Establishing Enhanced Collection and Enforcement of Antidumping and Countervailing Duties and Violations of Trade and Customs Laws

Overview

Introduction to Executive Order 13785

Executive Order 13785, issued by President Donald Trump on March 31, 2017, aims to enhance the enforcement of anti-dumping (AD) and countervailing duties (CVD) to rectify trade imbalances and protect domestic industries from unfair foreign competition. The Executive Order addresses loopholes and enforcement deficiencies that have led to the evasion of these duties by importers. By implementing stringent risk assessments and bonding requirements, it seeks to boost the collection of revenue owed to the U.S. government, which has been undermined by non-compliant importers often lacking domestic assets.

Objectives of the Executive Order

The Executive Order targets improving the efficiency and administration of U.S. trade laws. It aims to deter importers that circumvent AD and CVD by requiring additional security, typically in the form of bonds. This measure ensures that the United States secures its revenue stream from duties that protect domestic producers from subsidized and dumped foreign products. Additionally, the Executive Order mandates the development of innovative strategies to intercept and dispose of inadmissible goods effectively, enhancing the Customs and Border Protection’s capabilities.

Mechanisms for Enforcement

The Executive Order lays out a framework for categorizing importers based on their compliance history and potential risk to U.S. revenue. 'Covered' importers, those who pose specific risks such as no prior import history or incomplete payments, are the focus. The Secretary of Homeland Security, alongside other key departments, is tasked with devising a comprehensive plan involving bonding requirements and alternative legal measures to ensure duty collection. Furthermore, the order emphasizes intellectual property rights enforcement, granting authorities the ability to share information with rights holders to combat counterfeit goods more effectively.

Conclusion of Overview

In summation, Executive Order 13785 operates within a framework of economic protectionism, seeking to secure revenue and support U.S. industries against actions undermining them. Through risk-based assessments, it lays out an enforcement strategy aligning with broader economic goals of protecting domestic entrepreneurship and competitiveness, while reassuring American industries of the government’s commitment to fair trade practices.

Legal and Policy Implications

Alignment with Existing Laws

The issuance of Executive Order 13785 aligns closely with existing U.S. trade laws under Title 19 of the United States Code, reinforcing legal obligations without expanding new legislative powers. By directing Customs and Border Protection to incorporate additional mechanisms for enforcing duties, the order integrates into the statutory framework, leveraging existing authorities and resources to strengthen compliance measures.

Policy Shifts in Enforcement

By elevating the priority of prosecuting trade law violations, the EO mandates a shift in policy focus within federal enforcement agencies. Reliance on risk assessments and mandatory security requirements for 'covered importers' underscores a pivot to a preventive approach in trade enforcement, marking a departure from prior reactive practices. This proactive stance secures U.S. economic interests globally.

Inter-agency Collaborations

The Executive Order requires collaboration between various government departments, such as Homeland Security, Commerce, and Treasury. These collaborations aim for a cohesive approach to overcoming enforcement challenges that arise from political and economic conditions, ensuring synchronized governmental actions towards eliminating duty evasion.

Implications for Future Trade Policies

This EO sets a precedent for future trade policies by institutionalizing enhanced enforcement mechanisms. It builds a legal framework supporting subsequent policies dealing more comprehensively with tariff enforcement. The focus on securing duties reflects shifts towards economic nationalism, mirroring administration priorities.

Broader Economic Strategic Goals

Legally, the EO’s prescriptions benefit from established statutory provisions, yet aim to expand administrative efficiency through strategic policymaking. In doing so, they serve economic goals like reducing trade deficits and stimulating the manufacturing sector through improved trade balance and strategic economic positioning globally.

Who Benefits

Domestic Manufacturers

Domestic manufacturers benefit from Executive Order 13785 as the order provides extra protection against unfair foreign pricing practices. By ensuring proper imposition and collection of duties, it levels the playing field for American producers facing cutthroat competition from foreign goods circumventing AD and CVD.

Workers in Affected Industries

U.S. workers benefit from potentially increased job stability and creation in industries bolstered by enhanced trade law enforcement. By diminishing market disruptions caused by imported goods benefiting from illegal subsidies or dumping, the EO fosters an improved competitive environment conducive to job growth.

