Ya Basta - Mexico Asks China To Work Together to Address Duty Evasion Schemes

Duty evasion has recently been the subject of Congressional hearings, reports, and pending legislation in the Senate and House in the United States of America.  Looks like the United States of Mexico is joining the fiesta.

According to a September 28, 2011 press release, Mexico's Secretary of Economy recently sent a letter to China's Ministry of Commerce (MOFCOM) raising concerns that Mexican industries are being harmed by pervasive transshipment, undervaluation, and misclassification. The letter apparently identifies companies that offer services to evade duties and "trick" customs authorities in several countries, including Mexico.  I haven't seen the letter, but I wonder if they are referring to the companies described in Part II of this report.

While efforts north of the Rio Grande have primarily focused on customs enforcement, Mexico is seeking a bilateral working group to enlist China's assistance in combating the problem.  This approach is inline with the Mexican saying, "mas vale un mal arreglo que un buen pleito" (it's better to have a bad deal than a good fight).

Show Me the Money - DOC Announces New Requirement For Cash Deposits of Provisional Measures

The US Department of Commerce (DOC) announced today a change in its regulations that will require importers to post cash deposits of estimated antidumping (AD) and countervailing (CVD) duties starting with the preliminary determination in original investigations.  This change applies to new investigations initiated as a result of petitions filed on or after November 2, 2011.  While DOC maintains discretion under the new regulations because it will "normally" require cash deposits, it recognizes that, going forward, it will be "rare and unusual circumstances" when it permits bonding.

Prior to this change, importers were allowed to post bonds in lieu of cash deposits for the so-called "provisional measures" DOC puts in place upon making an affirmative preliminary determination in an original investigation.  Under the US's retrospective system, the "provisional measures" are estimates of the importer's AD/CVD liability based on the dumping and/or subsidy margins calculated for the preliminary determination.  The final AD/CVD liability is determined later through annual administrative reviews.

DOC is making the change:

• "to strengthen the administration of the nation's AD and CVD laws by making importers directly responsible for the payment of AD and CVD duties";
• "to ensure that the U.S. Government collects the full amount of the duties owed"; and
• "reduce some of the burdens that U.S. Customs and Border Protection (CBP) faces when trying to collect AD and CVD duties."

The current shortfalls in collecting AD/CVD duties are well documented: see here, here, and here.