ANTIDUMPING DUTY "EVASION SERVICES"
Paper from the United States
The following communication, dated 16 March 2015, is being circulated at the request of the Delegation of the United States.
In accordance with the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (ADA), antidumping duties can be applied following an investigation when the administering authority finds that dumped imports have caused material injury or threat of material injury to a domestic industry. Such duties are applied to remedy the effects of those injurious imports. If, however, exporters, resellers, and/or importers evade the application of antidumping duties, the measure is rendered ineffective and the injurious dumping can continue to the detriment of the domestic industry in the importing market, as well as all exporters who trade in accordance with the rules. Such evasions of the application of antidumping duties undermine the effectiveness of the ADA, and erode confidence in the rules-based multilateral trading system. While participants in such activities can face substantial civil and criminal penalties from domestic customs authorities, the effectiveness of such penalties may be limited.
Over the years, the United States has witnessed a dramatic increase in activities expressly designed to evade the application of antidumping duties. Websites marketing such services have been on the rise, and aggressive outreach is luring exporters and/or importers into a false sense of security by offering so-called "legitimate" services to evade the application of antidumping duties to subject merchandise. Unfortunately, this problem is pervasive and is not limited to trade remedy measures. Countries are also facing similar problems in areas such as valuation, origin, and classification. This paper highlights the U.S. experience with practices related to trade remedies, serves to notify other Members about this growing problem, and seeks input from other Members on their experience when faced with similar circumstances. The United States is interested in getting Member reactions and would like to discuss this problem of antidumping duty evasion in more detail with an effort to identify the actions Members are taking to counter and eliminate evasion attempts.
The United States has noticed a proliferation of evasion services. Operators of such schemes seek to assist exporters and/or importers with evading the application of antidumping duties. For example, in some instances, the merchandise that is subject to an antidumping measure (based on the actual country of origin) will be shipped to an intermediary third country. The goods are reloaded in the third country into new containers and provided with new documents that show the third country as the originating export country. The services provided include manipulating and creating new invoicing, packing lists, and other related documentation to disguise the actual country of origin. Typically, no other services are provided that would constitute substantial transformation, significant value addition, or other activities that legitimately confer a new country of origin. The same goods are then shipped to the final destination with false documentation for a new country of origin to evade the application of antidumping duties.
This problem has been going on for many years. However, it has become more pervasive and the parties have become more brazen in their activities. Accordingly, the United States believes it warrants a more detailed discussion in this Group.
In 2010, in response to the growing problem of antidumping duty evasion, a report was published that demonstrated that it was quite easy to find providers openly willing to offer to help evade the application of antidumping duties.
The situation has worsened since publication of that report. Companies seeking to evade antidumping duty orders no longer have to search to find such services, as providers are now making the initial contact with potential clients. Exporting/Importing companies have received emails that state, for example:
"We have been exporting for many years… If you need this product, please tell me, so I can quote you. Please do not worry about the dumping duties. This order will be operated through the intermediary trade. We will send the goods to a third country; the forwarder will repack our goods for export with other company title from that third country. It is a legit business. Contact Us."
The United States seeks to shed some light on this problem to this group and to discuss possible ways to address this growing problem as it not only serves to undermine the WTO Agreements, but more generally harms the trust and confidence we all place in the multilateral trading system. It is incumbent upon each of us to ensure cessation of practices that erode support for the WTO system. Silence or inactivity by the host country may also too easily be construed as tacit approval of, or complicity with, such illicit activities. These attempts to evade should not be allowed to operate with impunity when the business is grounded in activities to evade multilateral trade rules.
The United States believes that a discussion on this topic and a sharing of member's experiences and practices with respect to these activities would be useful to further understanding the extent of the problem and the means that Members may have to address it. We look forward to hearing the reactions and input from other Members.
 While this paper is presented for discussion of the attempts at evading the application of antidumping duties, the experiences discussed herein are similar for countervailing duties as well.