, and interviewed agency  and private sector representatives. To determine whether interagency  processes inhibit the collection of AD/CV duties, we analyzed  documentation related to interagency communications regarding AD/CV  duties and interviewed agency officials. To identify and analyze potential  options for improving AD/CV duty collection, we interviewed agency  officials and private sector representatives and reviewed academic  literature. In addition, we obtained information from several foreign  governments to understand how their AD/CV duty systems operate. We  determined that the data presented in this report are sufficiently reliable  for the purpose for which they are presented. Appendix I provides  additional information regarding our scope and methodology. We  conducted this performance audit from June 2007 to March 2008 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.
subsections: section_title: Background
paragraphs: 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 the facilitation  of the importation of the goods. Importers are responsible for paying all  duties, taxes, and fees on those products when they are brought into the  United States. Importers also are required to obtain a general bond to  secure the payment of their financial obligations. CBP is responsible for,  among other things, collecting the duties, taxes, and fees assessed on  those products and setting the formula for establishing importers’ bond  amounts.
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. law authorizes  the imposition of AD/CV duties to remedy these unfair trade practices,  namely dumping (i.e., sales at less than normal value) and foreign  government subsidies. While AD/CV duties are intended to protect U.S.  industries and workers from unfair foreign trade practices, they also have  become a substantial source of revenue for the U.S. government. CBP is  the U.S. agency responsible for collecting all import duties, which  amounted to over $98 billion from fiscal years 2003 through 2006. A  portion of these duties are AD/CV duties, of which CBP collected $8 billion  in cash deposits (or 7 percent of the total). A recent Department of the  Treasury (Treasury) analysis estimated that for fiscal years 2003 through  2006, the overall collection rate for all duties exceeded 99 percent and the  collection rate for AD/CV duties was somewhat lower (96 percent).  However, Treasury also reported that the collection rate for AD duties  owed as a result of an administrative review by Commerce was less than  50 percent. Treasury estimated that approximately $589 million in total  duties went uncollected during the period. Uncollected AD/CV duties  represented 87 percent of that amount.
Figure 1 shows the amount of uncollected AD/CV duties owed for entries  liquidated during each fiscal year, as of September 30. For example, for  fiscal year 2007, CBP reported $237 million in uncollected AD/CV duties  for entries liquidated during the year, as of September 30, 2007. The  amount of uncollected duties for entries liquidated during fiscal year 2007  could decrease based on additional collections made in subsequent years.
According to government officials and private sector representatives, the  substantial shortfalls in collecting AD/CV duties were first widely  publicized after the enactment of CDSOA (also known as the Byrd  Amendment) in 2001, which provided for the distribution of AD/CV duties  to the injured domestic industries, instead of, as in the past, going to  Treasury. Following the repeal of CDSOA in 2006 after a decision by the  World Trade Organization (WTO) that the law violated WTO rules, AD/CV  duties collected will again be paid to Treasury.
The process for investigating, calculating, and assessing AD/CV duties can  be a lengthy process and involves three key agencies. Commerce is  responsible for determining whether the imports at issue are being sold at  less than fair value (dumped) or are being subsidized by a countervailable  subsidy. The ITC is responsible for determining whether an industry in  the United States is being injured by the imports at issue. Both ITC and  Commerce must make affirmative determinations in their respective  investigations for AD/CV duties to be imposed. Commerce also sets the  AD/CV duty, which is equal to the amount of dumping or subsidization.   CBP is then responsible for collecting the AD/CV duties.
At the completion of its investigation, Commerce issues an AD/CV duty  order, which specifies the products for which importers must pay AD/CV  duties, and indicates the rates applicable to several specific exporters and  a catch-all rate for all other exporters that did not receive a specific rate.  The AD/CV duty order also instructs CBP to collect cash deposits at the  time of importation at those rates on all merchandise subject to the order.  As shown in figure 2, the merchandise also can be subject to an  administrative review by Commerce 12 months after the issuance of the  AD/CV duty order. During the administrative review, Commerce analyzes  previous imports to determine the actual level of dumping or subsidization  for those imports. At the conclusion of the administrative review (typically  about 18 months after the review’s initiation), the liquidation rate (i.e., the  final duty rate) for the merchandise is established. Commerce  communicates the final duty rate to CBP through liquidation instructions  and CBP instructs staff at each port of entry to assess final duties on all  relevant entries (i.e., applying the rate to the value of goods imported).  The liquidation process is complete when CBP refunds money (if the cash  deposit rate was higher than the liquidation rate) or issues a supplemental  bill (if the liquidation rate is higher than the cash deposit rate). If 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.” These actions  must be completed by Commerce and CBP within 6 months. (App. III  provides additional information regarding the AD/CV duty collection  process.)
To collect additional AD/CV duties an importer owes, CBP sends the  importer a monthly bill. An importer has 6 months from the date of  liquidation or reliquidation to protest the bill amount. After the protest  period has expired, if an importer has not paid the bill, CBP requests  payment from the surety (insurance) company that underwrote the bond  the importer provided when the products entered the United States.  According to CBP officials, if CBP does not receive full payment of the bill  within 8 months of sending the first bill, it “sanctions” the delinquent  importer. CBP officials also explained that importers that have not been  sanctioned are allowed to have their merchandise released from the port  of entry without paying all estimated duties, taxes, and fees so long as they  commit to make such payment within 15 days. When importers are  sanctioned, CBP revokes this privilege and requires the full payment of all  estimated duties, taxes, and fees before products can leave the port of  entry. If CBP does not receive payment within 1 year of issuing the first  bill, CBP’s Revenue Division (which is responsible for collecting payment)  refers the case to CBP’s Office of Chief Counsel, which determines the  next course of action. In addition, the Office of Chief Counsel determines  whether the bill should be written off.
While the time frames for completing each step in the process for  assessing and collecting AD/CV duties are established by law, AD/CV  duties also are subject to judicial review, which is not subject to time  frames. According to CBP and Commerce officials, importers and surety  companies frequently obtain legal injunctions or file protests related to the  application of AD/CV duties. In instances where litigation occurs, the  process can take months or years longer than described here.
section_title: Uncollected AD/CV Duties Are Substantial and Highly Concentrated
paragraphs: Uncollected AD/CV duties from fiscal years 2001 through 2007 amount to  over $613 million and are highly concentrated among a few industries,  products, countries of origin, and importers. For example, uncollected  AD/CV duties are highly concentrated in four products from one country.  In addition, a relatively small number of large AD/CV duty bills and  unresolved legal protests accounts for a sizeable portion of the  uncollected AD/CV duties. According to CBP billing records, about $350  million worth of AD/CV duty bills are in various stages of the collection  process. Of those bills, CBP officials expect that most of the nearly $290  million referred to its Office of Chief Counsel will be written off. Private  sector representative and congressional staff have found CBP’s detailed  reporting on uncollected AD/CV duties critical to conducting oversight of  CBP’s collection efforts. However, the law generating this reporting has  been repealed.
subsections: section_title: Uncollected AD/CV Duties Are Highly Concentrated
paragraphs: Data on all open, unpaid bills for AD/CV duties as of September 2007  (which amounted to more than $613 million) show that uncollected AD/CV  duties are highly concentrated in five ways: by (1) industry, (2) product,  (3) country of origin, (4) exporter’s new shipper status, and (5) importer.  In this report we use the phrase “uncollected AD/CV duties” to mean the  sum of all open, unpaid bills for AD/CV duties issued by CBP, which  includes those currently under protest. Nearly 100 percent of these  uncollected duties are AD duties.
As shown in figure 3, uncollected AD/CV duties are highly concentrated in  four ways:    By industry. The agriculture/aquaculture industry accounts for 87 percent  of the total, and the steel industry accounts for 7 percent.
By product. Since fiscal year 2001, CBP has assessed AD/CV duties related  to 597 AD/CV duty orders on specific products. Of those, as of September  2007, 120 duty orders have some amount of uncollected duties.  Approximately 84 percent of the total amount of uncollected AD/CV duties  is associated with four products, all from China: crawfish tail meat, garlic,  honey, and mushrooms.
By country of origin. Importers purchasing from China are responsible  for 90 percent of all uncollected AD/CV duties.
By exporter’s “new shipper” status. Importers that purchased goods from  companies undergoing a special “new shipper” review account for a  substantial amount of uncollected duties. As will be discussed in more  detail later in this report, under U.S. law, these importers were allowed,  until recently, to pay estimated AD/CV duties by posting a bond instead of  paying in cash as other importers are required to do. Importers that  purchased goods from companies undergoing a “new shipper” review are  responsible for approximately 40 percent of uncollected AD/CV duties.
Uncollected AD/CV duties also are highly concentrated among a group of  importers. CBP data show that from October 2000 through July 2007,  about 27,000 importers were subject to AD/CV duties. Of those, 520 (or  less than 2 percent) had uncollected AD/CV duties as of September 2007.
