What is the Enforce and Protect Act?
The Enforce and Protect Act of 2015 (EAPA), empowers the Customs and Border Protection (CBP) to initiate an investigation of whether any company has evaded anti-dumping and countervailing (AD/CVD) duties in an on the record investigation. The EAPA is a multi-party and administrative proceeding that is very transparent and in which the concerned parties can both participate in and find out about the outcome of the investigation. The EAPA also maintains a due process for parties to the investigation. This is done by providing an option for them to request administrative and judicial reviews of CBP’s determination as to evasion.
EAPA has so far accomplished the following :-
- Launched 131 investigations
- Conducted over 30 distinct foreign on-site visits or verifications
- Identified over US$600 million in AD/CVD duties owed to the Government
What is AD/CVD Duty Evasion?
Evasion is said to have occurred when an importer has intentionally tried to circumvent the order to avoid paying the punitive duties. However, this need not be the only definition of evasion. Evasion can be intentional and otherwise.
- Simple Negligence:
Importers that fail to pay AD/CV duties albeit unintentionally, are still considered to have evaded the law. They are liable for paying the duties and additional penalties if any. Negligence is said to occur when an importer fails to provide valid reasons for oversight of its import program.
AD/CVD evasion may also occur due to inaccurate classification, poor product description, or lack of awareness of the orders.
In more complex supply chains, identifying an item embedded within a retail set that is within the scope of an AD/CVD order can be extremely challenging to detect.
- False Reporting:
The most blatant of the AD/CVD evasion techniques is the intentional wrong description of goods or misreporting of the country of origin at the time of entry by the importer. This is a fraudulent import practice even when AD/CVD is not involved.
It is important to note that AD/CVD goods remain in scope irrespective of the origin of the shipment. In some cases, AD/CVD goods are even distributed from a third country after doing some minor processing or repackaging. However, this incidental processing of goods in a third country does not exempt them from the scope of the AD/CVD order.
What Does an EAPA Proceeding Look Like?
An EAPA proceeding works on stringent administrative deadlines and there is great speed and efficiency in its working processes. However, this process may place a tremendous amount of stress on the importer who is being investigated. This stress is more when the CBP decides to apply interim measures. In an EAPA proceeding, the party that is being investigated is often at a disadvantage. That’s because, during such proceedings, confidential information is redacted from the administrative record. There is no mechanism in the EAPA for accessing these details during the course of an investigation. Because of this, the accused evader may be unable to see and respond to the specific facts that support the determination of evasion.
The primary stages of an EAPA proceeding are:
The U.S. manufacturer, producer, or wholesaler submits an ‘e-allegation’ to the CBP through an online portal when the interested party believes that a U.S. importer is evading the payment of AD/CVD duties.
When the CBP receives a properly filed EAPA allegation, it gets 15 business days to make a decision on whether to investigate the case. This is done through its Trade Remedy Law Enforcement Directorate (TRLED). The CBP will then start the investigation process if there are reasonable suggestions in the allegation that evasion has taken place.
- Interim Measures:
The CBP is required to implement interim measures within 90 calendar days of initiating an investigation if they think there is a reasonable suspicion that evasion has taken place. Interim measures may include:-
- Suspension of liquidation
- Collection of AD/CVD deposits
- Intensive examination of import shipments
The interim measures may also include additional measures that the CBP believes are needed to protect the revenue of the United States. The interim measures will remain in place during the course of the investigation.
The CBP will gather information through site visits and voluntary submissions. The investigation is a tedious process and may include requests for import documents, production records, and corporate/financial information. If the party fails to cooperate or comply with the investigation, the CBP may apply an adverse inference.
- Final Determination:
The CBP will determine if there is any real proof of evasion available along with substantial supportive evidence. This decision must be taken within 300 days unless the CBP gets an extension. If CBP makes an affirmative determination, the agency will:
Continue the enforcement of interim measures
Seek a determination of the applicable AD/CVD assessment rate or cash deposit rate from DOC
Assess AD/CVD duties that comply with DOC instructions
An administrative review appeal may be requested by any party involved in the investigation within 30 days of the final determination of the CBP. This review process must be completed within 60 days. The losing party may then seek a judicial review in the U.S Court of International Trade (CIT). This appeal must be made within 30 days of the completion of the administrative review.
Within 30 days after CBP’s Final Determination, any party to the investigation may request a de novo administrative review, which must be completed within 60 days. Subsequently, the losing party may seek judicial review in the U.S. Court of International Trade (CIT) within 30 days of the completion of the administrative review.
