WASHINGTON Where have all
the duties gone? And what to do about it?
Some foreign companies have been skipping out
on their dumping duty bills, and the federal government thinks
it's high time they paid up.
A new report by the Government Accountability
Office (GAO) found "substantial shortfalls" in duty
collections, and it could lead to changes in how the U.S.
In all, $600 million in anti-dumping and
countervailing duties dating back to 2001 remain uncollected,
the GAO said. But the problem isn't widespread. Instead, it is
concentrated among a few products (four products account for
about 84 percent of the total amount of uncollected duties) and
importers (a relatively small number of importers owe the vast
majority of the uncollected duties). Half of the 23,000 unpaid
duty bills are less than $309, but the average duty bill is
more than $26,000 due to a relatively small number of very
The problem isn't really a metals-related
one. The agriculture and aquaculture industries account for 87
percent of the total, while the steel industry accounts for
just 7 percent.
While agricultural products dominate, an
attorney for the domestic steel industry pointed out that China
is associated with 90 percent of the total amount of
It's no surprise to David Phelps, president
of the American Institute for International Steel, that the
steel industry isn't one of the bad guys when it comes to duty
collection. "Our guys have been in business forever and we pay
the duties," he said.
The products with the greatest amount of
duties written off include crawfish tail meat from China (about
$10 million), manganese metal from China (about $5 million) and
carbon steel plate from Germany (about $4 million).
Getting all $600 million back is unlikely,
however. According to U.S. Customs and Border Protection
officials, prospects for collecting a sizeable portion of the
bills are slim because many of the importers have disappeared,
have no assets or have declared bankruptcy.
Several factors contributed to the
uncollected duties, the GAO said, urging the government to take
more aggressive action to close the loopholes.
Because the U.S. system assesses duties
retrospectively, the final amount an importer owes can
significantly exceed the initial amount paid when the goods
entered the country. The Canadian system, by contrast, collects
its duties prospectively.
The government also tends to underestimate
the final duty rate on "new shippers" because it bases the rate
on as little as one shipment. New shippers accounted for about
40 percent of the uncollected duties.
U.S. Customs also collects minimal
information on importers and doesn't conduct background or
financial checks, which creates challenges in locating
importers and collecting duties.
The GAO set out some options to improve
collections. The United States could eliminate the
retrospective component of the U.S. collection system. "But
there would be tradeoffs," the GAO report said. "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
Members of the Senate Finance Committee said
that quick action is needed to recover the lost dollars, but
provided few specifics. "I will continue to pressure the
administration to get its house in order with regard to
collecting all duties owed to the U.S. and to report on the
duties that go uncollected," Sen. Max Baucus (D., Mont.),
committee chairman, said. "American business owners are seeing
their businesses undercut by unfair and illegal pricing. We
must have an increased emphasis on vigilant homeland security,
but Customs must also safeguard America's economic
The GAO report put the problem into context,
ranking minority member Sen. Chuck Grassley (R., Iowa) said,
noting that the problem was with a few bad apples. "Of nearly
27,000 importers subject to anti-dumping or countervailing
duties since fiscal year 2001, it seems less than 2 percent
have open, unpaid bills," he said. "The bottom line is that we
need to do a better job of dealing with the few bad
Sen. Robert C. Byrd (D., W.Va.) said that the
so-called Byrd Amendment-the Continued Dumping and Subsidy
Offset Act, repealed in 2007-helped the government grasp the
magnitude of the losses. "Without the Byrd Amendment, the U.S.
government would never have grasped the magnitude of the losses
that continue to be incurred because our nation is failing to
collect such huge sums from unfair traders. It was only when
U.S. industries discovered that they could not collect the
duties they were owed under (Byrd) that the immensity of the
problem became clear. It is painfully obvious that our
government agencies must do more to resolve the complicated
issues that contribute to the non-collection of duties," he
"The GAO's report recognizes the challenges
of collecting anti-dumping duties," Sen. Thad Cochran (R.,
Miss.) said. "I hope that Congress and the federal agencies in
charge of collecting duties will use this report to better
protect U.S. industries against unfair trading practices."