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Not all antidumping duties collected, says GAO

Report finds $600 million shortfall

Thomas Russell -- Furniture Today, July 10, 2008

WASHINGTON — More than $600 million in antidumping duties have gone uncollected since 2001, the U.S. Government Accountability Office has found.

The GAO report, completed this past March, is of interest to the furniture industry because the U.S. government began imposing duties on Chinese-made bedroom furniture as early as June 2004. Duties are assigned to foreign manufacturers but are paid by the importers that buy goods from those factories and resell them in the United States.

The report didn’t break out how much of uncollected duties were related to furniture.

The findings are based on the GAO’s analysis of 23,000 bills dated between 2001 and 2007. The agency found that half the uncollected duty bills are less than $309, but that a number of larger uncollected bills increased the average uncollected duty bill to $26,000. Four companies in particular accounted for more than one-third of the total, and 20 companies account for 63% of the total.

Crawfish tail meat represented $357 million of the total uncollected duties. Other big deficits were in garlic at $75 million, honey at $43 million, steel at $43 million and mushrooms at $41 million.

Wood bedroom furniture fell in a category of other industries that represented $40 million or 7%, of the total.

While the amount of uncollected wood bedroom duties is relatively small, the report has implications for the industry. That’s largely because it follows the same rules and procedures as the other industries facing antidumping measures aimed at limiting imports priced below production costs.

Furniture also could face any reforms that could occur as a result of the report.

Until October 2007, the government diverted the duties to the petitioners, a group of domestic manufacturers in an industry that claimed they were injured by low-cost imports. Congress has since repealed that system, known as the Byrd Amendment, and money will start going directly into U.S. government coffers.

The report identified a few key reasons why some duties were not collected.

Importers can go bankrupt, disappear or cease operations before final duty rates are assigned and collected.
Bonds posted by importers to cover the initial duties may not have represented the total amount of duties owed. Congress addressed this by temporarily requiring importers to pay all initial duties in cash, the report noted.
Customs doesn’t conduct background or financial checks for importers of record and thus has little information to help it find importers that may have gone out of business or reformed under a new name.

The report attributed some of the problem to lack of staffing at the Department of Commerce and added that untimely or unclear payment instructions have hampered the collection process.

The GAO had several recommendations to deal with future collections. They include:

Changing the way initial duties are assigned in a way that would more closely reflect final duty rates. This could involve basing the rates for new shippers on higher volumes that fully reflect the amount of goods they actually export over an extended amount of time.
Extending the deadline for payment of final duties beyond the current six months.
Setting new bond requirements based on the assessment of an importer’s likely ability to pay duties. This could require larger bonds for importers deemed to have a lower ability to pay.
Establishing requirements for companies applying to be an importer of record that would make them easier to track. This could require mandatory financial or background checks.

Any changes in the collection process would require Congressional approval and are at various stages of debate.

The report is online at http://www.gao.gov/htext/d08391.html.

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GAO: $600M in antidumping duties not paid

Oct 1, 2008

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