Industry Witnesses Say Customs Enforcement Is Underfunded
Steel industry interests testified Feb. 16 that duty evasion is pervasive, and that customs enforcement cannot keep up. "Customs and duty evasion and circumvention occurs because there's opportunity and because there's lack of enforcement," said Scott Paul, president of the Alliance for American Manufacturing. "Our border protections with regards to fairly traded goods are underfunded."
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Paul and other witnesses were at the Senate Finance Committee's Subcommittee on International Trade, Customs, and Global Competitiveness field hearing in western Pennsylvania hosted by Sen. Bob Casey, D-Pa. Sen. Ron Wyden, D-Ore., the committee's ranking member, was the only other senator at the hearing, called "Trade Enforcement and Infrastructure: Safeguarding our Industrial Base from Present and Future Challenges."
A representative for U.S. Steel and Paul said 2015's Leveling the Playing Field Act (see 1504080013) and 2016's Trade Facilitation and Trade Enforcement Act (see 1602110018) have made a difference, however. "Duty evasion, there’s two types, there’s straight-up duty evasion, and then there’s duty evasion on dumping orders or countervailing duty," Paul said. "There is a boutique market both for mislabeling and shielding these types of [sanctioned] imports from enforcement. They’re essentially contraband coming into our country."
Todd Young, managing director of government affairs at U.S. Steel, said U.S. Steel hosted Customs personnel from around the country at its research and technology center, and the company showed them how to identify products, so they could catch exporters that are mislabeling products to evade tariffs. Transshipping is another major problem for enforcement, he said. Young noted that U.S. Steel and other producers asked for AD/CVD orders against China on cold-rolled and corrosion-resistant steel. "Before the orders were in place, imports of cold-rolled and corrosion-resistant steel from Vietnam replaced imports from China nearly ton-for-ton. As a result, U. S. Steel and other domestic producers filed circumvention petitions with the Commerce Department in September 2016," he said, and in December 2017, Commerce made a preliminary circumvention finding.
But even when tariffs are not evaded, they may not achieve the goal of decreasing exports of that product, Young acknowledged. During a White House meeting on trade earlier in the week, President Donald Trump told Republican in Congress concerned about the impact of tariffs on prices for factories that consume steel that countries may eat those tariffs, and therefore prices could be stable. "In 2014 we obtained AD/CVD orders on oil country tubular goods -- or OCTG -- from Korea and have obtained higher and higher AD duty rates in each administrative review," Young said, but OCTG imports from South Korea continue unabated as the Korean government is reimbursing the AD duties.