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. By contrast, other major U.S. trading partners have  AD/CV duty systems that, although different from one another, are  fundamentally prospective in that AD/CV duties assessed at the time a  product enters the country are essentially treated as final. New shipper review: After an initial rate is established, a new shipper  (i.e., a shipper who has not previously exported the product to the  United States during the initial period of investigation and is not  affiliated with any exporter who exported the subject merchandise) who  is subject to the “all others” rate can request that Commerce conduct a  review to establish the shipper’s own individual AD/CV duty rate. U.S. Customs and Border Protection (CBP), part of the Department of  Homeland Security, is responsible for collecting the AD/CV duties. In addition, importers purchasing from the new shipper can pay estimated  AD/CV duties by providing a bond in lieu of paying cash to cover the  duties—an option known as the new shipper bonding privilege. Past Initiatives to Improve AD/CV Duty Collection Have Made Little Progress

CBP, Congress, and Commerce have undertaken several initiatives to  address the problem of uncollected AD/CV duties. However, these  initiatives have not resolved the problems associated with collections. CBP’s goal was to increase protection for securing AD/CV duty revenue for  certain imports when the final amount of duties owed exceeds the amount  paid at the time of importation, without imposing an “excessive burden”  on importers. The enhanced bonding  requirement was subject to domestic and World Trade Organization  (WTO) litigation, and CBP decided to terminate the requirement in   April 2009. Congress Temporarily Suspended New Shipper Bonding Privilege

Congress partially addressed the risk that CBP would not be able to  collect AD/CV duties from new shippers by suspending the new shipper  bonding privilege from August 2006 to July 2009. The Treasury stated in a 2008 report to Congress that the added  risk associated with the bond compared with the cash deposit is low. Additional Options Exist for Improving Collection of AD/CV Duties

There are two key components of the U.S. AD/CV duty system that have  not been addressed but could improve the collection of AD/CV duties: the  retrospective nature of the system and the new shipper review process. As discussed earlier, importers pay the  estimated amount of AD/CV duties when products enter the United States,  but the final amount of duties owed is not determined until later. The long time lag between the initial entry of a  product and the final assessment of duties heightens the risk that the  government will be unable to collect the full amount owed, as importers  may disappear, cease business operations, or declare bankruptcy. This process allows new  manufacturers or exporters to petition for their own separate AD/CV duty  rate. As a result, a shipper  can be assigned an individual duty rate based on a minimal amount of  exports—as little as one shipment, according to Commerce—and can  intentionally set a high price for this small amount of initial exports. This creates additional risk by putting the government in  the position of having to collect additional duties in the future rather than  at the time of importation. Concluding Observations

The existence of a substantial amount of uncollected AD/CV duties  undermines the effectiveness of the U.S. government’s efforts to remedy  unfair foreign trade practices for U.S. industry. Some additional options exist  that Congress could pursue to further protect government revenue.
Why GAO Did This Study

Since fiscal year 2001, the federal government has been unable to collect over $1 billion in antidumping (AD) and countervailing (CV) duties imposed to remedy injurious, unfair foreign trade practices. 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. These uncollected duties show that the U.S. government has not fully remedied the unfair trade practices for U.S. industry and has lost out on a substantial amount of duty revenue to the U.S. Treasury. This statement summarizes key findings from prior GAO reports on (1) past initiatives to improve AD/CV duty collection and (2) additional options for improving AD/CV duty collection.

What GAO Found

U.S. Customs and Border Protection (CBP), Congress, and Commerce have undertaken several initiatives to address the problem of uncollected AD/CV duties, but these initiatives have not resolved the problems associated with collections. Some of these initiatives include the following: (1) Temporary adjustment of standard bond-setting formula. Importers generally provide a general bond to secure the payment of all types of duties, but CBP determined in 2004 that the amount of this bond inadequately protected AD/CV duty revenue. CBP took steps to address this by revising its standard bond-setting formula and tested it on one product (shrimp) to increase protection for AD/CV duty revenue when the final amount of duties owed exceeds the amount paid at the time of importation. The enhanced bonding requirement was subject to domestic and World Trade Organization litigation, and CBP decided to terminate the requirement in 2009. (2) Temporary suspension of new shipper bonding privilege. Importers purchasing from "new shippers"--shippers who have not previously exported products subject to AD/CV duties--are allowed to provide a bond in lieu of cash payment to cover the initial AD/CV duties assessed, which is known as the new shipper bonding privilege. Congress partially addressed the risk that CBP would not be able to collect initial AD/CV duties from such importers by suspending the new shipper bonding privilege for 3 years and requiring cash deposits for initial AD/CV duties, but the privilege was reinstated in July 2009. The Department of the Treasury stated, however, that the added risk associated with the bond compared with the cash deposit is low. Additional options exist for improving the collection of AD/CV duties. First, the retrospective nature of the U.S. system could be revised. Under the existing U.S. system, importers pay the estimated amount of AD/CV duties when products enter the United States, but the final amount of duties owed is not determined until later, a process that can take more than 3 years on average. This creates a risk that the importer may disappear, cease business operations, or declare bankruptcy before the government can collect the full amount owed. Other major U.S. trading partners have AD/CV duty systems that, while different from one another, treat as final the AD/CV duties assessed at the time a product enters the country. Second, Congress could revise the level of exports required for exporters applying for new shipper status. Under U.S. law, new shippers to the United States can petition for their own separate AD/CV duty rate. According to Commerce, a shipper can be assigned an individual duty rate based on as little as one shipment, intentionally set at a high price, resulting in a low or 0 percent duty rate. This creates additional risk by putting the government in the position of having to collect additional duties in the future rather than at the time of importation.