Anti-Dumping and Countervailing Duties

*Machine Operated Script*
Brokers, separately are are not out of the loop if, if there are missed declarations to customs that lead to underpayment of adcvd,

welcome to simply trade. Brought to you by global Training Center. My name is Lalo, and together with my co host, Andy, we have well over 60 years of combined trade logistics and supply chain experience along the way, we have seen and witnessed different challenges in trade compliance. We decided to put the show together and call on our friends and colleagues in the business to hang out with us and share their knowledge on all things trade. Thank you for spending some time with us. Enjoy the show.

Hey, Andy, I think in today’s show, we’re getting ready to open a big can of worms. This topic is just gonna probably just trickle on to quite a few more episodes in down the line, you know, but we have lined up a couple of guests that are heavily into anti dumping and countervailing duties, and so that’s what I mean by opening up a can of worms. It’s just you never know what you’re gonna get into. Well,

with anti dumping add, as I would say, anti dumping duties and countervailing duty, CBD, that is a heavy topic. It doesn’t apply to everything, but so the frequency may not be there as far as a lot of commodities, but the risk is astronomical if you do not handle and declare properly commodities that you’re importing that have anti dumping or countervailing cases against them, and as such, with the entries, and also, we’re going To get to hear firsthand from an attorney’s perspective of how serious this is, and so you need to be looking for this. I think it’s going to be something that you’ll learn a lot from it, and it just reminds you on how serious this is, if you’re of an upper management to the compliance arena, what you should be doing. Yeah,

that’s correct. And we’ve lined up both Jen Diaz and David Craven, both of Jen of the Diaz law firm. And I mean, if anyone’s on social media or anywhere out there looking at at posts, you’ll see that they’re constantly, always reminding us of different scenarios or different cases or whatnot that do affect you, sometimes not even knowing that your product is, you know. And then I believe they’ll have some examples that talk about that. But this is going to be, you know, we’re going to dig deep into that in this show.

Well, let’s get right into it and get into the show. Let me ask this question to y’all, is as we’re talking about countervailing duties and anti dumping duty cases? First off, obviously it’s a different entry type, so with brokers that are transmitting it that, you know it’s going to be an oh three type. But with that, it puts, you know, it may have the right classification everything together. But when soon as you go into this other entry category, it’s like a whole another ball game. Is it not 8,000%

okay, custom dies are on the ball. So

with that, it’s easier to identify the commodities that may have cases on it, but that’s on the custom side. Where do you find that information from the Department of Commerce? And if your commodities,

that’s one of the major categories.

A few points on that. Yeah, yeah. And it’s a huge issue, a huge issue, because now what you’re talking about is looking at a commodity from an HTS standpoint, and qualifying the item as to whether or not it is or isn’t subject to dumping based upon the HTS alone. And both commerce and customs will tell you that’s not good enough. It’s 100% not good enough. And it’s not the expectation for an importer to strictly utilize the HTS to absolve them of any ad CBD, potential liability. It’s your job to know every single scope, so important to know every single description of every scope, and even if your HTS is not identified in the scope. You may still have liability, and it’s up to you as the importer, to use your burden of reasonable care to figure that out.

Let me give you a real a real example of something like that. I import a TV cabinet made of wood from India. My TV cabinet I want to look extra fancy, so I make the top of my TV cabinet out of quartz slab. Quartz slab is a. To a dumping order out of India. It turns out that quartz slab, even if it’s incorporated into a piece of furniture, is subject to the dumping order and carries through. So my TV cabinet, which is not subject to dumping, is suddenly partially subject to dumping because I chose to make it out of court slab instead of, say, granite. And that’s not something that you would ever even think to look if you were importing TV cabinets. You’ve got your tariff provision, your you’ve isolated it, you’ve determined it, you’ve searched the words TV cabinet in the scope of anti dumping, and you never would have thought that it would have been dragged in, potentially into courts.

Okay, so David, let that that’s that’s a great example that, as you’re going through that typically compliance related areas are reactionary. So in other words, a lot of times they don’t know that this product is being, you know, designed, manufactured, whatever, until it hits the port, then it’s an, you know, you know what?

That’s a big no. I mean, no, no. Compliance program can be reactionary if you’re not looking at the product, if, if sales and purchasing are not in touch with compliance at the beginning. All you’re asking for is trouble. So the fact that if a compliance department is reactionary, you’re in trouble already. Just hearing those words, I want to strangle somebody within that company, and that’s not the way a company needs to be. Unfortunately, whoever’s doing the purchasing and ordering has to communicate with compliance, but in a perfect world, in the real world that doesn’t exist, and that’s why we’re 911, operators for trade at my law firm.

