SSA’s John Williams Testifies before House Subcommittee on Need to Strengthen Protections from Illegal Shrimp Trade

Today Southern Shrimp Alliance’s Executive Director John Williams presented expert testimony before Chairman Kevin Brady (R-TX) and other Members of the Ways & Means Committee’s Subcommittee on Trade in the U.S. House of Representatives.  Read SSA’s written testimony: http://waysandmeans.house.gov/UploadedFiles/John_Williams_Testimony_May_17th_Hearing.pdf

The topic of the Subcommittee’s hearing was “Supporting Economic Growth and Job Creation through Customs Trade Modernization, Facilitation, and Enforcement”.  See Committee website:  http://waysandmeans.house.gov/Calendar/EventSingle.aspx?EventID=294864

Other prominent witnesses included Mr. David Aguilar, Acting Commissioner of U.S. Customs and Border Protection (CBP); Mr. Kumar Kibble, Deputy Director of U.S. Immigration and Customs Enforcement (ICE); and Mr. Timothy Skud, Deputy Assistant Secretary for Tax, Trade and Tariff Policy of the U.S. Department of the Treasury.

A primary focus of Mr. Williams’s testimony was anti-circumvention legislation recently introduced by shrimp industry champions Congressman Charles Boustany (R-LA) and his Louisiana colleague Congressman Cedric Richmond (D-LA).  Read joint Press Release from Congressmen Boustany and Richmond:  https://shrimpalliance.com/?p=1861 Read SSA Press Release:  https://shrimpalliance.com/?p=1855

Congressman Richmond also submitted an excellent statement for the record to the Ways & Means Committee today in which he states:   “International trade will be critically important to US economic growth going forward, especially in my district. I am especially concerned about protecting Louisiana and American firms from unfair trade practices pursued by foreign competitors.” Read Mr. Richmond’s full statement:  https://shrimpalliance.com//wp-content/uploads/2012/05/5-17-12RepRichmondStatement.pdf

The bipartisan bill, H.R. 5078, the Preventing Trade Evasion and Circumvention (PROTECT) Act, was developed with substantial input from SSA based on its extensive expertise and experience with this issue. Read copy of the bill:  http://www.gpo.gov/fdsys/pkg/BILLS-112hr5078ih/pdf/BILLS-112hr5078ih.pdf

This legislation is designed to provide CBP with a suite of new tools and responsibilities to substantially strengthen their effectiveness in preventing antidumping duty evasion as well as investigating and prosecuting violations that do occur.

Mr. Williams’s testimony provided the Subcommittee with a detailed account of SSA’s extensive experience in working with CBP and other federal agencies to investigate a number of violations of the antidumping order issued by the Department of Commerce on shrimp from Brazil, China, Ecuador, India, Thailand and Vietnam in 2005, as well as how such circumvention has injured the domestic shrimp producing industry.

Antidumping duty evasion has cost US shrimpers untold millions of dollars in lost income because unpaid duties translate into lower prices paid to US fishermen for their catch.  Such schemes also have cost the US Treasury hundreds of millions of dollars in uncollected duties at a critical time in this Nation’s financial history.  Other testimony indicated that when combined with other industries, this loss in revenue climbs well into the billions of dollars.

Mr. Williams’s testimony also provided a stepwise explanation of how the PROTECT legislation will help CBP combat this illegal practice with respect to imported shrimp.   There follows an excerpt from his spoken testimony presented at the hearing today:

“The PROTECT Act makes circumvention a priority trade issue that Customs must address.

The toughest part of our early interactions with Customs was the lack of continuity of those officials responsible for enforcement.  Reorganizations within the agency just made it worse.  The PROTECT Act simplifies this.  If enacted, Customs would have a Trade Remedy Law Enforcement Division with a Director that reports to an Assistant Commissioner.

