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Import Administration Helps Reel in Fish Duty Cheaters

Action by the Commerce Department’s Import Administration is helping to ensure that U.S. producers of seafood products are not being undercut by unfair competition from abroad.

by Stephen Claeys

During the past three years, the Commerce Department, through the Import Administration (IA), has been working to ensure that foreign producers of frozen fish fillets are not engaging in unfair or illegal market practices that harm U.S. producers. The department’s efforts are an example of the critical trade policy role that IA plays both domestically and globally.

IA is a unit of the International Trade Administration. Its role is to enforce trade laws and agreements and to prevent unfairly traded imports. IA is also the lead federal agency responsible for developing and implementing policies and programs that counter unfair trade practices by foreign governments and companies.

Antidumping Order Issued

IA’s efforts regarding the importing of frozen fish fillets from Vietnam began in August 2003, when it found that Vietnamese producers were engaged in dumping their products in the U.S. market. “Dumping” is the practice of selling exported goods below “normal value,” which is either the cost of production or the price the product is normally sold for by the exporter in its own country. As a remedy, IA issued an antidumping duty order on frozen fillets produced from certain types of fish in Vietnam. The order assessed antidumping duties ranging from 36.84 to 63.88 percent of the value of the imported fish.

Investigation Finds Mislabeling

In October 2003, in response to reports from certain U.S. fish fillet processors, IA began an investigation into allegations that frozen fish subject to the antidumping order were being mislabeled and exported to the United States. Producers sometimes use such tactics as a means of avoiding payment of antidumping duty cash deposits due on a product being imported.

After conducting an analysis of importing trends, IA began working with Customs and Border Protection, and referred the matter to that agency to investigate for possible customs fraud enforcement action. IA also probed the matter directly with the Vietnamese companies during the first administrative review of the antidumping duty order it conducted in the summer of 2005.

During IA’s on-site verification process, it discovered correspondence and e-mails related to mislabeling. One respondent—CATACO, of Can Tho Province, Vietnam—prematurely withdrew from the verification process. As a result, IA took additional steps to guarantee that formerly misclassified entries were included in its analysis, thereby ensuring that all duties would be properly assessed.

Circumvention Actions Investigated

Another method used by foreign producers to avoid payment of antidumping duties, while still properly identifying their product, is to process the product in a third country prior to sending it to the United States. This practice, called circumvention, is subject to an anti-circumvention provision in U.S. law, which allows IA to evaluate such arrangements and include them within the scope of its original antidumping order.

At the same time that IA was conducting its administrative review in 2005 that uncovered CATACO’s mislabeling, it was also examining a potential circumvention arrangement involving the processing of Vietnamese fish in Cambodia. In July 2006, IA published its final determination that a Cambodian group, Lian Heng, was circumventing the antidumping order. IA ordered that the company’s exports containing Vietnamese fish covered by the 2003 order be subject to antidumping duties.

Cooperation with Prosecutors

In looking after the interests of U.S. producers, IA also worked closely with federal investigators and prosecutors in Pensacola, Florida. In August 2006, several companies were indicted for mislabeling Vietnamese frozen fish as non-subject fish. IA provided prosecutors with important background information on how the antidumping duties were calculated and the history of mislabeling. The companies subsequently pleaded guilty to the charges.

The actions not only resulted in the seizure of millions of kilograms of mislabeled fish and various other company assets, the levy of millions of dollars of fines, and prison time for the defendants, but also sent a strong message that IA takes its antidumping duty enforcement responsibilities very seriously.

Future Actions

IA is continuing to vigorously enforce the antidumping duty order during the administrative review that is currently under way. It also is ready to assist with several other potential criminal indictments regarding mislabeled frozen fish fillets from Vietnam. IA has worked hard to ensure that the relief to the U.S. industry provided by the antidumping order will not be “the one that got away.”

Stephen Claeys is the deputy assistant secretary for antidumping and countervailing duty operations in the International Trade Administration’s Import Administration.