It is not a good idea to intentionally evade the payment of anti-dumping and countervailing duties by conspiring with a manufacturer in a subject country to transship goods (in an unchanged condition without any modification) through a third country. A U.S. importer learned an expensive lesson for their actions in the United States.
Canadian importers should take a look at the Global Trade Law Blog post “A Peek Around the Curtain: A False Claims Act Settlement for Avoiding Customs Charges” written by Mark Jensen and Ryan Roberts to learn about what happened south of the border (as a lesson about what not to do). In this blog article, the authors write about a U.S. False Claims Act settlement by a U.S. importer of aluminum extrusions into the United States who intentionally provided false information about the origin of the goods and participated in the deception.
While Canada does not have legislation like the False Claims Act, a similar set of facts relating to actions undertaken to circumvent anti-dumping duties and/or countervailing duties could land a Canadian importer of record in a heap of expensive trouble.
First, if a Canadian importer of record imported aluminum extrusions from China after conspiring with an exporter to misstate the origin of the goods (and route the goods via a third country such as Malaysia), they would be in a lot of trouble under Canadian laws. If the importer filed documentation with the Canada Border Services Agency (CBSA) that it knows to be false and the documentation relates to goods that are subject to an anti-dumping/countervailing duty order of the Canadian International Trade Tribunal, the importer of record may be charged under the offence provisions of both the Special Import Measures Act (Canada’s anti-dumping/countervailing duty law) and Customs Act (for misstating the origin for customs duty purposes). The penalty for committing an offence includes fines and/or imprisonment.
In addition, the importer of record would receive a detailed adjustment statement for the duties that were alleged to be evaded (plus interest and penalties). Most likely, the duties would be at the highest rate that was set by ministerial specification because the most likely scenario is that the real manufacturer does not have normal values. If the real exporter did have normal values, the transshipment through a third country in this manner may be sufficient to result in the inapplicability of those normal values.
Further, the CBSA may impose administrative monetary penalties for both the false information under the Special Import Measures Act and the Customs Act. In short, the amounts payable will add up to far exceed the evaded duties.
On top of all of these amounts, the customs broker fees and lawyers fees will add up.
More importantly, the appeal of the imposition of the duties would be made to the Canadian International Trade Tribunal, which is the same quasi-judicial body who made the original injury finding. The Tribunal will not be favourably disposed to any appellant who circumvented their order in such a dishonest manner. The appeals under the offense provisions would go to the courts. As a result, the importer of record would be fighting more than one legal battle in more than one legal venue.
CAVEAT: It is important to recognize that there is a very big difference between intentional transshipment of goods (discussed above) and an importer of record buying goods from a non-subject country that happen to be subject to an anti-dumping/countervailing order in Canada. There are many situations where an honest importer of record does not know the origin of the goods and is not actively attempting to circumvent an anti-dumping/countervailing duty order. These importers may still receive a detailed adjustment statement from the CBSA, but should not be subjected to other more serious enforcement measures/penalties.