Because high-level enforcement positions have sat vacant within Customs, some have questioned whether the agency considers the enforcement of trade remedies to be a priority.  I know from my own experience that Customs takes enforcement seriously, but there is little public record to support that.  Under current law, Customs provides very little accounting of these activities.  Under the PROTECT Act, Customs is obligated to give a detailed accounting of its enforcement efforts in an annual report to Congress.

The PROTECT Act also makes addressing circumvention a principal negotiating objective of the United States in trade agreement negotiations.  Malaysia has become an obvious transshipment point for all kinds of products evading antidumping duties.  From our work with Customs, I understand that the Malaysian government has refused to cooperate with investigations.  At the same time, we are negotiating with Malaysia to join the Trans-Pacific Partnership.  Circumvention must be addressed in these negotiations.

The PROTECT Act also instructs Customs to seek to negotiate and enter into bilateral agreements to prevent circumvention.  Like with trade remedy enforcement, if Customs declines to use this authority, the agency must explain inaction to Congress on an annual basis.

The PROTECT Act substantially increases Customs’ capacity to address circumvention by removing restrictions on the information available for use in commercial targeting.  The Act also encourages enforcement by authorizing the sharing of confidential information between various federal agencies.

The PROTECT Act also improves Customs’ capabilities by enhancing its ability to collect information and authorizing Customs to make adverse inferences against non-cooperating parties.  This bill also prevents the abuse of the new shipper review process and promotes better application of single entry and continuous bonds to ensure duty collection.”

Prior to the hearing Mr. Williams met with Congressman Boustany and his senior staff to thank him personally for his leadership and to discuss plans for the hearing and future legislative action.  It was largely Mr. Boustany’s profile on the Ways & Means Committee that provided the impetus for the Committee to undertake this important initiative and he later introduced Mr. Williams at the hearing.  Mr. Williams was advised that the bill is likely to be included in a larger Customs and Border Protection Authorization bill to be sponsored by the Committee Chairman Congressman David Camp (R-MI), and which is expected to be adopted by the Committee and the full House of Representatives later this year.

Following the hearing, Mr. Williams also had the opportunity to share SSA’s expertise on various issues addressed by the legislation with Subcommittee Chairman Kevin Brady (R-TX) and his senior Committee staff.  Mr. Williams explained SSA’s positive experiences in working with CBP on a number of circumvention investigations while also noting frustrations experienced by both SSA and Customs officials with how slow and difficult circumvention enforcement can be.  Reiterating his testimony, Mr. Williams told Chairman Brady that based on his experiences, he is convinced that CBP will do the job if given the right tools provided in the PROTECT Act.  Mr. Brady was very receptive to this input and also expressed a great deal of pride in the Texas shrimp industry.

Also released at the time of the hearing was a new report to Congress by the U.S. Government Accountability Office entitled: “Antidumping and Countervailing Duties; Management Enhancements Needed to Improve Efforts to Detect and Deter Duty Evasion”. http://www.gao.gov/products/GAO-12-551

In many ways, this report serves to confirm Mr. Williams’s testimony and that the provisions of the PROTECT Act will address many of the specific problems identified by the GAO that limit CBP’s effectiveness in preventing and enforcing against duty evasion.

More specifically the report publicly confirms that the Malaysian government has refused to allow CBP officials to visit purported shrimp (and honey) producers in the country and has provided no explanation for its unwillingness to cooperate.  The report also confirms the pervasive nature of circumvention of antidumping orders and the growing complexity of circumvention schemes.  Finally, the report underscores a problem that has plagued the shrimp industry:  fly-by-night importers that spring up out of nowhere exploiting the ease of becoming an importer of record under existing law.

SSA will continue to work with the Congressmen Boustany and Richmond and other House Members, the Ways & Means Committee and SSA’s champions in the Senate to secure enactment of this crucial legislation before the end of the 112^th Congress in December.  While this will be a difficult challenge during an election year, enactment of this legislation will provide enormous benefits to the domestic shrimp producing industry and is well worth the investment of SSA’s time and hard work.