Today, Congressman Dan Lipinski (IL-3) announced the introduction of legislation that will help American manufacturers create jobs by making it harder for foreign companies to illegally avoid billions of dollars in customs duties. The Customs Training Enhancement Act, H.R. 6110, will improve information sharing between the private sector and U.S. Customs and Border Protection, enabling agents to identify schemes to import foreign goods without paying duties.
"Rampant cheating by foreign firms is putting American companies out of business and costing American workers their jobs," Rep. Lipinski said. "This bill will help us to fight back by ensuring that customs agents are equipped with the latest intelligence on the schemes foreign companies are using to gain an unfair advantage."
The Coalition to Enforce Antidumping and Countervailing Duty Orders estimates that duty evasion in just seven narrow industry categories costs taxpayers $400 million annually, and that the total cost of duty evasion across all industries is many times higher. An estimated $50 million in antidumping duties on a single product, mattress springs, is evaded annually, according to the coalition. Foreign companies avoid duties in a variety of ways, including by shipping goods from one country to another on their way to the United States in order to disguise their country of origin, misclassifying products, and undervaluing products to reduce the amount of duties owed.
H.R. 6110 is modeled on a successful partnership between the steel industry and Customs and Border Protection, in which industry professionals teach customs agents how to spot particular products that have been deliberately mislabeled in order to avoid duties. Under Rep. Lipinski's bill, CBP would be required to organize seminars on a regular basis at which company and industry representatives would be able to directly share critical intelligence with agents to better enable them to prevent customs fraud by foreign firms. As they are immediately and directly affected by duty evasion, American companies and their workers are often the first to discover that foreign competitors are cheating.
In a recent report, the Government Accountability Office described various instances of duty evasion, including cases in which numerous importers failed to declare that wood flooring from China was subject to countervailing duties; an importer falsely claimed steel nails from China were exempt from duties; and Chinese honey was shipped through Thailand to disguise its origins. In July, the federal government charged eight individuals with avoiding customs duties on hundreds of millions of dollars of foreign-made cigarettes and apparel imported through the Port of Long Beach, California.
Evasion of antidumping and countervailing duties is an especially grave problem, as such duties are put in place in order to protect American industries that have already been hurt by illegal trade practices such as selling goods below cost. There are 114 countervailing duty and anti-dumping orders in effect against goods made in China, the most of any nation. Such goods include solar-energy products, candles, steel cylinders, saccharin, shrimp, and clothes hangers. The St. Louis Dispatch reported last year that two Missouri hanger plants and one Illinois hanger plant shut down amid illegal dumping of Chinese-made hangers. Products from countries such as India, Taiwan, South Korea, and Japan that are subject to countervailing and anti-dumping duties include steel pipes, plastic bags, diamond sawblades, and cement.
"Every time foreign manufacturers evade duties by lying and cheating, they're hurting the American people in two ways," Rep. Lipinski said. "First, they're robbing taxpayers by failing to pay the federal government the money they owe. And second, they're causing American businesses to lose money and costing more Americans their jobs. We cannot allow this to continue. H.R. 6110 will help stop this widespread cheating."