That point, let me ask something, though. Let me jump in here. Is that matter of fact, there was a some of our other topics that we’ve had that the very thing is, in today’s world, you can no longer be reactionary. You’ve got to be proactive, and even to the point where, you know, vetting the vendors, that process has got to include the compliance and a thorough vetting of it. But then also, as we go through, let me ask you this question. Is that, as we’re talking through these anti dumping situations in the design and all that is that, what about the liability of the C suite? Is there liability for them if you start bringing these personal

liability? Yes, we’ve got some good stories on that as well. So really good. But,

yeah, I’ve seen some things where they I’ve seen some things where, you know, people try and use the scare tactic, well, potentially, whatever. But I mean in real world, and as it’s coming through, gaining the support of the upper management the executive levels is paramount, in a compliance arena. But this is one of those things where, as we’re looking at it, in particular, you’ve got, of course, everybody knows the CEO and COO, possibly the CFO, but who and then whatever officer that the logistics and the compliance rolls up to so. But what happens in that scenario there with what you’re talking looks like David’s examples, like the wheels come off,

let me. Let me start here without, without disclosing too much, and David will happily chime in and cut me off where I need to be cut off. But the reality is, when you have a corporate entity, whatever formation it is, the idea between the company and the individual owners is the company is supposed to shield and protect the owners from personal liability. That’s always the intention. Why have a company if the company is not going to be the company liable versus the individual owners that are liable like that’s the reason you have an entity. That’s the reason lawyers yell at people to set up companies to shield the individual from liability. When I see individuals importing I scream at them consistently. You should never be giving your social security number out why. It’s idiotic. Create an entity, have that entity be liable. But in this day and age, what we are seeing on the ground, and we have active cases that look like this now, which is very interesting for us, because it’s a whole new world with customs, is enforcement of ad CBD and collection of revenue by customs right now as the revenue collection agency, which is 100% their role For the Department of Commerce, just like customs collects TTB excise taxes, I have those issues as well. Customs collects ad CBD revenue on behalf of commerce and customs one, number one priority trade initiative is making sure they’re collecting the right amount of money, down to the freaking Penny. What is the right amount of money that customs should be collecting? And if customs believes that you’re cheating them in any way, shape or form, and not giving customs the right amount of money, whether or not that’s trans shipment, whether or not that’s changing countries of origin, whether or not it’s whatever the scenario is, we are seeing Customs Act more aggressively now than ever I’ve ever seen before. David’s been in this game for 40 plus years. I’m only at almost 20, so I’m a baby, but in my almost 20 years of doing this, I have personally never seen personal liability until this year. Personally, that’s my experience. David has experienced seeing personal liability before, because he was involved in a different case, but in different instances. But I will tell you, in my 20 years, I am now seeing personal liability for adcbd wrongdoing, alleged wrongdoing, on a personal level versus I would always be able to tell you before this year, have an entity is what protects you. It has strong opinions on this too.

Your problem isn’t just, in fact, it isn’t necessarily even primarily your liability for mis acting, because you can be completely innocent, and customs can say, You know what, you did everything you could, but your anti dump the product you’re importing, is subject to a 570% anti dumping duty, and you only mark your product up 10% so my customs penalty is only going to be the most I could assess is 110% of Your imported value. But I can collect anti dumping duties of 500% of your imported value. So this isn’t just Am I doing something wrong, it’s even if I’m doing something right, but I turn out that I was misinformed, or had it wrong, or commerce changed their position, I could suddenly have my company subject to these massive duties. And in theory, thanks to some really horrible Court of Appeals decisions, they might try to go after the officers and individuals for duty. And I’ll give you an example. I had a case, and I can’t dispose the full detail, but they went after the president and owner of the company, and they went after him for a customs penalty, and they went after him for unpaid anti dumping duties, and they went after him initially for $300,000 in penalties and $3.5 million in unpaid anti dumping duties. And we convinced customs that he had not done anything wrong, and customs eliminated the $300,000 penalty. And they still said, but because you were the owner of the company, we’re going to imply the law that we’re going through, and you must pay the money anyway, is the duty. And his response is, but I didn’t do anything wrong. That’s right. There’s no penalty here, but there’s $3 million in duty, and it’s hard to get rid of that duty there. It’s not impossible, but it’s hard. And I’ve got a case going on right now where I have a client that their customs is going after them for duty that accrued 17 years ago, and the company involved closed as a business 12 years ago, and the customs is now going after the owners of the old company who have started a new company in a similar, but not identical line of business for all that money, and it’s un American. Wow. And it shouldn’t be happening and, well, you can’t make

it up, right? Why?

