U.S. Customs toughens stance towards importers

SEAFOOD.COM NEWS by John Sackton - July 14, 2004- The U.S. Customs
service is toughening its stance towards importers in regards to the
types of bonds they must post when importing products subject to
anti-dumping duty.

The new guidelines, which have not yet been finalized, will make it more
expensive for importers to bring in merchandise subject to anti-dumping
duties.

Importers traditionally need to post two types of bonds. First is an
import surety bond that covers all products imported by that company.
The bond is necessary to protect the government's ability to collect
duties should the company be unable to pay them. This bond is typically
set by the Port Director with some relationship to the total volume of
imports by a given company, and the potential duty liability.

Under previous guidelines, importers also had to post a second bond, an
anti-dumping duty bond, which covered the potential liability of
anti-dumping duties specifically. These bonds could be posted on a
container by container basis.

The change the Customs service is proposing would be to require that
importers subject to anti-dumping order increase the amount of their
continuous surety bond, which is calculated on the basis of all their
imports over the past 12 months from the subject countries.

As a result, companies who import shrimp subject to anti-dumping duties
would have to pay for a bond based on their previous 12 months of
imports subject to the duty, rather than on the old per container basis.

The Customs service gave several examples of the new guidelines. For
example, if an importer brought in $1 million worth of shrimp from
countries subject to the duty last year, and the DOC set a rate of 40%,
that importer would have to increase their continuous bond by $400,000.

The Customs dept. said that the reason for this was because of the long
time period between the preliminary duty determination and the final
determination, which can be as much as 18 months. They also cited cases
where the final duty amounts have been larger than the preliminary
amounts, and companies who had posted individual bonds could not pay. In
the case of garlic, the old duty was 5%, and the anti-dumping
liquidation duty ultimately was 375%. As a result, customs failed to
collect from some importers whose bonds did not cover the total costs.

In the crawfish case, the government also failed to collect from some
companies, after the preliminary duty was set at 91.5%, but the final
duty was set at 201%. They said "this type of substantial increased
liability has resulted in a number of importers being unable to meet
their financial obligations for antidumping duty at liquidation, and the
continuous bonds were insufficient to protect the revenue."

The practical effect of this will vary from company to company. The
amount of the continuous surety bond for each importer is determined by
the Port director, and is based on the activities of each particular
company. The Port directors have the authority to increase the amount of
the bond if they see major changes in import practices.

How much will this cost?

The actual costs are hard to know, since many surety bond companies have
not been confronted with this type of requirement before. One broker
suggested that each $1 million increase in the continuous bond could
easily cost an importer $5,000.

When Will this take effect?

The Customs Service has directed its Port Directors to begin to review
continuous bond amounts for companies who import aquaculture products.
Any increase in bond liability will become effective when the Dept. of
Commerce issues its order on the case, which will happen when the notice
is published in the federal register.

In announcing the new rules, U.S. Customs commissioner Robert Bonner
said "U.S. Customs and Border Protection is the second largest revenue
generating agency for the United States. ..We are partially responsible
for ensuring that American business is competing on a level playing
field. These new guidelines allow [us] to be more proactive in ensuring
the collection of all appropriate antidumping and countervailing
duties."

The agency went on to say that "Anti-dumping cases are brought against
companies who export into the U.S. and sell products for less than
manufacturing and shipping costs. This practice is illegal and damages
the fair market for similar items sold in the U.S."

Chinese and Vietnamese shrimp companies, however, would vigorously
dispute that they are selling below actual cost. Instead, they have been
charged with selling below a fictitious cost calculated by the Dept. of
Commerce.

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