Among those importers that owe AD/CV duties, the majority of the amount  of uncollected AD/CV duties is owed by a relatively small number of  companies. As shown in table 1, the top 4 importers that owe the most  AD/CV duties account for more than one-third of the total amount of  uncollected AD/CV duties, and the top 20 importers account for 63  percent. For example, as of September 2007, “Importer 1” had 133  outstanding AD/CV duty bills amounting to $122 million, which was  secured by a bond of $700,000.
section_title: Most AD/CV Duty Bills Are Small, but a Few Are Very Large
paragraphs: As shown in figure 4, most AD/CV duty bills are small, but a relatively few  large bills skew the average bill amount. Our analysis of CBP billing  records shows that for the approximately 23,000 open, unpaid AD/CV duty  bills as of September 2007, the median bill amount was $309, which means  that half of AD/CV duty bills were less than $309 and half of the bills were  more. However, a relatively small number of bills for more than $1 million  increased the average (mean) bill amount to more than $26,000.
section_title: Unresolved Protests Affect the Amount of Uncollected AD/CV Duties
paragraphs: Unresolved protests of AD/CV duty bills substantially affect the collection  of AD/CV duties. After the completion of Commerce’s administrative  review, importers and surety companies can protest the amount of duties  CBP has assessed. As of September 2007, approximately $265 million (or  43 percent) of the total amount of uncollected AD/CV duties was subject to  protests. These protests affect the extent of uncollected AD/CV duties in  two key ways. First, until the protest is decided, CBP does not take  additional collection action. According to CBP officials, delays in its ability  to take collection action can impair their ultimate ability to collect the full  amount of duties owed. Second, if an importer or surety prevails in its  protest, the AD/CV duty bill is reduced or eliminated.
section_title: A Sizeable Amount of AD/CV Duty Bills Is Likely to Be Written Off
paragraphs: According to CBP billing records, about $350 million worth of AD/CV duty  bills are in various stages of the collection process. Approximately $290  million of these unpaid AD/CV duty bills has been sent to CBP’s Office of  Chief Counsel to determine the appropriate legal action. The Office of  Chief Counsel may take additional collection action such as sending  importers and sureties formal demands for payment or referring the case  to the Department of Justice (Justice) for litigation. In cases where at least  one viable party is located, the case is referred to Justice for litigation  unless the cost of collection is anticipated to exceed the amount  recoverable. The Office of Chief Counsel reports that it is currently  working with Justice to collect over $80 million in outstanding AD/CV  duties from two sureties that are undergoing insolvency proceedings.
CBP officials expect that most of the nearly $290 million referred to its  Office of Chief Counsel will be written off after proper legal review. From  fiscal years 2001 through 2007, CBP wrote off approximately $34 million in  AD/CV duties, most of which ($28 million) was written off in fiscal years  2006 or 2007. The Office of Chief Counsel cited several reasons for  writing off outstanding bills, including (1) CBP is unable to locate the  debtor(s), (2) the importer has no assets, (3) the debt against the debtor  has been discharged in bankruptcy, and (4) the cost of collection is  anticipated to exceed the amount recoverable.
section_title: Law Which Generated CBP Reporting on Uncollected AD/CV Duties Has Been Repealed
paragraphs: According to private sector representatives from industries receiving  payments under CDSOA, the reporting required by CDSOA allowed them  for the first time to easily identify the amount of money collected for each  AD/CV duty order. Though not required by CDSOA, in fiscal year, 2003  CBP began publicly reporting the amount of uncollected duties. This  reporting included detailed data on the amount of AD/CV duties  uncollected for each product subject to AD/CV duties. According to  private sector representatives and congressional staff, such reporting has  been critical to oversight of CBP’s efforts to collect AD/CV duties.
However, in February 2006, CDSOA was repealed. Nonetheless, ensuring  that Congress and the affected domestic industries have access to detailed  data on uncollected AD/CV duties is critical to the oversight of CBP’s  collection efforts. For example, representatives of the crawfish and steel  industries (for which some imports are subject to AD/CV duties) indicate  that detailed reporting on uncollected AD/CV duties is necessary to ensure  that injured U.S. industries are receiving the full amount of protection  intended by the imposition of AD/CV duties.
section_title: Four Key Factors Contribute to Uncollected AD/CV Duties; the Government Has Addressed Some of These Factors
paragraphs: Four key factors contribute to uncollected AD/CV duties; the U.S.  government has addressed some of these factors. First, the retrospective  component of the U.S. AD/CV duty system creates the risk of uncollected  duties because the final amount of AD/CV duties an importer owes can  exceed the amount it paid when goods entered the country. Second, “new  shipper” reviews pose two types of risks for the collection of AD/CV  duties. Congress addressed one of these risks by temporarily suspending  importers’ ability to post bonds and requiring a cash payment to cover the  estimated AD/CV duties owed at the time of importation when purchasing  from a new shipper. Third, all importers must provide a general bond to  secure the payment of duties, but CBP’s standard bond formula provides  little protection of AD/CV duty revenue because it sets bond amounts at a  low level. CBP addressed this by revising its standard bond formula for  imports subject to AD/CV duties, but the revision has only been applied to  one product and faces challenges in domestic courts and internationally.  Fourth, CBP collects minimal information regarding importers and does  not conduct background or financial checks, which creates challenges to  locating and collecting AD/CV duties.
subsections: section_title: Retrospective Component of U.S. AD/CV Duty System Creates Risk for Duty Collection
paragraphs: Two aspects of the retrospective component of the U.S AD/CV duty system  create risk for duty collection. First, under the U.S. AD/CV duty system,  the amount of duties owed (determined through an administrative review  by Commerce) can exceed the amount of estimated AD/CV duties an  importer paid at the time of importation. Second, the long lag time  between the time of importation and the time when final AD/CV duties are  assessed creates a risk that CBP will be unable to collect the full amount  of AD/CV duties owed. During this time, importers may disappear, cease  business operations, or declare bankruptcy, which has created challenges  to CBP’s ability to collect AD/CV duties owed.
subsections: section_title: Retrospective Calculation of Final Duties Creates Risk of Uncollected Duties
paragraphs: Under the U.S. AD/CV duty system, importers must pay estimated AD/CV  duties at the time of importation, but the final amount of duties is not  determined until later.  As a result, after Commerce conducts an  administrative review to establish final AD/CV duty rates, the final amount  of duties owed can exceed the estimated amount of duties the importer  paid at the time of importation. In these cases, CBP must attempt to  collect the duties from importers who are, at times, unable or unwilling to  pay. According to a 2007 Treasury report on major duty collection  problems, these situations create the most significant collection  problems. Some importers are unable to pay the additional amount  because it exceeds their available assets. Others, such as illegitimate  importers, expect that their final assessment will exceed their cash deposit  and plan to avoid their final duty obligation, according to Treasury  officials.
Final AD duty rates are lower or the same as the estimated duty rates the  vast majority of the time. However, in some cases, final duty rates are  significantly higher. In analyzing more than 6 years of CBP data covering  over 900,000 entries subject to AD duties, we found that duty rates went  up 16 percent of the time, went down 24 percent of the time, and remained  the same 60 percent of the time. In instances when rates increased, the  median increase was less than 4 percentage points, meaning that half of  the time the rate increased less than 4 percentage points. However,  because of some large increases, the average rate increase was 62  percentage points, and some exceeded 200 percentage points. When  there was a rate decrease, the median decline was 7 percentage points,  meaning that half of the time the rate decreases were less than 7  percentage points. However, some larger decreases caused the average  rate decrease to be 21 percentage points.
When these rate changes were applied to each entry, CBP provided  refunds or issued supplemental bills to the importers. In part because  there were more refunds than supplemental bills, on balance, the average  result was a refund of $324. For the 24 percent of the entries that had a  rate decrease, the average refund amount was $2,733. For the 16 percent  of the entries that had a rate increase, the average supplemental bill was  $2,137, but one was more than $7 million. Notably, the majority (58  percent) of uncollected duty bills over $500,000 are attributed to rate  increases greater than 150 percentage points. Figure 5 shows the amounts  of uncollected AD/CV duties by various levels of rate increases.
Long lag times between initial entry of a product and final assessment of  duties further increase the risk of uncollected duties, especially when  dealing with illegitimate importers. According to CBP officials, the more  time that elapses between the entry of goods and the assessment of final  duties, the lower the likelihood they will be able to collect any additional  duties owed because importers may disappear, cease business operations,  or declare bankruptcy. As seen in figure 6, half of all entries subject to  AD/CV duties took 29 months (about 2.4 years) or less to liquidate (i.e.,  close the entry or issue a bill or refund). For one entry, however, more  than 18 years elapsed between the entry of the goods and when the entry  was liquidated. On average, this process took about 3.3 years.
