Industry Official Calls CBP 'Black Hole' in Duty Enforcement Fight at House Hearing
Ongoing CBP problems with the collection of antidumping and countervailing duties, coupled with the agency’s inability to monitor illegal transshipments, continues to impede the growth of the U.S. garment hanger industry and other U.S. manufacturing, said M & B Metal Products President Milton Magnus in May 22 testimony before the House Small Business Subcommittee on Trade. Despite the Commerce Department’s decision in 2008 to impose duties of up to 187 percent on Chinese wire hangers, CBP has proven incapable of reining in Chinese dumping and circumvention of rules of origin requirements, Magnus said in written testimony.
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“Customs continues to be a black hole when it comes to commercial enforcement to the detriment of U.S. manufacturing and workers and at great cost to the U.S. Treasury,” said Magnus, testifying on behalf of the American Wire Producers Association. “We have seen in the past that Customs is quick to return overpayment, but slow [to] collect the additional duty. This not only hurts the U.S. Treasury, but it shows that Customs will not enforce our dumping orders.” Commerce began the most recent review of Chinese steel wire hangers in December 2013, and aims to issue the final results in October (see 13120216).
Trade enforcement is critical to reviving a sluggish U.S. economy and allowing growth among small exporting firms, said Subcommittee Chairman Scott Tipton, D-Colo., in a release. "Washington should do whatever possible to reduce unfair export barriers such as dumping, currency manipulation, and intellectual property theft," said Tipton. "Reducing such barriers to trade will help small businesses and farms find global markets for their products, grow their businesses, and hire workers. It is important that America expands free trade agreements that reduce tariff and non-tariff barriers, harmonize regulations, while also providing stronger trade enforcement and intellectual property protection.”
Chinese steel wire manufacturers over recent years have illegally transshipped the products through Taiwan, Vietnam, and possibly Laos, Malaysia, Cambodia and Sri Lanka, said Magnus testimony. The passage of the ENFORCE Act, introduced by Sen. Ron Wyden, D-Ore., in 2011 (see 11053124), would help to stamp out antidumping evasions, Magnus added. The legislation sets firm deadlines for CBP responses to evasion allegations. Senate lawmakers introduced Customs Reauthorization legislation in 2013 that includes ENFORCE Act antidumping language, while House members released similar legislation in 2012 (see 13040911). Rep. Charles Boustany, R-La., an opponent of the ENFORCE Act, recently said, however, Customs Reauthorization legislation is unlikely to advance in the foreseeable future (see 14050720).
Chinese evasion and manipulation of customs law hampers U.S. industry across the spectrum, said Magnus. “There are many other industries besides the garment industry that face the same struggles with cheating, illegal transshipment, and evasion under their trade orders,” said Magnus. “They include the nail industry, the innerspring industry, the threaded rod industry, the PC Strand industry, the wire shelving industry, and many more.”
The Chinese government has recently pledged to clamp down on counterfeit goods manufacturing and broader intellectual property (IP) rights violations, according to the Office of the U.S. Trade Representative (see 13122018). But IP infringement remains a significant obstacle for U.S. firms competing with Chinese counterparts, said testimony from Peter Jhones, legal adviser at Spyderco, a folding knife producer. The Chinese counterfeits are “made using inferior materials and demonstrate poor engineering techniques. They make for a dangerous and unreliable tool for service personnel and consumer alike,” said Jhones. “All internet auction sites should be required to have an infringement notification and removal system that works. This would level the playing field between the U.S. and Chinese owned internet auction and commerce sites. It would also provide an ideal point for IP holders to review and stop the offer-for-sale of infringing items being put into commerce worldwide.”