Anti-Dumping and your Customs Bond. Anti-dumping is the highest risk category to a surety on the customs bonds they underwrite. In 2018 anti-dumping was the leading cause of loss on import bonds. Anti-Dumping Duties, or ADD as it’s commonly referred to, is a tariff imposed on imports manufactured in other countries that are priced below Fair Market Value on similar goods made in the USA. When the government believes imported goods are being “dumped” into the market through low pricing, anti-dumping duties are levied to protect local businesses from unfair competition by foreign imports.
There are many reasons why ADD is a higher risk to the surety. The duties levied against the importer can reach between 7-230% depending on product and the country of origin. The duties are also applied retroactively. At the time of entry, a cash deposit of estimated duties is made. A final amount will be determined after Commerce’s ITA Enforcement and Compliance calculates the final rates. The CBP will issue a bill for any additional duty plus interest. If a company cannot pay, the surety will be responsible to pay the CBP on their behalf.
Importing goods subject to Anti-dumping can increase the difficulty of securing a Customs Bond. The CBP has seven categories of trading violations.
- Forced Labor Violations: A forced labor violation involves importation of merchandise that is made or produced through the use of forced labor, including forced or indentured child labor, prison labor, slave labor, and labor forced on anyone because they have been trafficked.
- Anti-dumping and countervailing duties: (AD/CVD) are additional fees owed on merchandise subject to an AD/CVD order. They help ensure that American businesses are not harmed when foreign countries under price their goods. Importers who do not want to pay AD/CVD duties avoid payment by various means, including illegal transshipment, re-marking country of origin on packages and/or merchandise, undervaluation, falsely declaring the manufacturer, and falsely described merchandise and/or misclassification.
- Duty Evasion Violations: Other Than AD/CVD There are numerous methods used by violators attempting to avoid paying lawfully-owed duty on imported merchandise. Click Here to see a list of the most commonly attempted duty evasion methods CBP has encountered.
- Merchandise Violations: Counterfeit/Fake Goods (IPR) Self explanatory.
- Merchandise Violations: Import Safety and Others Some merchandise is illegal to import because it is unsafe for humans or animals, unsafe for the environment, or facilitates the use or production of illegal merchandise (Examples: precursor chemicals used for producing illicit drugs and electronic gaming adapter devices). See below a list of violative merchandise intercepted by CBP and other border agencies.
- Shipping Violations: Various methods are used in an attempt to avoid scrutiny by various border agencies and evade duties, penalties, and seizures.
- Miscellaneous Violations: Some import and export violations are perpetrated by personnel involved in the international trade industry.
Financial statements, collateral or other forms of financial backing may be required by the surety before a bond is issued. In addition, the premium on the bond can be up to double the amount of a bond that is not subject to ADD.
The International Trade Administration lists information on various commodities which have applicable ADD. Common items are steel, household supplies (tissue paper and plastic bags) and wooden furniture, to name a few. An easy method for an importer to avoid the risk of ADD is to know their product. Duties and penalties of anti-dumping are assigned to make those goods less viable in the US market. Find a different source for your products, if possible.