National Clothesline

A new federal law would give the U.S. Department of Commerce and the U.S. Customs and Border Protection more tools to crack down on schemes to evade tariffs on wire hangers and other imported steel products.

The legislation, called the Enforcing Orders and Reducing Circumvention and Evasion (ENFORCE) Act of 2010, was introduced last month by Senators Ron Wyden (D-OR) and Olympia Snowe (R-ME) and is supported by the Coalition for Enforcement of Antidumping and Countervailing Duty Orders, a group that includes the hanger manufacturer M&B Metal Products along with other U.S. manufacturers of steel products.

The coalition had complained earlier this year that manufacturers in China were evading tariffs on their products by transhipping, a practice of shipping products to the U.S via third countries, then falsely designating that country as the country of origin to evade the duties.

In 2008, the Department of Commerce placed tariffs ranging from 33 percent to 221 percent on hangers made by companies in China after a flood of low-priced Chinese imports had reduced the U.S.-based hanger industry to one sole survivor, M&B Metal Products.

Soon after, according to the coalition, steel wire hangers imported from Taiwan increased dramatically, despite there being no meaningful production of steel wire hangers in Taiwan. Similar transshipment cases exist involving Vietnam, Korea, Hong Kong, Canada and Mexico, the coalition said.

The ENFORCE Act would increase the Department of Commerce’s ability to investigate duty evasion and facilitate greater cooperation and information sharing between DOC and CBP.

A timeline to allegations of evasion would give the government 60 days after an allegation of evasion is put forward to determine whether there is a reasonable basis to believe an importer is evading a tariff. If an affirmative preliminary determination is made, duties would be collected in cash until the investigation is concluded.

“We applaud Senators Wyden and Snowe for introducing this vital legislation,” said Joe Downes, spokesperson for the coalition and senior vice president of Leggett & Platt, Inc. of Carthage, MO. “Illegal duty evasion is a critical problem for all domestic producers and for Commerce and Customs as well. This act will give our key enforcement agencies new tools to stop illegal evasion of our trade laws and help maintain a fair and level playing field for U.S. manufacturers and their workers.”

In a related case, the coalition said that two men have been arrested in connection with transshipment of wire hangers from China to Mexico and into the United States.

Arturo Huizar-Velazquez and Jesus de La Torre-Escobar, were charged with 55 counts of smuggling, wire fraud, conspiracy and money laundering. If convicted, they face maximum prison terms of five to 20 years per count, fines and the payment of any applicable dumping duties.

The indictment, handed down from the U.S. District Court for Southern California, said the two men, operating out of Tijuana, Mexico, had hangers shipped from China to Mexico where the boxes were stamped “Made in Mexico,” then shipped to the United States.

The coalition said it believes that a substantial portion of the hangers imported into the United States today are Chinese hangers that have been transshipped through third countries, such as Vietnam, Taiwan, and Korea, in violation of the dumping order against China.