Two significant developments that protect American workers and families from trade-related crime and unsafe imports took place last week.
- First, on Wednesday, June 3rd, by a unanimous vote of 23 yeas to 0 nays, the House Judiciary Committee advanced the bipartisan “Protecting American Industry and Labor from International Trade Crimes (PAIL) Act,” H.R. 1869.
- Second, on the same day, President Trump signed an Executive Order (EO) strengthening the enforcement of U.S. customs laws.
PAIL Act to Combat Trade-Related Crime
The PAIL Act was introduced by Congresswoman Ashley Hinson (R-IA), with strong support from the House Select Committee on the Strategic Competition Between the U.S. and the Chinese Communist Party (Select Committee) Chairman John Moolenaar (R-MI) and Select Committee ranking member Ro Khanna (D-CA), and currently has forty-two other co-sponsors, including Representatives Clay Higgins (R-LA), Donald Davis (D-NC), Kathy Castor (D-FL), and Troy Nehls (R-TX).
The PAIL Act establishes and funds a task force within the Criminal Division of the Department of Justice (DOJ) to investigate and prosecute trade-related crimes. This trade crimes task force would be responsible for increasing the number of investigations and prosecutions of criminal acts involving trade fraud, while also providing advanced training to law enforcement officers within Homeland Security Investigations (HSI) and U.S. Customs and Border Protection (CBP). The PAIL Act would also require annual reports on the DOJ’s efforts to counter trade-related crimes.
The creation of a dedicated task force to bring trade crime-related prosecutions addresses a significant weakness in the federal government’s ability to respond to fraud. Over the past two decades, federal law enforcement officials have investigated and confirmed widespread criminal schemes related to the importation of foreign shrimp, but these investigations have not yet resulted in significant criminal prosecutions of the actors responsible. While the U.S. shrimp industry has found other ways to address fraud in global shrimp trade, the criminal networks involved have largely not been held accountable and continue to facilitate the illegal importation of foreign seafood.
Executive Order to Strengthen Trade Enforcement
The June 3rd EO Strengthening Customs Enforcement addresses several long-standing issues that result in duty evasion and other non-compliant trade and improves the federal government’s ability to hold importers of record accountable. In particular, the EO seeks to close loopholes and strengthen insufficient enforcement mechanisms that allow trade cheats and other non-compliant actors to evade tariffs or enter merchandise that is harmful to Americans.
For example, the EO requires the Department of Homeland Security (DHS) to take steps to require that importers maintain sufficient domestic assets and post significant bonds as security to ensure compliance with U.S. customs and trade laws. It also cracks down on shell companies by requiring importers to provide CBP with information on beneficial ownership and domestic assets.
Importantly, the EO recognizes the heightened risks posed by foreign importers of record that can “more easily evade payment” of duties owed to the Government.
Under NOAA Fisheries’ Seafood Import Monitoring Program (SIMP), all importers of shrimp are required to possess a valid International Fisheries Trade Permit (IFTP). However, NOAA Fisheries has administered the IFTP requirement so as to permit purchasers (consignees) of foreign shrimp, rather than the official importer of record, to act as the IFTP holder. This, in turn, has allowed foreign (non-resident) entities to continue acting as the official importer of record for shrimp products, undermining the ability of federal agencies like CBP to enforce trade laws and collect duties owed to the U.S. Treasury. Where a U.S. presence has been required, NOAA Fisheries’ database of current IFTP holders includes U.S.-based shell companies incorporated by foreign nationals.
Both foreign (non-resident) importers of record and domestic shell/paper companies acting as importers of record pose significant risks to American consumers and to the U.S. Treasury. The June 3rd EO appropriately recognizes that allowing importers to escape responsibility for compliance with U.S. trade laws provides no benefits to Americans, while facilitating trade fraud.
“Long ago, our government made an intentional choice to provide preferential treatment to foreign producers selling into this market. Because American shrimpers are forced to operate under strict regulations and reporting requirements, the lack of reciprocity with respect to imported shrimp makes no sense,” said Blake Price, Executive Director of the Southern Shrimp Alliance. “The Southern Shrimp Alliance applauds President Trump for prioritizing the implementation of practical steps needed to improve trade enforcement and is thrilled to see the PAIL Act make progress in Congress.”