CBP Establishes New Guidelines for Continuous Bonds for Importers of Agriculture/Aquaculture Merchandise Subject to AD/CV Cases

CBP states that it is issuing these guidelines as recent AD cases for agricultural/aquaculture merchandise (e.g., garlic and crawfish from China) have resulted in considerable AD rates, without an associated increase in the importer's continuous bond amount, which places Customs' revenue in jeopardy if importers are unable to meet their financial obligations for AD duties at liquidation.

Guidelines for Importers of Agriculture/Aquaculture Merchandise

Ports to review continuous bonds to see if should be increased at time of order.. Effective immediately, CBP states that Port Directors will be required to review continuous bonds for importers of agriculture/aquaculture merchandise subject to AD/CV cases and obtain larger bonds where necessary. Any increase in bond liability will be effective when the International Trade Administration (ITA) issues its order for the case. CBP states that the following formula for such increases will be used:

The ITA rate at order multiplied by the value of imports of merchandise subject to the case by the importer during the previous year

(For example, if an importer has imported agriculture/aquaculture merchandise subject to a relevant AD case with a value of $1 million during the previous 12 months, and the AD rate is 40%, the importer's continuous bond will be increased by $400,000.)

Increase to continuous bond after preliminary determination, if increased risk. If at any time after the ITA issues a preliminary affirmative determination in an agriculture/aquaculture case, CBP detects sudden changes in declared values, claimed country of origin, or declared classification, etc., CBP states it will consider such changes to reflect an increased risk. In such circumstances, the Port Director shall increase the importer's continuous bond using the following formula:

ITA deposit rate in effect on date of entry multiplied by the value of imports of merchandise subject to the case by the importer during the previous year

Increase to continuous bond for new importers. The continuous bonds for new importers of agricultural/aquaculture merchandise subject to an AD or CV duty case, where the importer has no prior history of such imports, will also be increased, regardless of the stage of the case. The bond amount will be increased in accordance with the following formula:

ITA deposit rate in effect on date of entry multiplied byestimated annual import value of the goods subject to the case.

Periodic Reviews on Bond Sufficiency to be Conducted

CBP states that periodic reviews will be conducted to monitor the sufficiency of continuous bonds for agriculture/aquaculture merchandise subject to AD and CV duty cases. The Port Director may adjust the rates used in the formulas set forth above to calculate different bond amounts as circumstances warrant, bearing in mind that among the primary goals of bond sufficiency are ensuring CBP's ability to collect the AD and CV duties at liquidation and ensuring that the revenue is protected.

CBP to Continue to Monitor Other AD/CV Cases for Bond Sufficiency

CBP adds that it will continue to monitor AD and CV duty cases for all commodities. If CBP determines any comparable risk with other commodities, a similar review of bond coverage will be performed.

CBP to Revise Bond Directives to Reflect This Amendment

CBP and CBP sources state that these new guidelines will be incorporated into existing bond directives, including CD 099 3510-004 (dated 07/23/91), entitled "Monetary Guidelines for Setting Bond Amounts," which are currently being rewritten by CBP's National Finance Center.

CBP sources add that a rewritten CD 099 3510-004 is expected to be issued this year, and will reflect other changes that have occurred since July 1991. (See ITT's Online Archives or 11/19/02 news, 02111910 for BP summary of one such change.)

CBP contacts: Bruce Coulliette (bonds) at (202) 927-2148 or Christine Furgason (AD/CV) at (202) 927-2293

Amendment to 099 3510-004 (dated 07/09/04) available at http://www.cbp.gov/xp/cgov/import/add_cvd/07082004.xml

Press release on amendment (dated 07/09/04) available at http://www.cbp.gov/xp/cgov/newsroom/press_releases/07092004.xml

CD 099 3510-004 (dated 07/23/91) available at http://www.cbp.gov/linkhandler/cgov/toolbox/legal/directives/3510-004.ctt/3510-004.txt