According to CBP and Treasury officials, some importers attempting to  avoid AD/CV duties take advantage of the long lag times created by the  system to deliberately evade paying AD/CV duties. Since, on average, more  than 3 years elapse between the entry of the goods and the final  assessment of duties, importers can bring in a large volume of  merchandise subject to AD/CV duties before final duties are assessed.
section_title: New Shipper Reviews Enhance Risk for Uncollected AD/CV Duties; Congress Has Partially Addressed This Risk
paragraphs: U.S. law pertaining to the application of AD/CV duties to “new shippers”  poses two types of risks related to the collection of these duties. The first  risk is linked to the ability of importers purchasing from new shippers to  post bonds instead of having to pay cash deposits. In the course of an  AD/CV duty investigation, Commerce typically determines an AD/CV duty  rate applicable to a good associated with several specific manufacturers  and exporters as well as a rate for all those manufacturers and exporters  of the good not individually investigated. After the conclusion of an AD/CV  duty investigation, some exporters who are not individually investigated  may request a review in order to receive their own rates because they  believe they could receive a lower rate. A “new shipper” (a  manufacturer/exporter) who did not export the subject merchandise  during the initial period of investigation and is not affiliated with any  exporter who exported the subject merchandise can request that  Commerce conduct a review to establish the shipper’s own individual  AD/CV duty rate. Once Commerce initiates a new shipper review,  importers purchasing from the manufacturer/exporter undergoing the  review used to have the option of paying estimated AD/CV duties by  providing a bond in lieu of paying cash. As discussed earlier in this report,  importers that were allowed to provide bonds in lieu of cash deposits are  responsible for about 40 percent of the amount of uncollected AD/CV  duties.
Congress has partially addressed this risk of uncollected AD/CV duties  associated with new shipper reviews. In August 2006, Congress  temporarily suspended the “new shipper bonding privilege” that allowed  importers who purchased from companies undergoing a new shipper  review to provide a bond, instead of cash, to cover the estimated AD/CV  duties due at entry. As a result, all importers must now provide a cash  deposit to cover the estimated duties at entry until July 2009. This new  policy eliminated the risk of uncollected AD/CV revenues when the final  duty amounts were assessed at the cash deposit rate or less because CBP  does not have to issue a bill for the bonded amount. However,  supplemental duties due to rate increases remain unprotected.
The new law also required CBP to apply the revised policy retroactively to  April 1, 2006. Thus, those importers who already had obtained bonds for  AD/CV duties on shipments from new shippers during the approximately  4.5 months preceding the legislation were required to make cash payments  for these shipments. CBP identified $96 million worth of such bonds that  needs to be replaced with cash. While CBP has taken steps to collect this  money, as of January 2008, it had collected only approximately $100,000 in  total.
The second risk is linked to the level of imports required to obtain an  AD/CV duty rate as a result of a new shipper review. U.S. law does not  specify any minimum amount of exports or number of transactions that a  manufacturer or exporter must make to be eligible for a new shipper  review. As a result, an exporter can be assigned its own individual AD/CV  duty rate based on a very minimal amount of exports. For example, a new  shipper can purposely make one commercial shipment to the United  States at a relatively high price for which the importer would pay a  relatively high AD/CV duty rate, then request a review of that shipment.  Commerce’s review (based on the one shipment) will determine that the  new shipper was not dumping the product in the United States and assigns  a 0 percent AD/CV duty deposit rate. Once Commerce assigns the new  shipper a 0 percent AD/CV duty rate, the AD/CV duties the importer paid  on the one commercial shipment are refunded, with interest. In addition,  no AD/CV duty deposits are collected on future shipments, but additional  duties may be owed if those shipments are determined to have been  dumped or subsidized when an administrative review is completed in  approximately 12 to 18 months.
section_title: CBP’s Standard Bond Formula Provides Little Protection of AD/CV Duty Revenue; CBP Has Taken Steps to Address This Risk, but Faces Challenges
paragraphs: CBP’s standard bond setting formula provides little protection for securing  AD/CV duty revenue when the final amount of AD/CV duties owed exceeds  the amount paid at the time of importation. To ensure payment of  unforeseen obligations to the government, all importers are required to  post a security, usually a general obligation bond, when they import  products into the United States. This bond is an insurance policy  protecting the U.S. government against revenue loss if an importer defaults  on its financial obligations. CBP determines the appropriate amount of a  bond required for each importer.  In general, the importer is required to  obtain a bond 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).
As seen in table 1 earlier in this report, CBP’s standard bond formula is  insufficient to protect AD/CV duty revenue in some cases. Table 1 presents  data on the top 20 importers with uncollected AD/CV duties and their bond  amounts, which are insufficient to protect AD/CV duty revenue for all 20  importers. When AD/CV duties are retrospectively increased, the standard  bond formula can be insufficient to cover the importer’s new obligation. If  an importer fails to pay the supplemental AD/CV duties, CBP can collect  from the surety, up to the amount of the bond that was provided at the  time of importation. However, CBP frequently faces a lengthy process of  trying to collect from bonding agents who can, and often do, protest CBP’s  decision to collect the bond amount. According to Treasury’s analysis, if  an importer defaults and the amount of the bond is insufficient to cover  the importer’s new obligations, duties due in excess of the bond coverage  are often uncollected.
In July 2004, in response to problems collecting AD duties, CBP  announced a revision to its standard bond policy for bonds covering  certain imports subject to AD/CV duties. The revised bond formula was  intended to reduce the risk of uncollected duties, but CBP has tested it on  only one product subject to AD duties. The revised policy requires  importers to obtain a bond equal to 100 percent of the estimated AD/CV  duties for items imported over the previous 12 months. Essentially, the  new requirement doubles the AD/CV duty revenue protected in that CBP  now receives a cash deposit, plus an increased bond approximately equal  to the cash deposit. In February 2005, CBP applied the revised policy to  imports of shrimp from six countries subject to AD duties as a “test case”  before applying the policy more broadly.
In October 2006, we reported on the implementation of the test case and  its effects. We found that the revised bonding requirement achieved its  goal of increasing the amount of AD duties secured. CBP data showed that  the policy increased the amount of duty revenue protected by 85 percent,  but that the costs imposed on shrimp importers as a result of the revised  policy are substantial. For example, shrimp importers must pay higher  premiums and often are required by sureties to provide 100 percent  collateral. According to shrimp importers, this reduced the amount of  funds available to operate their business, tied up collateral for several  years, and strained the borrowing capacity of some importers.
While the policy has protected revenue and had some negative impacts on  importers, it is not possible to assess its full effects on AD/CV duty  collections for three reasons. First, it has been applied to one product,  shrimp, which has little history in terms of duty collections. Second, the  domestic shrimp industry and over 100 shrimp exporters reached  agreements to not request that Commerce conduct administrative  reviews. In exchange for cash payments from exporters and the  cooperation of the exporters on issues related to illegal antibiotics and  circumvention, the domestic industry agreed not to request an  administrative review of these exporters. This eliminated the possibility of  duty rate increases which can result in uncollected duties. Thus, it is not  possible to separate the effects of the policy from the effects of the  agreements. Third, some U.S. importers and WTO members have  challenged the legality of the policy. The U.S. Court of International  Trade has issued an injunction on the implementation of the policy for  some importers, and a WTO dispute settlement panel issued a report in  February 2008 indicating that the revised policy as applied to imports of  shrimp from India and Thailand is inconsistent with WTO rules. The  policy is currently still being applied to most shrimp importers, but it has  not been applied to importers of other products.
section_title: CBP Collects Little Information Regarding Importers of Record, Creating Challenges to Locating Debtors and Collecting Duties
paragraphs: CBP collects a minimal amount of information from companies applying  to be importers of record, which challenges its ability to subsequently  locate and collect duties from delinquent debtors. Aside from basic  information such as an importer’s name and its mailing address, CBP  requires one additional unique identifying number. This number can be an  Internal Revenue Service Taxpayer Identification Number (for a company)  or a Social Security number (for an individual). In addition, applicants can  request that CBP assign them a unique number for CBP’s tracking  purposes. Companies seeking to avoid paying AD/CV duties can easily  drop identification numbers and obtain new ones, making the numbers an  ineffective tool for enforcement. Regardless of the type of unique  identifying number the importer uses, the company (or individual) is not  subject to any credit or background checks before being allowed to import  products into the United States. With such limited information about  importers, locating them can be difficult, especially if they are trying to  evade duties. According to CBP officials responsible for attempting to  collect delinquent AD/CV duties, their collection efforts often are  ineffective because by the time they are able to attempt to collect,  importers have ceased business operations.
