This morning the President issued an Executive Order calling upon U.S. Customs and Border Protection (CBP) to improve the collection of duties assessed on imports of merchandise into the United States. CBP has previously reported that it has been unable to collect over $2 billion in assessed antidumping duties. The U.S. Government Accountability Office (GAO) has reported that these uncollected duties can be traced to foreign entities and lightly-capitalized companies that disappear when bills come due. The GAO has explained that some of the people behind these unpaid bills simply start new companies and begin to act as importers of record under new names.
Over the last several years, the Southern Shrimp Alliance has tracked shrimp importers that have ceased operations in response to large duty bills issued by CBP and documented how these companies continue operations after re-forming under new names. The Southern Shrimp Alliance has also documented how shell companies that exist on paper only and foreign companies – nonresident importers of record – facilitate trade fraud in the U.S. shrimp market. The use of these companies allows shrimp exporters and distributors to limit the consequences of the discovery of import fraud and quickly resume supply chain operations with minimal inconvenience.
“U.S. producers operate in a highly regulated environment and must compete against imports that are manufactured in countries without regulations. The customers that decline to buy domestic in favor of cheaper imports call that a comparative advantage,” said John Williams, the Executive Director of the Southern Shrimp Alliance. “I don’t know what they call it when importers skip out on monies owed to the U.S. Treasury, only to come back with a different shirt on and a new name to continue doing what they’d been doing before. I know what I call it: a crime.”
With a membership comprised of hundreds of small and medium-sized businesses involved in all aspects of the U.S. warmwater shrimp commercial fishery stretching from Texas to North Carolina, the Southern Shrimp Alliance has consistently supported initiatives to prevent importer evasion of U.S. laws. Chief among these proposals is the imposition of increased security requirements, such as requiring importers to obtain bonds, on imports that pose significant risks to revenue. CBP currently has the authority to require single-entry bonds (a bond issued for an individual import entry) as well as higher levels of continuous bonds (a bond issued for an individual company’s importing activities) where a risk to revenue has been identified. More frequent use of this authority, along with meaningful limits on the ability of foreign entities to act as importers of record and better tracking of importers that close down and re-open under new identities, would make it much more difficult for bad actors to circumvent U.S. laws.
“Thousands of men and women in this country’s commercial shrimp industry pay their bills and operate in fear of the fines and penalties that come with a failure to meet the strict technical requirements of all the regulations upon their businesses,” Mr. Williams said. “It’s well past time that we require the same of importers. The entire shrimp industry is grateful to President Trump for making this a priority for his Administration.”