But I also, I, I also want to bring up a point that we don’t necessarily talk about often, but brokers, I’m seeing liability on as well in a separate entity. So you have the importer, and I tell every importer, your two most important relationships are your broker and your lawyer. So if you don’t have a great customs broker, that’s another story. I mean that that needs to be a very important, coveted relationship. What we’re seeing is customs is also similarly, going after brokers saying you you broker, you didn’t enter this as a type three. Here’s your informed compliance letter. Here’s your broker penalty for this. So brokers, separately are, are not out of the loop if, if there are mis declarations to customs that lead to underpayment of adcd, it’s both the importer who has the duty of reasonable care and the broker that has the duty to reasonably supervise and control, right?

All right, let’s Let’s back up for a minute. Though, as we’re talking through, obviously it’s some really grave consequences in. They come after you for the anti dumping and potential risk. And I get it with the brokers, because I know the brokers were saying, Look, I just used the information from a commodity perspective of what we were provided. And you know, I’ve seen these cases like this before, and quite frankly, I think customs and or the the government in this realm is like, it’s completely unrealistic. It’s like, how can you penalize me for something that I didn’t even have the information and it’s gone through so wrong information,

wrong information. Oh, yeah, importers that that literally get wrong information, let’s say, from a broker that was doing compliance related work and not even getting paid for it. So that’s another story. So that’s a huge red flag, and I highly caution brokers to not be external compliance departments for free, because I’ve seen court like litigation stem from this, where people lose their businesses as a result of that. So doing the research and that work beforehand, even if the importer gets wrong information, if customs is owed whatever amount of money, usually millions. I mean, we’re seeing hundreds of 1000s, millions of dollars owed customs is a dog with bone. They’re going to go after it so

to that extent. But go ahead.

No, go ahead. Andy, I was going to ask about the welcome. Maybe this might work. I was going to ask, okay, so you’re talking about all these, and David as well, you’re talking about all these, you know, consequences, but what if I’m sitting I mean, we see this all the time. We have this guy at Etsy. We have this gal on Amazon. They don’t have a big corporation behind them. I mean, how? And they’re gladly selling all this stuff coming in.

They’re under greater risk. They’re under greater risk,

yes, well, of course, you know. But right? Because they are the CEO, they are this Lalo.

They get caught too. They really do. And what happens is we consistently see those small guys come to us that say, I don’t have this kind of money. I just don’t have it. I’m getting these bills from customers that are gazillions of dollars, and do you think I made? I don’t have it. I didn’t let

me give you a real life example of how extreme this can be. There was a case a few years ago about a woman in a bar who met somebody who said, Will you sign a customs Power of Attorney for me so that I can make entry in your name? And this person made entry of a bunch of agricultural products that ended up having a notice of redelivery filed, and the person didn’t file, the notice of redelivery and customs went after the woman in the bar who signed the piece of paper and got a penalty of two and a half million dollars against her for basically she said, they said, Well, you should have known better than to sign in a power customs, power of attorney. And the answer is, she was in a bar. She was probably drunk. We put everything we’ve been able to tell this woman had no means of support. Someone offered her 200 bucks to do something that was simply signing a piece of paper, versus 200 bucks to do something far nastier and

and that insane, insane 200

the Court of International Trade has some good judges and bad judges, and she got a bad judge, and this judge said, no, no mitigation, and she now has a customs debt attached to her of two and a half million dollars.

So Lalo, perfect example of your small company. I mean, we have real life examples all the time. Unfortunately, we’ve had a client for last couple of years with the small small business broker. Gave him advice that the product was not subject to anti dumping. Imports, no anti dumping. Next thing you know, half a million dollars from CBP. Let

me add, let me add the big companies. Customs doesn’t go after, if I am a 500 person company, customs doesn’t go after the owners, the CEOs, the CFOs, it leaves them alone. It only goes after the owner or the CFO or the CEO if the company is 10 employees or eight employees, so the big companies all get walks on the penalties. The company might get a penalty, but no individual is going to get a penalty. If I’m Ford Motors, I am not going to have Henry Ford the whatever the 23rd is not going to get a personal penalty. Even if he were directly involved, they’re just going to leave him alone. But if it’s Craven import. Us, and it’s me, and my brother and sister and kids customs will go after me personally. And so it’s some ways, it’s a bigger problem if you’re not a large company, and it’s really unfair.

So to that extent, let me ask this David, though, is, and I agree that is completely unfair. But to that point is, as we’re talking through it, let’s, let’s get ahead of this ball game, because it’s, you know, right now, it’s like, Alright, I’m scared to death to even import anything. And yet, there are people needing to do that. You know, is stimulating trade internationally, is just part of our global economy now. So to that extent, let’s, let’s, hey, I want to import a widget, and what do I need to do here?

