WASHINGTON, D.C. – At a Senate Finance Committee hearing today, Senator Rob Portman (R-OH) urged the Commissioner of the U.S. Customs and Border Protection, Kevin McAleenan, to use the tools available through the ENFORCE Act to help crack down on countries that illegally import goods by transshipping them through other countries. Portman expressed concern about how Section 232 has been used and stressed that its misuse could result in a trade war with our allies. Instead, he urged the administration to vigorously use the tools at their disposal, such as the ENFORCE Act, which is working to crack down on foreign competitors that launder products through other countries to evade our trade laws. 

The ENFORCE Act helps stop efforts by foreign countries to illegally import goods by setting up a process that gives domestic producers an opportunity to formally petition Customs and Border Protection to investigate possible antidumping and countervailing duty evasions.  

A transcript of his remarks can be seen below and a video can be found here:

Portman: “Thank you, Mr. Chairman and Commissioner McAleenan, thank you for your service and those of your officers. We appreciate what they do every day, including of course, interdicting heroin, fentanyl, and other drugs coming into our country. We’re trying to help you with that, by the way. The STOP Act, as you and I have talked about many times, would be a tremendous help in getting you the data that you need to interdict these packages that are coming in from overseas, primarily and mostly from China. As you know, fentanyl is now the number one drug killer in my home state—and I believe among the opioids, the number one killer in the country. So, we hope to follow suit with the House very shortly and get you those tools. 

“I talked to you briefly before the hearing started to warn you about what I was going to talk about, but it’s a big issue and you have a specific role that would really help. It has to do with these steel tariffs and their impact on our economy and how we go about ensuring a level playing field. The 232 measures, which are under our national security, really a waiver under our trade law, doesn’t require us to show an injury to our industry. It doesn’t require us to show any unfair trade, but as you can see other countries are retaliating aggressively against us as you use this tool. My fear is this trade escalation will continue and it’s going to hurt our consumers, but also our exports and our manufacturers. So, what’s the problem? Well the major problem that everyone seems to agree is overcapacity of steel production in this world, and primarily that’s China. About 15 years ago they had about 15 percent of the global production, now they have about half the global production and they do sell their steel at below cost. We’ve been able to show that and win some trade cases on that, and I think that’s good but one of the problems is they transship it through other countries. That’s why, working with Senator Wyden and others, we passed this legislation called the Enforce and Protect Act, also known as the ENFORCE Act, because we recognized the overcapacity problem and wanted to deal with the duty evasion issues and the transshipment issue and we vested a lot of responsibility in you and your people. I know you’ve got a lot to do with people and drugs and other issues related to commerce but this one is really important, and frankly, I don’t know that we would need to have a 232 case and have all of the potentially negative consequences that come from that if we were doing a better job on transshipment. I know you appreciate its importance. We’ve had some successes in the wire coat hanger case for example. The ENFORCE Act was essential in saving the last manufacturer in the United States, couldn’t have done that legislation without your help. 

“Unfortunately, with all the things that distracted your people and your lack of hiring and so on, we talked about earlier, the legislation remains underutilized. One reason I think we don’t see as many allegations as we should is because we don’t have this ability to have administrative protective orders. The International Trade Commission and Department of Commerce both successfully use these, the APO—administrative protective order—to facilitate confidential information sharing with interested parties. I strongly believe that there’s an opportunity to apply that here to the ENFORCE Act. I’ve heard from a lot of stakeholders about this, they want this process at CBP because they understand how useful it can be. I know you you believe you don’t have the legal authority to do it yourself but I want to hear from you today. Do you believe that the creation of an APO process under the ENFORCE Act would make the process more useful for petitioners, and thus increase the number of petitions?” 

The Honorable Kevin K. McAleenan, Commissioner of US Customs and Border Protection: “Thank you, Senator for your question and to the committee for the authority under the ENFORCE Act, which we’ve taken on. Implementing an interim final role within six months of the passage of the Trade Facilitation Trade Enforcement Act, we’re now up to 20 investigations, nine completed, $50 million in duty evasion prevention accomplished. We’ve done four onsite visits in 18 locations which has really given us a sense of where there is a fraudulent issue of fake transshipment, if you will. We’re able to actually look at that factor using our international network, our partnership with foreign government and with HSI.”   

Portman: “But your interim rules came out in August of 2016 and we’re still waiting on the final regulations, so if you could tell us today when you expect those final regulations to come out, that would be helpful. Do you have an answer on that?” 

Hon. McAleenan: “Well, actually I think that depends on the second half of your question. The ongoing lessons learned from these 20 investigations and the incoming allegations under the ENFORCE Act, the lessons we take from those and how we want to apply them to a final rule. The administrative protective order process is something we have looked at and we’re happy to have an ongoing conversation with Congress about. As you noted, we don’t have the authority or the resources to implement it today.” 

Portman: “Do you think it would be helpful?” 

Hon. McAleenan: “I think that the key elements of it, the sharing of additional information with interested parties is very helpful, and whether we can do that through a final rule of our own or whether an APO would materially advance that, that’s worth discussing, absolutely.” 

Portman: “But you want to get that confidential information. Another way we can improve the ENFORCE Act would be to allow petitioners to file allegations when the importer is not known, because that’s the case sometimes. They see innovation coming, they’re tracking prices, market dynamics. They know it’s happening, they’re just not sure who’s doing it. Again, legal authority aside, do you believe that permitting allegations when importers are unknown would make the process more useful for petitioners and help increase the number of petitions?” 

Hon. McAleenan: “Yes, we agree with that and that’s an improvement we’d like to make in the process.” 

Portman: “It sounds like the first one—you’d like to make the change substantively, whether it’s through an APO or some other way, and the second one—you believe people ought to be able to file these cases without knowing the importer.” 

Hon. McAleenan: “Correct.” 

Portman: “Great, thank you Mr. Chairman.” 

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