CBP officials pointed out that foreign companies and individuals are  allowed to be importers, and that CBP’s ability to collect from such  importers, especially illegitimate ones, is very limited. According to CBP  officials, the number of nonresident importers (i.e., foreign importers of  record) seems to be growing and poses unique issues when it comes to  collecting AD/CV duties. CBP officials indicated that if foreign importers  of record do not pay supplemental duties, the cost of attempting to collect  the duties would be high and would likely exceed the amount collected.
section_title: Although Improvements Made, Weaknesses in Interagency Communication Impede Processing of AD/CV Duties, but the Overall Revenue Effect Appears Minimal
paragraphs: Despite some improvements, weaknesses in interagency communications  impede CBP’s ability to process the final amount of AD/CV duties within  the required 6 months. In recent years, CBP and Commerce have taken  several steps to improve communication regarding AD/CV duties, but  untimely action by Commerce and CBP’s need to seek clarification from  Commerce during the liquidation process present challenges to  completing the process in the time allowed. Many entries are not  addressed within the statutory 6-month period, though the overall effect  on revenue appears minimal. Human capital challenges at Commerce  affect its ability to effectively perform its role in the liquidation process,  but Commerce lacks a strategy for addressing these challenges.
subsections: section_title: Agencies Have Taken Steps to Improve Communication
paragraphs: In recent years, agencies have taken steps to improve communication  related to processing AD/CV duties. First, Commerce established a  Customs Unit within the Import Administration in January 2005 that  provides essential customer services and information to both government  and private sector stakeholders involved in the AD/CV duty process. The  Customs Unit serves as the focal point for CBP on customs issues,  maintains a call center, and fosters communication daily with CBP via e- mail and telephone. Both CBP and Commerce officials agree that the  formation of the Customs Unit has improved their interagency  communication. Commerce also has taken steps to improve the template it  uses to guide the development of liquidation instructions. In addition,  according to Commerce, officials from Commerce, CBP, Immigration and  Customs Enforcement, and occasionally the Department of Justice or  U.S. Attorney’s Office attend a monthly trade enforcement meeting at  which they discuss AD/CV duty collections, including open and potential  fraud cases.
CBP and Commerce also have taken steps to improve their handling of the  protests filed by importers and surety companies regarding the amount of  duties owed. For instance, according to Commerce officials, in 2006,  Commerce increased the number of staff processing protests from one to  five, enabling the agencies to reduce the backlog of 250 protests. In  addition, CBP enhanced its tracking system to monitor the status of the  protests it sends to Commerce for advice on how to resolve the protest.  Also, CBP is in the process of clarifying instructions to its ports on  procedures for handling AD/CV duty-related protests.
CBP is undertaking steps to improve its data systems for processing  AD/CV duties, as part of the agency’s larger project to replace its 20-year- old data system—called the Automated Commercial System (ACS)—with  the Automated Commercial Environment (ACE). CBP is building a  separate AD/CV duty module within ACE, soliciting input from Commerce  officials throughout the project. According to CBP officials, ACE will  enhance its ability to handle more AD/CV duty tasks automatically.  Currently, thousands of entries subject to AD/CV duties require manual  entry for liquidation, which is resource and time intensive. According to  CBP officials, the AD/CV duty module in ACE is expected to be completed  sometime after January 2011.
section_title: Weaknesses in Interagency Communication Create Impediments, Impairing CBP’s Ability to Process AD/CV Duties
paragraphs: Communication weaknesses in the interagency process for liquidating  entries subject to AD/CV duties impede CBP’s ability to process AD/CV  duties in a timely manner. This process involves action by both Commerce  and CBP and is governed by statutory and self-imposed deadlines.  However, untimely and unclear communication creates impediments to  completing the process within these time frames. Many entries are not  liquidated within the specified time frame, though the amount of revenue  lost or gained appears to be minimal. Human capital challenges at  Commerce contribute to these weaknesses, but Commerce lacks a  strategy for addressing these challenges.
subsections: section_title: Liquidation Process Involves Action by Commerce and CBP and Is Governed by Statutory and Self-Imposed Deadlines
paragraphs: Commerce and CBP must take several steps in order to liquidate an entry  subject to AD/CV duties that has undergone an administrative review.  Under U.S. law, this process must be completed (by sending a bill or  refund or closing the transaction) within 6 months of Commerce  publishing a notice in the Federal Register specifying (1) the final AD/CV  duty rates or (2) a final court decision to liquidate entries that were  enjoined subject to litigation, whichever comes later. There are three  basic steps in the liquidation process.
First, after concluding an administrative review, Commerce publishes the  review’s final results in the Federal Register, and commits to sending  specific instructions to CBP within 15 days after the notice in the Federal  Register or the lifting of any injunction. Commerce often prepares these  liquidation instructions using a template. Commerce then sends the  instructions to CBP headquarters to liquidate the covered entries at the  final AD/CV duty rate determined by the administrative review. Second,  CBP headquarters reviews the instructions sent by Commerce to ensure  they are sufficiently clear. CBP headquarters then forwards the  instructions to each port of entry. Third, CBP staff at ports of entry  liquidate the entries in one of three ways: (1) refunding the difference to  the importer when the final duty liability is lower than the cash deposit  collected at the time of importation; (2) issuing a bill to the importer for  the difference when the final duty liability is higher than the cash deposit  collected at the time of importation; or (3) closing the entry when the cash  deposit is the same as the final duty liability.
section_title: Untimely and Unclear Liquidation Instructions Create Impediments to Liquidation
paragraphs: We identified two main impediments to CBP’s ability to liquidate entries  subject to AD/CV duties. One impediment is untimely liquidation  instructions from Commerce. Specifically, we identified instances where  Commerce failed to send the liquidation instructions within its self- imposed 15-day deadline. Since approximately January 2006, CBP has  been documenting “message logs” for the purpose of tracking the  timeliness of Commerce’s delivery of liquidation instructions. In reviewing  these logs for a 4-month period, we determined that Commerce sent the  liquidation instructions to CBP headquarters within 15 days of publishing  the relevant Federal Register notice approximately 20 percent of the  time. In addition, almost 30 percent of the instructions were sent more  than 100 days after the Federal Register notice was published. After  reviewing the instances we identified where instructions were sent more  than 100 days after the Federal Register notice, Commerce officials  determined that such a delay was often (about 70 percent of the time)  beyond their control. For example, Commerce officials noted that some  cases are subject to legal injunctions or North American Free Trade  Agreement rules which allow longer time frames for the issuance of  liquidation instructions. However, they also noted that some liquidation  instructions are sent more than 100 days after the publication of the  Federal Register notice or the lifting of any injunction because of  administrative oversight due primarily to heavy workload.
According to Commerce officials, they recognize the importance of  sending liquidation instructions in a timely manner, but lacked a  mechanism for ensuring that this occurred. After we made Commerce  officials aware of the untimely liquidation instructions we identified, in  December 2007, the Deputy Assistant Secretary for AD/CV Duty  Operations sent a memo to each of the nine Office Directors responsible  for AD/CV duty operations reiterating the need to ensure that liquidation  instructions are timely. He also announced a plan for tracking the  timeliness of liquidation instructions, including a requirement that each of  the Office Directors report quarterly on their office’s efforts to meet the  goal of issuing instructions 15 days after the pertinent notice in the Federal  Register or the lifting of any injunction.
A second impediment to the timely liquidation of some entries subject to  AD/CV duties is a lack of clarity in Commerce’s liquidation instructions  and the extra time taken by CBP to obtain clarification. CBP and  Commerce officials acknowledge that liquidation instructions can be  complicated and difficult to draft and may be very detailed. However,  according to CBP headquarters officials, they are unable to send  liquidation instructions to field offices to act upon in a significant  percentage of cases because Commerce’s instructions are unclear.
Commerce communicates its instructions to CBP through ACS. If CBP  needs to clarify or correct liquidation instructions, it will return the  instructions back to Commerce through ACS. Our analysis of CBP’s log of  instructions returned to Commerce for clarification found that CBP sought  clarification for approximately 21 percent of liquidation instructions that  Commerce sent within the 7-month period we reviewed. Further, CBP’s  log noted that several instructions were sent back for clarification for a  second or third time.
section_title: Many Entries Not Liquidated Within 6-Month Deadline, but Revenue Lost or Gained Appears Minimal
paragraphs: We identified over 37,000 entries out of a total of approximately 3.1 million  entries (approximately 1 percent) subject to AD duties liquidated from  October 2004 through June 2007 that were “deemed liquidated” (i.e., CBP  failed to complete the liquidation process within the 6-month period). If  CBP cannot complete the liquidation process within 6 months of  Commerce’s notice in the Federal Register, it may not collect the  appropriate amount of AD/CV duties. When CBP fails to complete the  liquidation process within 6 months, an entry is “deemed liquidated” and  the entry is liquidated at the rate asserted by the importer at the time of  entry (e.g., the cash deposit rate). 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.