Sure, a lot of homework and due diligence. I call that pre compliance. So in advance of importation, the CBP reasonable care checklist has wonderful notes that I wish was required reading for every importer. So if I had my way, I would require every importer to read 211 pages on importing into the United States. And they would have to take a test, and that asks about reasonable care and their obligations. They would have to understand that they’re signing a power of attorney, subject to terms and conditions, and broker liabilities, 50 bucks the shipment not much, and they would have to understand that compliance internally is a big deal and that they have risks and potential penalties on board. So now, when it comes to anti dumping within the reasonable care checklist, they talk about this as well. Who’s your expert? Where are you getting your information from? So my first question to any business Big or small, is, who’s your expert? Are you using somebody internally? And if you don’t have that expert internally, you must have that expert externally. And are you paying for that advice? Is my first question, because if you’re not paying for it, it doesn’t count. That free advice that you’re getting is worth as much as you paid for it. If you’re not truly, truly, truly paying for advice is somebody truly, truly, truly putting time, love, effort into the quality of the advice that they’re providing to you. And I question that, because a lot of people do provide free advice, but at the end of the day, do they really want to be liable for it? Do they really have unfortunately, we see a lot of it, and I think a lot of it’s out of the goodness of their heart, and they’re trying to be great and trying to be helpful. But when it comes to anti dumping, you have about 10 different sources you have to look through at the same time in order to figure out if your particular product is subject to the scope. Yeah, I’ve talked to CBP about this when we were at their summit last week, and I said, Look, you’ve got a new sexy adcvd page. I love the concept of it. I love the thought and the theory of it, but there’s a problem. And the problem is you can’t just go to ace the automated commercial environment, the ad CBD lookup, that’s not good enough. You can’t just go to the initiations of investigations that’s not good enough. You can’t just go to you have so many things you have to search at the same time in order to truly understand and vet whether or not your particular product is potentially subject to an existing adcvd scope or a potentially existing or initiated ad CBD, or something that’s coming on the horizon. I mean, the problem is, it’s an area that, to me, is more confusing than it should be, and it’s more difficult than I think it should be, but it’s not the same as, for example, reviewing cbps cross when you’re trying to find a dcvd rulings, the public does not have access to access which is the doc the Department of Commerce website. You don’t have access to see the scope rulings, which are very different than binding rulings. Your binding ruling is for your HTS, your valuation, your country of origin, classification, and so on, your FTA applicability, but that doesn’t do anything for you. For adcbd applicability, CBP is not going to opine on that, because it’s a commerce question, not a CBP question. And that makes it really interesting, because now you have two federal agencies that you’re dealing with at the same time that both work drastically differently, and you’re expected and obligated to understand how both of them work. So if you want to truly understand if your product is or isn’t compliant, or is or isn’t subject to an adcvd scope ruling, technically, you have a process where you could ask commerce via a scope ruling request. That process used to be, I would say, a little bit more simplified, but you’re still party to a litigation. You still have to serve everyone who’s part of that particular case. It used to be 45 days, and they commerce would find all sorts of reasons to reject and make you refile, which we’ve seen as a Fauci. This trick to get another 45 days, for example, out of you. But now you don’t even have that 45 day window. It could be more than that 45 days. So in the customs side, if you want a classification ruling, you know you have your 30 days, and CBP should be issuing your ruling. That’s great assurance for a time period. On the commerce side, you may not get your ruling, your scope, rolling back within that 45 days that it used to be, it may not be 60 days. It could be longer. So you potentially have to wait. So in my opinion, as a whole, and I want David to give some of his thoughts on this, because he’s been living, eating and breathing this for so many years. He’s my ABC VD guru. You need somebody like a David to say, I’ve looked at your product, I’ve looked at the description, I’ve looked at what I believe your product is and what the intended use is, and I’ve compared it to my knowledge of the scope rulings of what’s going on and what’s being initiated. And in my opinion, you don’t have anything to worry about, or you really do. These are the scopes we need to look out for, or your HTS may not be included in this scope, but if you look at the description, what your product is, what your product does, what your products being used for. It’s clearly defined inside of the scope and the description, and it really is subject.

Okay, we have talked about a lot of detail here, and this is one of those topics that takes a little time to digest, but we continued on the conversation. So for the sake of time, we’re ending this first show for now and go to this part two of this, and you’re going to hear some more good detail in this. So hopefully you’ll have time to digest the information you’ve just heard. Go now, and don’t forget, go to part two. And as we continue on with Jennifer, David, thank you

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