In the current international trade environment, instability and uncertainty are increasing, while unilateralism and protectionism are also increasing. Faced with this background, Pudong International Trade Council in Shanghai, under the guidance of the Shanghai City Commerce Commission, provides foreign legal public services to small and medium-sized enterprises to help them meet these challenges.

Since China joined the WTO, to the first half of 2023, a total of 53 countries and regions around the world have launched 1938 new trade relief cases against China. Among them, the United States is the country that initiated the most times, after its 301 tariffs on China, Chinas traditional trade relief investigation will decline, but the increase in Chinese enterprises transferring investment abroad, the United States has strengthened anti-tax evasion, anti-obstruction and other measures.

To help understand and respond to U.S. anti-evasion investigations, we need a deeper understanding of its rules and trends.

a) Rules of investigation

In fact, the main legal basis for U.S. counter-evasion investigations is Section 781 of the 1930 Customs Act (Section 19 of the U.S. Code, Section 1677j, Section 19 of the U.S.C.A. Section 1677j).

a) Merchandise completed or assembled in the United States;
2) Merchandise completed or assembled in other foreign countries;
Minor alterations of merchandise;
4) Later-developed merchandise

In the case of anti-evasion investigation practices, the U.S. investigation agency’s questionnaires will collect the following types of information:

a description of the company under investigation, including the underlying situation of the company, the company’s executives, financial information, the production and sales of the products concerned to the United States, and the production of the products concerned by the parent company;

The second is to avoid the identification of the products involved in the investigation and similar products;

In the case of assembly companies in the United States, including basic information about affiliated companies, the production of products involved in the case of affiliated companies, and the situation of affiliated companies purchasing upstream products from China;

Fourth, the importance of U.S. assembly procedures, including the level of investment in U.S. companies, the level of research and development, the nature of production processing, and the value-added of products in the U.S.; the five are other issues, including the companys trade patterns and the changes in the companys imports after the investigation.

In the procedure, the U.S. counter-circulation investigation is subject to application, filing and filing notice, issuing sample questionnaires and survey questionnaires, filing comments and filing comments, answer comments and answer comments, preliminary judgment, preliminary judgment comments and preliminary judgment comments, and final final judgment proceedings.

b) Law Enforcement Trends

In order to strengthen customs enforcement, the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) was signed by the President of the United States Donald Trump on February 24, 2016.TFTEA Chapter IV Prevention of Evasion of Anti-dumping and Countervailing Duty Orders, the Enforce and Protect Act of 2015 (EAPA), introduced a anti-evasion investigation rule enforced by the U.S. Customs and Border Protection Agency (CBP), aimed at regulating anti-dumping and anti-subsidy tax evasion through fraudulent import duties.

Prior to the EAPA legislation, the U.S. domestic industry believed that importers could require CBP to conduct an investigation by changing the applicable tariffs or by misreporting the tax identification, but the applicant himself could not participate in the investigation and therefore could not understand the specific circumstances of the customs investigation. After this legislation, the U.S. domestic industry could participate as the applicant and monitor whether CBP is strictly enforced.

In the face of these challenges, Chinese companies need to be prepared:
Strengthening the proof capacity:Ensure daily records are consistent with the contents of counter-evading investigations, providing sufficient factual basis for their claims.
(2) Improving the business structure:Simplify the business structure and ensure compliance with the rules of trade relief investigation.
Regulation of statistics:Ensure that the data is complete, accurate and true and easy to respond to.
Strengthening financial compliance:Ensure financial records are consistent with the tax system records, and be prepared to respond to anti-evasion investigations.
(5) Detailed cost accounting:Detailed cost calculations for different products provide the basis for anti-dumping investigations.
Improving the tax systemEstablish a tax system consistent with business needs to meet the flexibility of business implementation and the linkage of tax control systems.

In order to better respond to international trade relief investigations, the Shanghai Pudong International Chamber of Commerce is committed to providing the necessary support and guidance to to ensure that move forward steadily in the complex international trade environment.

The above content is derived from Shanghai Fair Trade, which is a comprehensive foreign trade enterprise based on import and export foreign trade agents. Welcome to contact our consulting business, consult hotline 136-4171-6118.