The process for importing products into the United States involves several different private parties, as well as the U.S. government. These private parties include exporters, carriers, and importers, among others. Exporters are companies that sell goods manufactured or produced in foreign countries to the United States. Carriers are companies that transport the goods to the United States. Importers may be companies that purchase the goods from exporters or simply may be responsible for facilitating the importation of the goods. The importer of record is responsible for paying all estimated duties, taxes, and fees on those products when they are brought into the United States. Importers of record are also required to obtain a general bond to secure the payment of their financial obligations. CBP is responsible for, among other things, managing the import process (see fig. 1); collecting the duties, taxes, and fees assessed on those products; and setting the formula for establishing importers’ general bond amounts. The United States and many of its trading partners have established laws to remedy the unfair trade practices of other countries and foreign companies that cause injury to domestic industries. U.S. laws authorize the imposition of AD duties on imports that were “dumped” (i.e., sold at less than normal value) and CV duties on imports subsidized by foreign governments. As we reported in March 2008, the U.S. AD/CV duty system is retrospective, in that importers initially pay estimated AD/CV duties at the time of importation, but the final amount of duties, reflecting the actual amount of dumping or subsidization, is not determined until later. Commerce is responsible for calculating the appropriate AD/CV duty rate. CBP is then responsible for collecting the estimated AD/CV duties when goods enter the United States, and subsequently processing the final AD/CV duties (called “liquidation”) when instructed by Commerce. Liquidation may result in providing importers with a refund or sending an additional bill. A wide range of imported goods are subject to AD/CV duties, such as agricultural, chemical, steel, paper, and wooden products. Each set of AD/CV duties—detailed in an AD/CV duty order—is for a type of product from a specified country. The written “scope” of each AD/CV duty order describes the specific type of product that is subject to the duties. The duty order also lists one or more Harmonized Tariff Schedule codes associated with the product. There are duty orders in place for some types of products from several countries. For example, there are currently AD duty orders on frozen warmwater shrimp from five countries—Brazil, China, India, Thailand, and Vietnam. For some other types of products, there is a duty order in place on only one country, such as saccharin from China. As of March 2012, there were 283 AD/CV duty orders in effect, with more duty orders on products from China than from any other country (see table 1). Importers that seek to avoid paying appropriate AD/CV duties may attempt to evade them by using a variety of techniques. These techniques include illegal transshipment to disguise a product’s true country of origin, undervaluation to falsify the price of an import to reduce the amount of AD/CV duties owed, and misclassification of merchandise such that it falls outside the scope of an AD/CV duty order, among others (see fig. 2). According to CBP, importers sometimes use more than one evasion method at a time to further disguise the fact that they are importing goods subject to AD/CV duties. Because the techniques used to evade AD/CV duties are clandestine, the amount of revenue lost as a result is unknown. CBP detects and deters AD/CV duty evasion through a three-part process that involves (1) identifying potential cases of evasion, (2) attempting to verify if evasion is occurring, and (3) taking enforcement action. CBP begins its detection of AD/CV duty evasion by identifying potential instances of evasion, using two primary sources of information: import data and allegations from external sources. Import data is generated from the documents submitted by importers as part of the import process. Allegations are collected electronically through e-Allegations, an online system created by CBP in 2008. CBP also collects allegations via other means (such as telephone and e-mail, among others) and stores them in the e-Allegations system. As of September 2011, there were almost 400 allegations related to AD/CV duty evasion in the e-Allegations system, mostly from sources associated with affected industries. To look for anomalies that may be indicators of evasion, CBP personnel at both the local and national levels conduct targeting, analyze trends in Local import data, and follow up on allegations from external sources. targeting and analysis is conducted by CBP personnel stationed at more than 300 ports of entry, while national targeting and analysis is conducted by officials at CBP headquarters and its National Targeting and Analysis Group (NTAG) for AD/CV duty issues located in Plantation, FL. CBP officials explained that most of their targeting involves identifying entries filed under the Harmonized Tariff Schedule codes associated with a given product that is subject to AD/CV duties and then examining the import documentation for those entries for anomalies that may suggest evasion is occurring. Examples of such anomalies in import documents include, but are not limited to being filed under the same tariff code as a product that is subject to AD/CV duties but not being declared as subject to such duties, listing a country of origin that is not capable of producing the goods (or the quantity of the goods) imported—a potential indicator of illegal transshipment, and showing a monetary value for the goods imported that appears to be too low for the quantity or weight of goods imported—a possible sign of undervaluation. Once CBP identifies a potential instance of evasion, it can use a variety of techniques at different points in the import process to attempt to verify if evasion is occurring. These include, but are not limited to, the following: targeting additional shipments made by the importer of record and conducting further data analysis to look for other anomalies that may be evidence of evasion; requesting that the importer provide further information, such as product invoices and other documents that can help CBP understand the transactions involved in producing and importing a good and ascertain if evasion occurred; sending referrals to ICE to initiate criminal investigations and gather evidence of evasion from foreign countries, such as by visiting production facilities overseas and collecting customs documents from foreign counterparts; performing cargo exams to inspect shipments arriving at ports of collecting samples of products potentially brought in through evasion and conducting laboratory analysis of these samples to attempt to identify their true country of origin and other technical details that can help CBP determine if the products should be subject to AD/CV duties; and auditing importers suspected of evading AD/CV duties by collecting company records (such as purchase orders, shipping documents, and payment records) and examining them for discrepancies. Figure 3 shows where in the import process CBP typically uses these techniques. In cases where CBP is able to verify evasion, its options for taking enforcement action to deter evasion include (1) pursuing the collection of evaded duties, (2) imposing civil penalties, (3) conducting seizures, and (4) referring cases to ICE for criminal investigation. As we discuss later in this report, CBP lacks complete data on the amount of evaded duties it has pursued and collected in cases of evasion. From fiscal years 2007 to 2011, CBP assessed 252 civil penalties totaling about $208 million against 237 importers that evaded AD/CV duties. Over the same period, CBP also made 33 seizures related to AD/CV duty evasion, with a total domestic value of nearly $4 million. In instances where CBP suspects that criminal laws may have been violated, it can refer cases to ICE for criminal investigation. Between fiscal years 2007 and 2011, ICE investigations of AD/CV duty evasion led to 28 criminal arrests, 85 indictments, and 37 criminal convictions. As discussed later in this report, some products that are subject to AD/CV duties fall under the same tariff codes as other products that are not subject to AD/CV duties. Consequently, the tariff code for an entry may be insufficient for CBP to determine whether or not the entry is subject to AD/CV duties; additional information may be needed. wood flooring and were also preparing to assess civil penalties on 14 importers. At another port we visited, CBP officials described a case that began with an anonymous fax alleging evasion of the AD duties on steel nails from China. After reviewing import data, the officials were able to confirm that the importer named in the allegation had brought an entry of steel nails into their port and that the importer’s broker had filed the entry as not subject to AD duties. Because the AD duty order on steel nails from China provides an exemption for roofing nails, the port officials then sent a formal request for information to the importer to ask for a sample of the The port officials sent steel nails imported, which the importer provided.the sample to a CBP laboratory to determine if the nails provided were roofing nails or not. After the laboratory determined that the sample nails were not roofing nails, the port officials concluded that the steel nails were subject to the AD duty order and, consequently, should have been declared as such. The officials subsequently told us that this would result in a penalty against the importer and that 34 additional entries by the importer at six ports were also under review for evasion. Two types of factors affect CBP’s efforts to detect and deter AD/CV duty evasion. First, CBP faces several external challenges in attempting to gather conclusive evidence of evasion and deter parties from evading duties.