Federal Agencies Step Up Efforts to Address Shrimp Import Fraud

Yesterday, the Southern Shrimp Alliance sent a letter to the Acting Secretary of the U.S. Department of Commerce commending the agency for its increased efforts to address shrimp import fraud.Commerce issued a final determination on Tuesday denying the request of Hilltop International, a shrimp exporter conglomerate, to be excluded from the antidumping duty order on shrimp from China due to evidence of circumvention. The final determination also assigned a final antidumping duty rate of 112.81% on entries of shrimp exported by Hilltop between February 1, 2010 and January 31, 2011.

Commerce’s determinations were based on the agency’s own investigation of evidence indicating that Hilltop and its U.S. importer-affiliate, Ocean Duke Corporation, unlawfully circumvented antidumping duties through transshipment of shrimp through a Cambodian affiliate, Ocean King (Cambodia) Co., Ltd., amongst other schemes. Commerce found that Hilltop’s refusal to answer the agency’s inquiries impeded its investigation. Commerce further found that Hilltop’s actions – including repeated denials of any formal relationship with Ocean King – undermined the reliability of all information provided by the company in the proceeding.

The Southern Shrimp Alliance’s letter thanked Commerce for investigating the claims and for providing a concrete demonstration of the agency’s concern regarding widespread circumvention and fraud.

Commerce’s final determination corresponds to increased emphasis on addressing shrimp import fraud by a wide array of federal agencies including U.S. Customs and Border Protection (CBP), U.S. Immigration and Customs Enforcement (ICE), NOAA Law Enforcement, and the U.S. Department of Justice.

On Wednesday in New Orleans, the Southern Shrimp Alliance participated in a Commercial Fraud Modular Field Training intended to enhance the capacity of CBP and ICE to successfully conduct complex commercial fraud investigations. The Commercial Fraud Modular Field Training represents a new initiative undertaken by CBP and ICE to strengthen the agencies’ combined response to commercial fraud, including duty evasion, and reflects increased concern regarding the prevalence of duty evasion. The Southern Shrimp Alliance’s presentation stressed instances of open and obvious duty evasion, the relationship between these evasion schemes and other types of commercial fraud, and the severe impact of circumvention on shrimpers throughout the Gulf and South Atlantic.

“The impact of shrimp import fraud in the U.S. market continues to be substantial. Just one fly-by-night importer we have been tracking imported over 450,000 pounds of peeled and deveined shrimp in a two-week period last month. All of it was claimed to be from a Malaysian company with no history of exporting shrimp to the United States,” noted John Williams, Executive Director of the Southern Shrimp Alliance. “At current prices, just those shipments to one importer evaded roughly $2 million in antidumping duties. It should surprise no one in the industry to see Asian P&D prices in steep decline.”

The enhanced enforcement efforts of federal agencies comes on the heels of legislation introduced by Rep. Charles Boustany (R-LA) and Rep. Cedric Richmond (D-LA) to strengthen CBP’s capacity to tackle evasion of trade remedies. Their bill, H.R. 5708 (the “Preventing Recurring Trade Evasion and Circumvention Act” or “PROTECT Act”), would establish a structure within CBP to address illegal circumvention and strengthened tools available to the agency to go after importer fraud.

“The leadership shown by Rep. Boustany and Rep. Richmond in addressing duty evasion has shone a spotlight on the massive harm trade fraud has caused to the shrimp industry,” continued Mr. Williams. “Although there is much work to be done to eradicate the problem, we are encouraged by the federal government’s vigorous approach and grateful to Rep. Boustany and Rep. Richmond for emphasizing an issue of vital importance to the shrimp industry.”

Read SSA’s Letter to Commerce:

Read excerpts of Commerce’s Issues & Decision Memorandum regarding Hilltop or the full Memorandum:

Read a summary of the PROTECT Act introduced by Rep. Boustany and Rep. Richmond:

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