The potential revenue lost or gained on entries deemed liquidated appears  minimal. In the vast majority of the 37,000 cases of deemed liquidation we  identified, no revenue appears to have been lost or gained as a result of the  deemed liquidation. We identified 507 entries which should have resulted  in the collection of additional revenue, but were deemed liquidated. Our  analysis showed that the United States did not receive approximately  $106,000 in revenue for these entries. More significantly, we identified 171  entries which should have resulted in approximately $1.5 million of  refunds to importers, but were deemed liquidated.
section_title: Human Capital Challenges at Commerce Affect Liquidation Process, but Commerce Lacks a Strategy for Addressing the Challenges
paragraphs: Commerce officials acknowledge that human capital challenges limit their  ability to draft clear and timely liquidation instructions in some cases, but  they have no clear strategy for addressing these challenges. They attribute  these human capital challenges to a hiring freeze that has been in place  since January 2006, which affected the hiring of International Trade  Compliance Analysts who are responsible for drafting AD/CV duty  liquidation instructions. According to Commerce officials, the AD/CV duty  operations offices have lost 46 International Trade Compliance Analysts  since January 2006, and they had been unable to refill these positions due  to the hiring freeze. As a result, as shown in figure 7, as of January 2008,  the Import Administration had less than half (103 of 211) of the  International Trade Compliance Analysts which it was authorized.
Despite the substantial decline in the number of staff, there has been only  a slight decline in caseload since fiscal year 2004. As shown in table 2, the  caseload per analyst has increased substantially since fiscal year 2004.  According to Commerce officials, this growth in caseload for International  Trade Compliance Analysts is a key reason that some liquidation  instructions are not sent in a timely manner.
Commerce has taken some steps to improve its human capital, but lacks a  clear strategy for addressing its human capital challenges. For instance,  Commerce officials report that the agency released a job announcement  for the International Trade Compliance Analyst position to support the  nine AD/CV duty operational offices, and they have hired nine new  analysts since September 2007. They also have requested additional  funding to establish an additional office to focus on CV duty investigations  involving nonmarket economies. However, according to Commerce  officials, they have not conducted a comprehensive analysis to understand  its human capital challenges and have no formal human capital plan to  address these challenges.
section_title: Options for Improving the Collection of AD/CV Duties Have Potential Advantages and Disadvantages
paragraphs: Congress and the relevant agencies face two sets of options to consider in  attempting to improve the collection of AD/CV duties. Each set has both  potential advantages and disadvantages. One set of options would be for  Congress to fundamentally alter the U.S. AD/CV duty system by  eliminating its retrospective component and making it prospective. The  other set of options involves adjusting specific aspects of the current U.S.  AD/CV duty system while retaining its retrospective nature. This set  includes such options as adjusting the requirements for “new shippers,”  heightening the requirements for becoming an importer of record, revising  the bond requirements for importers, and lengthening the statutory  deadline for assessing final AD/CV duties. Consideration of any option  should include analysis of whether the change would be consistent with  international trade agreements, including WTO rules.
subsections: section_title: Congress Could Eliminate the Retrospective Component of the U.S. AD/CV Duty System
paragraphs: U.S. law could be changed to eliminate the retrospective component of the  U.S. AD/CV duty system and, instead, treat AD/CV duties assessed at the  time the product enters the country essentially as final. Under the current  U.S. AD/CV duty system, when Commerce issues an AD/CV duty order, it  establishes estimated AD/CV duty rates. Commerce then instructs CBP to  collect estimated duties at those rates from importers when products  subject to the order enter the country. However, as discussed earlier,  Commerce often conducts an administrative review, during which it  analyzes additional imports (typically 1 year of entries) and calculates the  final duty rates (and thus the amount of duties owed by the importer). In  this way, the U.S. system is retrospective in nature, in that the final  amount of duties is based on the actual amount of dumping or  subsidization for that year.
subsections: section_title: The Prospective AD/CV Duty Systems of Other Countries Present Alternatives
paragraphs: Other countries we reviewed do not determine their final AD/CV duties by  calculating actual amount of duties owed after products enter the country.  While each country’s AD/CV duty system operates differently, major U.S.  trading partners such as Canada, Australia, and the European Union have  AD/CV duty systems that are fundamentally prospective. Under these  countries’ systems, the AD/CV duties assessed at the time a product enters  the country are essentially treated as final. App. II provides illustrative  examples of the calculation of AD/CV duties under different scenarios. If  and when the AD/CV duty rate is changed, it is applied only to future  imports and has no effect on the amount of duties owed for previous  imports. As a result, other countries reported that they have no major  problems collecting AD/CV duties.
Canada’s AD duty system often is referred to as a prospective normal  value system. Canadian officials conduct investigations to determine  whether imports are being dumped or subsidized and whether they are  causing injury to Canadian industry; if so, they impose AD/CV duties.  According to Canadian officials, when the government finds that dumping  is occurring, the Canadian government calculates a “normal value” for the  product, which is used to calculate the amount of AD duties applicable on  all future shipments to Canada. For all future imports, if the normal value  of the goods exceeds the export price, the importer owes AD duties in an  amount equal to the difference between the two prices. Thus, the amount  of duties owed, if any, varies based on the export price. The lower the  export price, the greater the duties owed, and vice versa. If the export  price is equal to or higher than the normal value, the importer owes no AD  duties. Officials stated that this normal value is used until the Canadian  government conducts a review to update it, which typically occurs  annually. These reviews are initiated either by the government or at the  request of an importer or exporter based on market or price changes.  Following the completion of a review, the new normal value is used for all  future imports, but is not used to recalculate the amount of duties owed  on prior imports (unlike in the U.S. system). Officials further explained  that under Canadian law, importers and certain exporters (for example,  those from the United States and Mexico) also may request a  redetermination of the normal value or export price after duties have been  assessed on a transaction for the purpose of obtaining a refund. Any duties  found to have been paid in excess as a result of the redetermination will  be refunded to the importer. As of November 2007, Canada imposed AD  duties on 17 products and CV duties on 6 products. In 2006, Canada  collected approximately $24 million in AD/CV duties.
Australia’s AD duty system also is prospective and the duties are assessed  based on the normal value calculated during an investigation of unfairly  priced imports. However, as Australian officials explained, the AD duties  owed may have two components: one fixed and one variable. The fixed  component is the difference between the normal value and the export  price during the AD duty investigation. This amount is assessed on all  future imports on a per-unit basis. The variable component is the  additional duties that will be assessed if an exporter lowers its price for an  individual transaction below what it charged during the investigation. The  additional duties will be assessed at an amount equal to the difference  between the two prices. Like the Canadian system, Australia periodically  reviews the normal value and makes any adjustments on a prospective  basis. As of October 2007, Australia imposed AD duties on 35 products and  CV duties on 1 product.
The European Union’s (EU) AD/CV duty system also is prospective, with  the amount of the duties based on the amount of dumping or subsidization  applied on an ad valorem (percentage) basis. EU officials stated that they  conduct an investigation to determine whether imports are being dumped  or subsidized and whether they are causing injury to a European industry.  If so, they then establish the normal value for the product and compare  this to the export price. Officials further explained that they calculate the  percentage difference between these two prices and set this as the AD/CV  duty rate. This rate is then applied to all future imports of the product. As  a result, the amount of the AD/CV duties owed is a simple percentage the  current export price. Thus, the lower the export price, the lesser the  amount of duties owed; the higher the price, the greater the amount of  duties owed. According to EU officials, EU regulations allow for the  periodic review of AD/CV duties as well as for the refund of any duty paid  determined to be in excess of the actual margin of dumping and/or  subsidization of the exporter concerned. Officials stated that these  periodic reviews have a prospective effect, that is, the new rate of duty  will affect only future imports (contrary to the U.S. system, the amount of  duty cannot be increased retrospectively). Separately, importers have the  opportunity to request a refund review, which would concern past  imports. As of December 2006, the European Union had 134 AD measures  and 2 CV measures in force. The AD measures covered 59 products and 32  countries, while the CV measures covered 10 products and 5 countries.
section_title: Trade-Offs Involved When Considering Prospective and Retrospective AD/CV Duty Systems
paragraphs: Prospective and retrospective AD/CV duty systems differ in a variety of  ways, and the specific design features of each system influence their  relative advantages and disadvantages. The types of trade-offs associated  with each system can be illustrated by comparing three specific  characteristics:    Timing for determining and collecting final AD/CV duties. In  prospective AD/CV duty systems, the amount of AD/CV duties paid by the  importer at the time of importation is essentially treated as final. This  eliminates the risk of being unable to collect AD/CV duties. Establishing  the final amount of AD/CV duties owed at the time of importation also  creates certainty for importers. This enables legitimate importers to plan  their business operations. In addition, some prospective AD/CV duty  systems and retrospective systems assess AD/CV duties that increase or  decrease as the degree of dumping or subsidization increases or  decreases, which can provide exporters an incentive to eliminate or  reduce dumping. For example, under Canada’s “prospective normal value”  AD/CV duty system, Canada’s investigation results in establishing a normal  value which is known to all parties. Exporters can then raise their prices  up to that normal value, thereby eliminating their dumping and avoiding  any AD/CV duties.