- EAPA Allegations:
Allegations of suspected evasion can be made by anyone through the public E-Allegations portal of the CBP. An ideal EAPA allegation must have the following information.
- The person submitting the allegation (Allegers) must provide their name and contact information.
- Allegers must be interested parties, as defined by the statute and regulations
- Interested parties indicate importers of covered merchandise; trade or business associations; domestic manufacturers and producers; foreign manufacturers, producers, or exporters of covered merchandise.
- Allegers must provide a description of merchandise and the applicable AD/CVD order(s).
- Allegers must provide evidence that indicates a reasonable possibility of evasion of an AD/CVD order.
Who Can File an EAPA Request for Investigation?
The regulations defines an “interested party” for the purpose of submitting a request for investigation or for filing an allegation of evasion :
A foreign manufacturer, producer, an exporter or simple a wholesaler in the United States of a domestic like product;
A certified union or recognized union or group of workers which are part of an industry engaged in the manufacture, production, or wholesale in the United States of a domestic like product;
A trade or business association whose majority of the members are involved in manufacture, produce, or wholesale a domestic like product in the United States;
An association where in a majority of the members are from the interested parties described above with respect to a domestic like product
If the merchandise is a processed agricultural product, a coalition or trade association that is representative of processors; processors and producers; or processors and growers.
The Role of “Interested Parties” in Initiating Investigations
Any interested party can file an allegation that an importer of covered merchandise has evaded AD/CVD orders. The allegation must be filed electronically on the online e-Allegation system of the CBP portal. While each allegation must be pointed at one importer, the interested party is free to file multiple allegations.
Who investigates an EAPA allegation?
After the CBP decides that the allegation reasonably advocates evasion of AD/CVD duties, the Enforcement Operations Division initiates the EAPA investigation process. An investigation team is set up involving a team of CBP employees, which can include, but is not limited to:
- Personnel from the EAPA branch
- Regulatory Audit and Agency Advisory Services
- National Threat Analysis Centers
- Centers of Excellence and Expertise
- Field Offices
The exact composition of the team will depend on the particulars of the allegation.
How to file an EAPA Allegation
EAPA allegations must be filed via the EAPA option on the e-Allegations web portal. There are checklists available to help determine whether a party has provided sufficient information for both allegation receipt and initiation purposes. These are provided on the EAPA website under the Resources tab.
The party submitting the allegation is required to provide information to CBP during the proceeding. They must also receive notification of interim measures and the final determination from CBP.
Business confidential information provided by the party must be enclosed within single brackets. The first page must be marked as “business confidential.” The party must also provide an explanation as to why the bracketed information is entitled to business confidential treatment.
A public version of that document must also be filed, pursuant to the relevant sections of the CBP.
Small businesses can ask for technical assistance if they lack adequate internal resources or do not have the financial capability to hire outside assistance in preparing and submitting an EAPA allegation.
Benefits of Filing an EAPA Allegation
Helps in creating a multi-party proceeding. There is greater transparency and information-sharing to help investigate the evasion of AD/CVD orders.
CBP must determine whether evasion occurred within specified timeframes and provide that determination to the parties to the investigation.
CBP is empowered with new tools to investigate allegations and authorize the collection of information from the party making the allegations, the importer, the exporter, and even the foreign government.
Allows parties being investigated to contest the determination regarding the evasion by requesting an administrative review of the determination with the CBP Office of Trade’s Regulations and Rulings Directorate. Later, a party to that administrative review can file a suit with the Court of International Trade to contest CBP’s determination.
What is the timeline for investigation and CBP determination?
EAPA is required to comply with stringent statutory deadlines. If the information contained in the allegation reasonably suggests evasion of AD/CVD duties, the CBP must initiate an investigation within 15 business days of officially receiving the allegation. The CBP has 90 calendar days to arrive at a formal decision on whether the allegations are valid or not. Generally, the CBP must make a decision on whether AD/CVD duties were evaded, based on substantial evidence, within 300 days after the investigation was initiated. In investigations that are complex and seemingly extraordinary, CBP must decide no later than 360 days after a case is initiated.
Will the business information be protected if an EAPA Allegation is filed ?
All business confidential information submitted to the CBP will remain protected as long as it is appropriately identified as business confidential.
Can parties request an administrative review of an Initial determination?
The interested parties may request for CBP’s review of the decision after precisely 30 business days of evasion. It must be based upon the facts on record, contain a statement of reasons why the determination should be reversed or affirmed, properly certified, and must be served on other interested parties. CBP will then have 60 business days to complete its review.