CBP Prevents $287M of Duty Evasions through “Game-Changing” Enforce and Protect Act

In Fiscal Year (FY) 2020, U.S. Customs and Border Protection (CBP) prevented importers from evading $287 million in duties owed to the U.S. Government through the Enforce and Protect Act (EAPA). This is a 500 percent increase since the beginning of the EAPA program in FY 2017.

As the second-largest revenue-collecting agency in the federal government, CBP uses EAPA to ensure that foreign companies and other entities exporting goods into the United States pay the correct duties associated with their products. The U.S. Government adds duties to imports produced by companies that receive subsidies in their home country or other advantages that allow them to sell the good for less than market value in the United States.

When exporters find ways to evade paying these antidumping and countervailing duties (AD/CVD), they have an unfair advantage over domestic companies, as they can afford to sell their goods at a lower price. Duty collection gives American businesses a fair chance to compete in the same market. The significant increase in the prevention of duty evasion since FY 2017 is a testament to CBP’s ability to ensure a level playing for American businesses through EAPA.

“Under EAPA, CBP’s work with the trade community on allegations of duty evasion has been a game-changer in combatting unfair trade practices and leveling the playing field for U.S. businesses,” said CBP Acting Commissioner Mark A. Morgan. “CBP is exercising this authority to protect American businesses from those using fraud and evasion to undermine our economy.”

To combat the ever-evolving schemes to evade U.S. trade laws, CBP uses EAPA in the following ways:

1. Pause the final billing to prevent evaders from skirting their obligations.
   • CBP thoroughly vets an importer’s transaction history over the course of an entire year before determining the final payment owed the U.S. Government.
2. Conduct onsite visits in foreign countries to determine firsthand if fraud is occurring.
3. Leverage new authorities to ensure importers cooperate in evasion investigations, which was not possible before EAPA.
   • Adverse inference is a powerful authority that allows CBP to legally pursue entities that fail to provide information regarding product compliance.
4. Hold importers accountable for understanding the origins of their supply chains.

The majority of AD/CVD evasion investigated through the EAPA program this year involved Chinese goods transshipped through Cambodia, the Dominican Republic, India, Malaysia, Laos, Taiwan, Turkey, Thailand, or Vietnam. Some of the most common evasion schemes include illegally shipping goods through a third country or attempting to undervalue or misclassify goods upon entrance into the United States. One recent case involved the illegal shipment of Chinese-origin xanthan gum through Malaysia to avoid a 154.07 percent duty rate, and another involved importers claiming a $0.08 per kilogram duty rate for Chinese-origin fresh garlic, when the actual duty rate of $4.71 was nearly 6,000 percent higher.

The difference between $0.08 and $4.71 adds up quickly when more than 61 million kilograms of fresh garlic from China crossed the border in 2019 according to the U.S. Department of Agriculture. These duties can be the difference between American garlic farmers selling their product or not. They also ensure that American consumers having a variety of options to choose from and that the U.S. Government receives the revenue it needs to continue to protect Americans from unsafe and illegal goods.

Established in 2016, EAPA is one of the most powerful and successful authorities in CBP’s arsenal of tools to protect American workers, manufacturers, farmers, and consumers from businesses and people determined to evade U.S. trade laws. Despite a recent slowdown in the flow of international trade, CBP is currently leveraging EAPA to investigate 59 evasion schemes.