In a retrospective AD/CV duty system, the amount of AD/CV duties owed is  not determined until well after the time of importation. Importantly, our  analysis showed that, in the U.S. system, final duties are assessed, on  average, more than 3 years after importation. This time lag, which often is  the result of the time required to conduct the administrative review  necessary to calculate final AD/CV duties and any judicial review of the  results of the review, has several potential implications. First, the threat of  an administrative review can deter some companies from dumping. An  administrative review could result in AD/CV duty rates being increased  from the estimated rate paid at the time of importation, which could mean  significant new duty liability for an importer. As such, since legitimate  importers seek price certainty, they may be less inclined to purchase from  exporters whose AD/CV duty rates fluctuate substantially over time.  Second, the time lag creates collection risks for the U.S. government. As  discussed earlier, the long lag times between entry and final duty  assessments in the U.S. system increase the risk of uncollected duties, as  importers may become unable or be unwilling to pay the final amount of  AD/CV duties when they are assessed. Third, the time lag can result in  “bad actors,” those importers who intentionally avoid paying required  duties, not being identified until they have been importing for a long time.  Only after its collections efforts are unsuccessful does the government  clearly know that duties owed by this importer are at serious risk for  noncollection. During this time lag, the importer may continue to import  dumped or subsidized products into the country, thus incurring additional  duty liability and increasing the U.S. government risk for noncollection.  “Accuracy” of AD/CV duties paid. Under a prospective AD/CV duty  system, the amount of duties assessed may not match the amount of actual  dumping or subsidization. Under some prospective systems, the amount of  AD/CV duties an importer is assessed is based on dumping or  subsidization that occurred in a previous period. As a result, if the amount  of dumping or subsidization changes, the amount of duties paid in the  current period may not equal the amount of dumping or subsidization that  is currently occurring. However, the government is able to collect the full  amount of AD/CV duties assessed because the duties are paid at the time  of importation.
Under a retrospective AD/CV duty system, the amount of duties assessed  reflects the actual amount of dumping by the exporter for the period of  review. The amount of the final AD/CV duty liability may not be  established until the government reviews all the imports for a given period  and calculates the amount of dumping or subsidization that has occurred.  As a result, a retrospective system can assess duties that exactly reflect  the amount of dumping or subsidization. However, in practice, a  substantial amount of retrospective AD/CV duty bills are not collected.  This gap between the amount of duties assessed and the amount collected  means that the government is not fully remedying the unfair trade practice.  This suggests that assessing a more accurate duty rate does not  necessarily result in receiving more accurate duty amounts from  importers. It also raises concerns about the equity of the system, as those  who evade AD/CV duties gain a competitive advantage at the expense of  those companies that pay the full amount of duties owed.
Administrative simplicity for customs officials. Both prospective and  retrospective AD/CV duty systems may involve complex processes for  determining appropriate AD/CV duty rates. However, they differ with  respect to their simplicity for customs officials responsible for collecting  AD/CV duties.
Prospective AD/CV duty systems create a smaller burden for customs  officials because the full and final amount of AD/CV duties is assessed at  the time of importation. For example, according to Canadian customs  officials, its AD/CV duty system places little burden on customs officials.  Since all duties are paid when products enter the country, customs  officials face little, if any, additional work to process imports subject to  AD/CV duties.
Retrospective AD/CV duty systems can create a substantial burden for  customs officials. According to CBP officials, the U.S.’s retrospective  AD/CV duty system places a unique and significant burden on its  resources. For example, it creates a considerable amount of administrative  duties related to identifying, tracking over time, and properly processing  entries subject to AD/CV duties. When CBP needs to collect additional  duties beyond those paid at the time of importation, additional resources  also are needed to attempt to collect those duties, which can involve  attempting to locate importers that have disappeared or collecting from  importers that have declared bankruptcy, and may also necessitate  working with other agencies such as Justice. According to CBP officials,  the retrospective AD/CV duty system increases workload and diverts focus  from other priority trade issues.
section_title: Congress and Agencies Could Adjust Specific Aspects of the Current U.S. AD/CV Duty System
paragraphs: Adjustments to specific aspects of the U.S. AD/CV duty system could be  made without altering its retrospective nature. We identified four types of  changes. One type of change includes revising the requirements related to  “new shippers.” A second adjustment involves heightening the  requirements for becoming a U.S. importer. A third type of change  includes revising the bond requirements for importers. Each of these  changes would impose additional costs on both legitimate and illegitimate  companies. A final change includes lengthening the amount of time CBP is  provided to make a final assessment of AD/CV duties. Such a change could  reduce the amount of foregone revenue, but could make collections more  difficult in some situations.
subsections: section_title: Congress Could Make Adjustments to the Requirements for New Shipper Reviews
paragraphs: Requirements for new shipper reviews could be adjusted in two different  ways. First, Congress could extend or make permanent its suspension of  the new shipper bonding privilege. Doing so would require all importers to  pay estimated AD/CV duties in cash at the time of entry, thus eliminating  the need to attempt to collect from surety companies.
Second, Congress could revise the level of exports required for exporters  applying for “new shipper” status to potentially reduce the risk of  uncollected duties. As discussed previously, under U.S. law, a company  applying to be a new shipper is entitled to an expedited review of its  exports for the purpose of establishing an AD/CV duty rate to that  company’s exports in the future. According to Commerce officials, since  such companies typically have exported only one shipment of the goods  subject to AD/CV duties, which is almost always at a relatively high price,  they typically calculate a cash deposit rate of 0 percent. As a result,  importers purchasing from these companies pay no AD/CV duties at the  time of importation. However, Commerce may later determine that the  exports were dumped or subsidized, and therefore retrospective bills  would be issued. As described earlier, these retrospective bills are a key  factor contributing to uncollected AD/CV duties. To mitigate this risk,  Congress could choose to provide Commerce the discretion to require  companies applying for a new shipper review to have a greater volume of  imports before establishing an individual AD/CV duty rate. According to  Commerce officials, such discretion would be useful because it could help  mitigate the risks posed by establishing an AD/CV duty rate based on one  shipment.
Revising the requirements for new shippers could reduce the risk of  uncollected duties by making it harder for exporters to manipulate new  shipper reviews and evade duties. However, a large volume of imports may  be required to prevent some exporters from intentionally manipulating the  new shipper review process. In addition, requiring a greater volume of  imports could unfairly burden legitimate new shippers by requiring them  to export more than they otherwise might before they could obtain an  individual cash deposit rate.
section_title: Requirements for Becoming an Importer of Record Could Be Heightened
paragraphs: CBP or Congress could heighten the requirements for a company applying  to be an importer of record to potentially reduce the likelihood that  importers would prove unable to pay their duty liabilities. As discussed  previously, the requirements for becoming an importer in the United  States are minimal and do not involve any financial or background checks.  Heightened requirements might include mandatory financial or  background checks. However, according to CBP officials, performing  financial checks would provide a limited assessment of importers’ future  ability to pay additional AD/CV duties because their financial situations  can change quickly. Additionally, a financial check does not address a  company’s willingness to pay additional AD/CV duties. It also would create  a significant new burden on CBP, which would need to conduct or oversee  these financial or background checks. For example, CBP data indicate that  from fiscal years 2005 through 2007, there was an average of over 350,000  importers of record. Of those, about 130,000, on average, were new  importers each year. Moreover, these financial or background checks  would need to be updated periodically, which would compound the  resource requirements over time. In addition, it is possible that the  heightened requirements would be imposed on all importers to be fair.  Given that the vast majority of importers comply with customs laws and  pay their duty liabilities, such a broad approach may not be a cost- effective way to improve the collection of AD/CV duties.
section_title: CBP Could Revise Its Bonding Requirements
paragraphs: Bond requirements could be modified to provide additional protection in  the case that importers are unable or unwilling to pay their duty bills. One  option would be for CBP to expand the application of its revised bond  policy for imports subject to AD/CV duties. As explained earlier, this  policy was established in July 2004, and significantly increased the value  of bonds required of importers. At the time it was initially implemented,  CBP officials envisioned applying the policy to shrimp imports as a test  case and subsequently applying the policy to additional imports they  believe pose a significant risk for uncollected AD/CV duties. To date, the  policy has been applied only to imports of shrimp from six countries  subject to AD/CV duties. As we have previously reported, this policy  effectively doubled the amount of revenue protected by requiring (in  addition to the cash deposits required at the time of entry) a continuous  bond essentially equal to the cash deposits. However, expanding the  application of the policy entails substantial drawbacks. For example, some  importers covered by the expanded policy would face a significant  increase in their costs. Shrimp importers reported that they experienced  increased costs due largely to substantial collateral requirements needed  to obtain the bonds. According to importers, these costs reduced their  profitability and forced some importers to exit the industry. In addition,  the revised continuous bonding policy has been challenged in U.S. court  and at the WTO. The U.S. Court of International Trade has issued an  injunction on the implementation of the policy for some importers, and a  WTO dispute settlement panel issued a report in February 2008 indicating  that the revised policy as applied to imports of shrimp from India and  Thailand is inconsistent with WTO rules.
