Global Knowledge®

Three international trade companies, the President of the San Diego Customs Brokers Association, and seven others face federal charges after investigators uncovered a multi-million dollar import fraud scheme in Southern California.

Looking to evade taxes, customs duties and other charges, the fraud ring illegally imported over $100 million of goods, according to the Department of Justice. The group allegedly exploited the in-bond import process, which allows goods intended for sale in other countries to pass through American ports duty-free. San Diego Customs Brokers Association President, Gerardo Chavez, created fake documents claiming that the imports were destined for Mexico. He also created false database entries to back up the paperwork.

After claiming the goods as en-route to Mexico, the group got truck drivers to take the goods to warehouses all over Southern California. From there, the goods (including clothing from China and cigarettes produced in India) were shipped all over the U.S.

“The charges announced…underscores our commitment to ensure that no one exploits the import process for personal gain,” said Laura E. Duffy, U.S. Attorney for the Southern District of California. “Not only does such illegal conduct present a significant danger to the American people, but it deprives law abiding companies of a level playing field resulting in the potential loss of billions of dollars in revenue.”

The Department of Justice approximates that the scheme may have deprived California of over $10 million in customs duties, taxes and other revenue. Even more disconcerting is the claim that some vegetable shipments handled by the group were contaminated with salmonella.

Two of Chavez’s companies, Tecate Logistics LLC and International Trade Consultants LLC, were implicated in the scheme, as well as British citizen Sunil Mirwani and his company M Trade Inc. Additionally, several employees and agents of wholesalers, customs brokers and transport companies have been charged with knowingly aiding the conspiracy.

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Join Amber Road and American Shipper on Wednesday, June 20 at 2pm EDT for a webinar that will discuss findings from the second annual Import Operations & Compliance Benchmark Study, published by American Shipper and BPE Global. Key topics will include:

• Regulatory compliance policies and practices
• Import operations management and outsourcing
• Supporting technologies solutions and functionality
• Organizational structures and policies
• Training and education

Panelists for The Secrets to Import Success: Best Practices in Managing Import Operations & Compliance include:

• Nathan Pieri, SVP, Marketing and Product Development, Amber Road
• Andrea Appell, Director, BPE Global

Click here to register.

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On Thursday, May 17th, the United States announced that it will impose anti-dumping tariffs of more than 31% on solar panels from China. This decision, likely to ratchet up the trade tensions between the US and China, is the result of the US Department of Commerce finding several Chinese solar panel companies guilty of dumping their goods (selling them at below fair-market value).

The United States bought $3.1 billion worth of Chinese solar cells in 2011, which comes to more than half the American market for these devices. The anti-dumping duties are intended to level the playing field for US solar panel makers who may be undermined by Chinese competition, but may not necessarily be high enough to drive the Chinese makers out of the business altogether.  Regardless, this imposition is said to be one of the strongest by the Obama administration in addressing complaints of unfair Chinese trade and economic practices.

This change also comes with opposition from many solar panel installers in the United States who have opposed anti-dumping duties. They believe the inexpensive imports have helped spur many homeowners and businesses to put solar panels on their rooftops.  However, this change is likely to mean a substantial increase in the price of solar panels going forward. High duties are likely to raise costs, slowing demand for the polysilicon that is used to make solar panels.

As per the Department of Commerce, merchandise covered by this investigation is currently classified in the Harmonized Tariff System of the United States (HTSUS) under subheadings 8501.61.0000, 8507.20.80, 8541.40.6020, 8541.40.6030, and 8501.31.8000.

The Commerce Department said a final determination on tariffs would be made in early October.

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Import controls have been updated for Norway.  Tariff rate quota has been amended for beef and certain agricultural products originating from the EU and Swaziland.  The following HTS chapters are affected: 02 and 06.