Government Revenue Streams

The U.S. federal government is a direct beneficiary of enhanced duty enforcement, as the EO targets recapturing significant revenue lost to importer evasion, potentially amounting to billions. Improvements in revenue collection can support federal initiatives, reflecting fiscal and regulatory motives.

Domestic Trade Policy Advocates

Domestic trade protectionism advocates perceive the EO as a strong gesture towards dispute resolution in trade law enforcement. This aligns with their advocacy for tightened controls, enhancing their position in discourse on national trade policies and international negotiations.

Intellectual Property Rights Holders

The order benefits intellectual property rights holders by empowering authorities to provide information on IP infringements and counterfeit goods. This fortifies protections around trademarked or patented products, increasing IP management cost-effectiveness.

Who Suffers

Noncompliant Importers

Importers who previously circumvented duties face increased risks with stringent bonding requirements and other enforcement measures. This scrutiny disrupts their operations, escalating business costs and potential legal repercussions if found non-compliant.

Foreign Producers Relying on U.S. Market

Foreign producers, particularly those benefiting from dumping or subsidies, may find their U.S. market access constrained. They must reconsider pricing models and export strategies, facing potential market exclusion.

International Trade Relations

Such protectionist policies could strain international trade relations, as affected countries may view these measures as unjust trade barriers. This could lead to increased tensions and potential retaliations in the global trade arena, affecting broader diplomatic relations.

Industries Dependent on Imports

U.S. industries heavily relying on imports, particularly those not easily replaced by domestic production, could face increased costs. Importers' compliance costs may rise, affecting profit margins and operational feasibility for import-reliant businesses.

Consumers

The potential rise in goods prices, especially those previously subject to circumvented duties, might affect consumer pricing. Consumers may bear the cost burden, facing restricted access to affordable imported goods and increased prices for various products.

Historical Context

Protectionist Traditions

Executive Order 13785 fits within a historical continuum of protectionist policies, favoring domestic industry protection. These measures align with past administrations' tendencies to revive the industrial sector as an economic cornerstone.

Trump Administration’s Economic Agenda

The EO aligns with Trump’s broader economic agenda, favoring renegotiations and tougher stances on trade balances. This order is consistent with Trump’s campaign rhetoric of economic nationalism and recalibrating international trade in favor of American interests.

Shifts in Globalization Critique

The EO highlights evolving critiques of globalization, seen by some as undermining national labor markets and industries. By empowering domestic enforcement mechanisms, the EO subscribes to narratives seeking to redefine globalization in America's favor.

Product of Trade Deficit Concerns

The order addresses rising concerns over the U.S. trade deficit, with policymakers attributing deficits to inadequate trade law enforcement. By addressing duty leaks, the EO responds to concerns about trade imbalances' sustainability and domestic economic impacts.

Convergence with International Trade Policies

Though domestic-focused, the EO aligns with international trade policies reflecting global trends of countries realigning trade practices amid shifting geopolitical landscapes. It calls for a reinvigorated approach to international agreements with stronger enforcement provisions.

Potential Controversies or Challenges

Legal Challenges and Court Cases

Executive Order 13785 could face legal challenges regarding alignment with international trade agreements such as those governed by the WTO. Legal professionals and affected importers might pursue court cases, arguing the EO imposes unfair trade barriers contrary to globally accepted standards.

Congressional Pushback

While some Congress members may support the EO for aligning with domestic priority, others might oppose it due to potential economic fallout. Lawmakers with a progressive trade outlook could argue it disrupts free trade dynamics, impacting multilateral economic cohesion.

Enforcement Practicalities

Challenges could arise in implementing risk assessments and bonding requirements. CBP needs to enhance its regulatory capacities and infrastructure to meet new demands, raising questions about resource allocation and enforcement efficacy.

Trade Relations and Retaliatory Actions

With stringent duties, affected countries may pursue retaliatory measures, escalating trade wars and affecting trade harmony. This could include reciprocal tariffs or sanctions, straining diplomatic relations and impacting U.S. export-reliant sectors.

Potential Economic Disruptions

The EO may introduce market volatility as businesses recalibrate for compliance. Alterations in import logistics might disrupt supply chains, causing disruptions in industries reliant on timely, cost-effective imports and potentially leading to short-term economic instability.