CBP also could set new bond requirements based on its assessments of an  importer’s likely ability to pay AD/CV duties. CBP could create a set of  criteria to judge each importer’s ability to pay and require larger bonds of  companies judged to have a lower likely ability to pay, which would  increase the amount of AD/CV duty revenue protected. Such an approach  could allow CBP to target importers considered to be at high risk for  uncollected AD/CV duties and require them to provide larger bonds.  However, performing such analyses of individual importers’ likely ability  to pay retrospective AD/CV duties, like background and financial checks,  would create a substantial administrative burden for CBP. Such analyses  would create a substantial new workload because of the likely complexity  of the analyses, the large number of importers (approximately 350,000),  and the need to regularly update the analyses.
CBP also could require importers to provide an additional bond for each  entry subject to AD/CV duties in addition to the already required  continuous bond. Some representatives from surety companies said that  this requirement could protect additional revenue while creating only a  minimal burden on CBP. They suggest that this type of requirement would  allow surety companies to identify, in advance, when they are insuring the  payment of AD/CV duties, which are at greater risk of nonpayment by  importers. Since they face a greater risk of having to pay out on bonds  related to AD/CV duties, surety companies would likely increase the cost  to importers of obtaining the bond, perhaps through increased premium  rates or collateral requirements. These increased costs could deter  malfeasance by illegitimate importers by increasing the cost of importing  merchandise subject to AD/CV duties. However, it may impose costs on  legitimate importers that pose little risk of failing to pay retrospective  AD/CV duties. At the same time, competition among surety companies  could force them to offer better bond prices for lower-risk importers,  reducing the costs for importers not at risk of uncollected duties.
section_title: Congress Could Extend the Length of Time Allowed for CBP to Liquidate Entries Subject to AD/CV Duties
paragraphs: Congress could choose to extend the time frame allowed by law for CBP  to liquidate entries subject to AD/CV duties. As discussed earlier, CBP  has 6 months to liquidate entries subject to AD/CV duties from the time  that Commerce publishes a notice in the Federal Register establishing (1)  the final AD/CV duty rates or (2) the lifting of an injunction against  liquidation, whichever comes last. According to CBP officials, this 6-month  deadline can be very hard to meet, especially when a large volume of  imports needs to be liquidated or a case is extremely complex. According  to CBP officials, for most imports, the Harmonized Tariff System code for  a product determines the applicable duty. However, in some AD/CV duty  cases, no Tariff code exists for the specific products that Commerce  investigated and imposed duties on. An example is wooden bedroom  furniture from China. According to CBP officials, there is a Tariff code for  wooden furniture, but there is not one for wooden bedroom furniture, for  which there is an AD order in effect. As a result, CBP needs to examine the  invoices for every entry of wooden furniture from China to see if it falls  within the scope of the AD order. This is very labor intensive and creates  an opportunity for companies to circumvent the duties. Extending the  amount of time for CBP to liquidate entries subject to AD/CV duties could  reduce the potential for entries to be “deemed liquidated,” which can lead  to foregone revenue if additional duties should have been paid. However,  extending this time frame could delay refunds to some importers. As  discussed earlier, the more time between a product’s entry into the  country and when entries are liquidated, the greater the chance duties will  be uncollected.
section_title: Conclusions
paragraphs: The existence of a substantial amount of uncollected AD/CV duties  undermines the effectiveness of the U.S. government’s efforts to deter  unfair foreign trade practices and reduces the amount of revenue available  to the U.S. government. With more than $600 million in AD/CV duties  currently uncollected, a large portion of which is likely to be written off,  the U.S. government’s efforts to remedy injurious unfair trade practices  also has been seriously compromised. This problem was first widely  recognized after 2000, and has gained increased prominence and visibility  based on annual public reporting by CBP. However, a recent change in  U.S. law eliminated the legal requirement that generated CBP’s reporting  on uncollected AD/CV duties.
While Congress and the relevant agencies have taken some steps in recent  years, they have not yet fully addressed the factors contributing to  uncollected AD/CV duties, and serious risks remain. Some of these factors  stem from shortfalls in the capabilities and operation of the relevant  agencies. For instance, human capital deficiencies at Commerce and  untimely or unclear liquidation instructions have hampered the imposition  and collection of AD/CV duties. Increased attention and interagency  coordination in these areas could help ensure the steps in the AD/CV duty  process are completed in a timely manner.
Taking additional steps to mitigate the risk to AD/CV duty collections,  however, requires consideration of additional options and evaluation of  their relative advantages and disadvantages. Certain adjustments could be  made within the existing framework of the U.S. AD/CV duty system to  further protect AD/CV duty revenue. Adjustments such as altering  importers’ bond requirements would protect additional revenue, but also  could have significant implications for the trade community and our  trading partners, which would need to be carefully considered. Providing  Commerce with the discretion to establish a minimum level of exports  needed to qualify for a special new shipper review could reduce the  possibility of uncollected AD/CV duties and would affect both legitimate  and illegitimate importers and exporters. On the other hand, additional  analysis is required to determine whether eliminating the retrospective  aspect of the duty collection process could help achieve the AD/CV duty  system’s intended purposes more effectively. Such fundamental alteration  of the system would entail weighing the implications for a variety of  stakeholder groups including affected domestic producers, exporters,  importers, and the relevant federal agencies.
section_title: Matters for Congressional Consideration
paragraphs: In order to help reduce the amount of uncollected AD/CV duties, Congress  should consider taking the following three actions:  First, Congress should require the Secretaries of Commerce, Homeland  Security, and the Treasury to work together to conduct an analysis and  report to Congress on the relative advantages and disadvantages of  prospective and retrospective AD/CV duty systems. The report should  address the extent to which each type of AD/CV duty system would likely  achieve the goals of remedying injurious dumping or subsidized exports,  minimizing uncollected duties, reducing incentives and opportunities for  importers to evade AD/CV duties, effectively targeting high-risk importers,  and creating a minimal administrative burden. To ensure the report is  completed in a timely manner, Congress should establish a specific date by  which the report is to be delivered.
Second, Congress should require CBP to publicly report on an annual  basis regarding the amount of uncollected duties for that year for each  AD/CV duty order. In addition, the report should indicate the total amount  of all open, unpaid bills for each AD/CV duty order.
Third, Congress should consider providing Commerce with the authority  to establish, at its discretion, a minimum amount or value of exports from  companies requesting a new shipper review.
section_title: Recommendations for Executive Action
paragraphs: In order to help ensure the full collection of AD/CV duties and improve the  liquidation process, we make the following three recommendations for  executive action:  First, the Secretary of Homeland Security, in consultation with other  relevant agencies, should determine whether CBP can adjust its bonding  requirements to further protect revenue without violating U.S. law or  international obligations and without imposing unreasonable costs upon  importers.
Second, the Secretary of Commerce should work with the Secretary of  Homeland Security to identify opportunities to improve the clarity of  liquidation instructions. The Secretary of Commerce should report to  Congress within 1 year on the steps it has taken to improve the clarity of  liquidation instructions.
Third, to ensure that the Import Administration has sufficient human  capital to issue timely and clear liquidation instructions to CBP, the  Secretary of Commerce should develop a strategic human capital plan  encompassing its AD/CV duty operational offices.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a copy of this report to the Departments of Commerce,  Homeland Security, Justice, and the Treasury, as well as the U.S.  International Trade Commission and the Office of the U.S. Trade  Representative. The Department of Commerce’s comments are contained  in appendix IV. The Department of Homeland Security’s comments are  contained in appendix V. The Department of the Treasury’s comments are  contained in appendix VI. The Departments of Homeland Security and  Commerce agency generally agreed with our recommendations. In  addition, we received technical comments from the Departments of  Commerce, Homeland Security, and Justice, as well as the United States  International Trade Commission and the Office of the U.S. Trade  Representative. We have incorporated these comments as appropriate.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date.  At that time we will send copies of this report to the  appropriate congressional committees as well as the Secretaries of  Commerce, Homeland Security, Justice, and the Treasury, the Chairman of  the U.S. International Trade Commission, and the U.S. Trade  Representative. We will make copies available to others upon request. In  addition, the report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staffs have any questions about this report or need  additional information, please contact me at (202) 512-4347 or  YagerL@gao.gov.  Contact points for our offices of Congressional  Relations or Public Affairs may be found on the last page of this report.   GAO staff who made major contributions to this report are listed in  appendix VII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To help reduce uncollected antidumping (AD) and countervailing (CV)  duties, the Senate Appropriations and Finance Committees asked us to  review the reasons why the duties are uncollected and what the U.S.  government has done to address this problem. In addition, they asked us  to identify options for improving the AD/CV duty system. Specifically, we  examined (1) the extent and nature of uncollected AD/CV duties, (2) the  key factors contributing to risks for uncollected AD/CV duties and the  steps taken to improve the collection of AD/CV duties, (3) interagency  communications that affect the processing of AD/CV duties, and (4)  potential options for improving AD/CV duty collections.
