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Point of View: Continuous-bond policy politically motivated

Property of SeaFood Business magazine
By Greg Rushford
April 01, 2007

As if importers of America's favorite seafood didn't already have enough worries - with antidumping tariffs ranging from 6 to 113 percent on shrimp from Thailand, China and four other Asian and Latin countries - consider the matter of U.S. Customs and Border Protection's so-called "continuous bond" policy. It's a continuous nightmare.

Conceived in secrecy and applied in an "arbitrary and capricious" manner that constitutes an "abuse of discretion," as a federal judge has determined, the new bonds have wreaked havoc in the shrimp industry. Importers have had to struggle with over-extended credit lines and disrupted sales that the nefarious bond policy has caused; some have even been forced out of the business. Unabashed, CBP officials want to inflict the bonds upon the rest of the seafood industry.

It gets worse. Documents from CBP's own files reveal that political calculations, not the public interest, have driven this policy.

The antidumping tariffs on the six shrimp-exporting countries were imposed in February 2005. That same month, CBP implemented the continuous bonds. 
In previous months, there had been no official notice in the 
Federal Register, no public comment period.

Ken Pierce, a lawyer for the Thai shrimp industry, argues it's "double taxation." Before the continuous bonds were imposed, Pierce explains, an importer who brings in $100 million of shrimp with a 6 percent antidumping duty was required to post a cash deposit of $6 million to cover the tariffs, plus a $50,000 bond. That was tough enough. But with the continuous bonds, that $50,000 bond would morph into a whopping $6 million, secured by pledging a portion of the importer's business as collateral - and repeating the process annually to keep the line of credit open. When the National Fisheries Institute took CBP to court in 2005, the agency said that it had been trying to ensure that antidumping duties would be paid to the U.S. Treasury, pointing to evasions associated with imports of Chinese crawfish and garlic. But in New York last November, U.S. Judge Timothy Stanceu of the U.S. Court of International Trade cited CBP internal documents to conclude that the agency had also been motivated "by domestic political pressures to take action directed against the shrimp importing industry."

The judge cited CBP documents that acknowledged that the officials were aware that the shrimp duties, thanks to the notorious Byrd Amendment, would go into the pockets of members of the Southern Shrimp Alliance who had filed the antidumping petition, not the U.S. Treasury. "The domestic petitioners in this case are from south and southeastern states that have congressional representation on" key committees, one internal CBP memo observed. "The importers are not as geographically concentrated."

Despite the judge's criticisms, the NFI lawsuit continues with no conclusion expected anytime soon, due to the anticipated appeal from the losing side when Stanceu issues a final determination. Meanwhile, the related WTO litigation that Thailand has brought is just getting started.

For importers, the continuous nightmare continues.

 

Greg Rushford is editor and publisher of the Rushford Report, an online journal on international trade politics at www.RushfordReport.com

 

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