GAO Report Finds Collection Of ‘Dumping’ Penalties Lacking

Thu. Apr. 24, 2008


A new analysis by Congress’ investigative arm has found that the government has failed to collect $613 million in penalties from companies that import illegally “dumped” goods into the United States over the fiscal years FY01 to FY07.

The GAO report was requested by the bipartisan leadership of the Senate Finance and Appropriations committees. The Commerce Department imposes antidumping duties on products exported to the U.S. at unfairly low prices, as well as countervailing duties on exported products that are subsidized by foreign governments. The duties are then collected by Customs and Border Protection.

“The noncollection of those duties means that the U.S. government has not fully remedied the unfair trade practices and has lost out on a substantial amount of revenue,” GAO wrote in the report to Appropriations and Finance leaders.

The $613 million in uncollected revenues is relatively small compared with the total actually flowing into the Treasury — about $8 billion over FY03-06, according to GAO, and the Treasury Department estimates a collection rate of about 96 percent.

Still, in this economic environment every little bit helps, and the Finance Committee plans to hold a hearing on the matter next Tuesday. “I will continue to pressure the administration to get its house in order with regard to collecting all duties owed to the U.S. and to reporting on the duties that go uncollected,” Senate Finance Chairman Baucus said in a statement. “American business owners are seeing their businesses undercut by unfair and illegal pricing.”

There is a budgetary reason to collect all duties owed for unfair trade practices. In 2006, Congress repealed a law enacted in 2000 named for Senate Appropriations Chairman Robert Byrd that redistributed anti-dumping and countervailing duties to affected domestic manufacturers. The World Trade Organization found that the Byrd Amendment violated international trade rules.

Beginning Oct. 1, new antidumping and countervailing duties go directly into the Treasury, as they were prior to the Byrd amendment becoming law.

The GAO report found that 84 percent of uncollected duties are associated with just four products, all from China: crawfish tail meat, garlic, honey and mushrooms.

Importers buying from China are responsible for 90 percent of all uncollected duties, GAO said. Crawfish tail meat alone accounted for $354 million, or 58 percent of the total. Just four companies are responsible for more than one-third of the total uncollected duties, Senate Finance ranking member Charles Grassley noted. “The bottom line is that we need to do a better job of dealing with the few bad apples,” he said.

GAO said Customs cannot publish the names of the offending importers under the terms of federal trade and privacy laws, although they did say that as of January, none of the top 20 companies evading duties were still active.

by Peter Cohn

Thu. Apr. 24, 2008