To analyze the extent and nature of uncollected AD/CV duties, we  analyzed data received from U.S. Customs and Border Protection’s (CBP)  Office of Finance. They include all open, unpaid bills for AD/CV duties as  of September 30, 2007. These data include key characteristics like the bill  amount, whether or not the bill was under protest, and the importer  number. The bill amount includes the principal amount of the bill, but not  any accrued interest. While we include in our reporting uncollected AD/CV  duties subject to ongoing protests, we also analyzed bills not subject to  protests. The results from both analyses were similar. We assessed the  reliability of the data by (1) performing electronic testing of required data  elements, (2) reviewing existing information about the data and the system  that produced them, and (3) interviewing agency officials knowledgeable  about the data. Based on our data reliability assessment we deleted less  than 1 percent of the original cases. Our analysis consisted of 120 unique  AD/CV duty orders and more than 23,000 individual bills. We determined  that these data were sufficiently reliable for the purposes of this report.
To identify new shippers with open, unpaid bills; new shippers with bills  under protest; and differences between estimated and final duty rates, we  merged two data sets received from CBP. One data set included all open,  unpaid AD/CV duty bills since fiscal year 2001, as of September 30, 2007,  and indicated whether the bills were under protest. The other data set  included all entries subject to AD/CV duties that were liquidated between  October 2000 and July 2007, the AD/CV duty order date, and whether the  estimated AD/CV duties paid at entry were secured using cash or a bond.  We identified entries involving a company undergoing a new shipper  review as those where the importer was allowed to post a bond to secure  AD/CV duties after the AD/CV duty order was issued. In addition, we  needed to select only those entries involving one entry line because CBP’s  data regarding open, unpaid bills do not separate out the amount  attributable to individual AD/CV duty orders if multiple orders were  involved. Our analysis of new shippers consisted of 559 orders and  approximately 1.4 million entries.
To analyze the differences between estimated and final AD/CV duty rates,  we needed to select only those entries involving one AD/CV duty order  because CBP’s data do not separate out the liquidation rate applicable to  each order if multiple orders were involved. Once we selected those  records with only one AD/CV duty order, we calculated liquidation rates  by dividing the liquidation amount by the line value. We are not reporting  results related to changes in CV duty rates because one case (softwood  lumber from Canada) accounted for the vast majority of entries in our data  set, and thus would have unreasonably biased the results. We also  excluded the AD order on softwood lumber from Canada from our  analysis because the liquidation rate for those entries were set as a result  of a binational political agreement, which is outside the typical practice.
We assessed the reliability of the data by (1) performing electronic testing  of required data elements, (2) reviewing existing information about the  data and the system that produced them, and (3) interviewing agency  officials knowledgeable about the data. We determined that these data  were sufficiently reliable for the purposes of this report.
To identify the key factors that contribute to uncollected AD/CV duties  and the steps taken to improve the collection of AD/CV duties, we  reviewed reports and documents related to AD/CV duty collections from  CBP and the Departments of Commerce and the Treasury. We further  reviewed reports from the Congressional Research Service as well as legal  journals. To determine the length of time it took Commerce to send AD/CV  liquidation instructions to CBP, we analyzed CBP’s internal “message log”  spreadsheets for the period of April 2007 through July 2007. These  spreadsheets indicated the dates CBP received and posted liquidation  instructions from Commerce. To determine reasons why Commerce  sometimes delayed sending instructions to CBP, we requested that  Commerce analyze the circumstances of 63 entries where it took  Commerce more than 100 days to send AD/CV duty liquidation  instructions to CBP. We analyzed CBP’s internal “reject log” spreadsheets  from January 2007 through July 2007, which logged the instructions that  CBP sent back to Commerce for clarification. We additionally analyzed  data from Commerce related to the authorized versus actual staffing levels  for the International Trade Compliance Analyst position from fiscal year  2004 through January 2008. We further examined Commerce data to assess  caseload growth for this Analyst position. In addition, we interviewed a  variety of Department of Homeland Security officials. This included  officials from CBP’s Offices of International Trade, Finance, and Field  Operations. We interviewed officials from Immigration and Customs  Enforcement’s Office of Commercial Fraud Investigations. Additionally,  we interviewed officials from the Departments of the Treasury, Justice,  and Commerce. To obtain information on private sector views on the  factors contributing to uncollected AD/CV duties, we interviewed officials  from domestic trade industries as well as importer and surety  associations.
To determine the steps the U.S. government has taken to improve  collection of AD/CV duties, we analyzed CBP policies and procedures for  collection of duties. We interviewed CBP officials in the Office of  Technology, Office of International Trade, and Office of Field Operations,  as well as its Debt Management Branch in Indianapolis. We also  interviewed officials at the Department of Commerce International Trade  Administration’s Customs Unit and the Department of the Treasury. We  requested and reviewed documentation from the Department of  Commerce and CBP regarding steps they have taken to improve the  collection of AD/CV duties. In addition, we reviewed the Department of  the Treasury’s July 2007 report on major duty collection problems. We  interviewed representatives of domestic industries and importers affected  by AD/CV duties and trade lawyers and academics with expertise in AD/CV  duty issues. We reviewed governmentwide guidance on debt collection,  including OMB Circular A-129—Policies for Federal Credit and Non-Tax  Receivables and segments of the Debt Management Improvement Act. Our  analysis included reviewing our prior report on CBP’s revised continuous  bonding policy.
To identify and analyze potential options for improving AD/CV duty  collections, we reviewed academic literature regarding the operation of  various countries’ AD/CV duty systems and their relative advantages and  disadvantages. Additionally, we obtained information from the  governments of Australia, Canada, and the European Union regarding how  their AD/CV duty systems operate and whether lessons could be learned  from the operation of their systems. We did not independently analyze the  laws and regulations of Australia, Canada, or the European Union. We also  interviewed agency officials, including officials from CBP and the  Department of Commerce’s Trade Remedy Compliance Staff, which are  responsible for helping U.S. exporters understand other countries’ AD/CV  duty systems. We interviewed private sector representatives including  both domestic producers and importers in a variety of industries such as  steel and agriculture/aquaculture. In addition, we interviewed  representatives from an association of retailers and the surety industry.
We conducted this performance audit from June 2007 to March 2008 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.
section_title: Appendix II: Examples of the Calculation of AD/CV Duties in the United States, Australia, Canada, and the European Union
subsections: section_title: Assumptions: Normal value calculated during investigation = $110; average import price calculated during investigation = $100
paragraphs: At entry: Percentage  difference between the normal  value and average import  price during the investigation  (10%)
At liquidation: Percentage  difference between the normal  value and the current import  price  difference between the  current import price and  the average import price  investigation (10%)
At liquidation: $85 + $25 =  $110  $85 + $25 = $110  $85 + $25 = $110  This reflects the amount of duties assessed under each system. As discussed in the body of the  report, in the United States, there can be a substantial difference between the amount of duties  assessed and the amount paid.
section_title: Appendix III: Illustration of the Process and Maximum Time Frames for Collecting AD/CV Duties
paragraphs: Undetermined time (up to 24 month extra) protet?
Decide whether to issudditionl dty ill? ill?
subsections: section_title: adminitrative review No
section_title: Dring it dminitrtive review, Commerce has p to 18 month to lyze importring the previous yer to determine the ctuamont of dmping or subsidiztion nd clcte the finl dty rte for the import, which me more, less, or the same mont as the etimted dty rte.
paragraphs: Commerce end CBP  hequarter intrction  to liquidte the import t  the finl rte determined  dring Commerce’  dminitrtive review. CBP  hequarter, in trn,  intrct ff t ech port  of entry to liquidte the  import t the finl dty  rte determined Commerce. The gencieve 6 month to  complete thi process.  If the finl rte i greter  or lesser thn the  etimted rte,   subsquent ill or refnd  will e issued. At thi time,  importer or suretieo file prote with CBP,  which cignificntly  prolong the process.
CBP ttempt  to collect on  onding  dty ill ending   printed ill to  the importer  pproximtely  every 30 d.
After  ill i  over 237  d  delinquent,  CBP  “sanctions”  the importer.   Thesanction  require the  importer to  y the fll  mont of  dtie owed  t the time of  entry on ll  fre  import.
section_title: Appendix IV: Comments from the Department of Commerce
section_title: Appendix V: Comments from the Department of Homeland Security
section_title: Appendix VI: Comments from the Department of the Treasury
section_title: Appendix VII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Christine Broderick (Assistant  Director), Jason Bair, Joseph Brown, Deborah Owolabi, Lisa Mirel, Karen  Deans, Etana Finkler, Grace Lui, Michael Hoffman, and Ken Bombara  made key contributions to this report. Stephen Caldwell, Thomas Costa,  Lucia DeMaio, Ian Ferguson, Laurie Hamilton, Elisabeth Helmer, Evelyn  Logue, Jackie Nowicki, Michael Rohrback, Ellery Scott, and Jena Sinkfield  also contributed to the report.