Overview
The United States Department of Commerce (DOC) has announced the intent to terminate the 2013 Suspension Agreement on Fresh Tomatoes from Mexico. This means that if an agreement is not reached prior to Tuesday, May 7th, 2019, anti-dumping (AD) duty will be assessed on all importations of fresh tomatoes that were grown in Mexico in accordance with the original determination made in 1996.
The only exclusion from this duty will be for tomatoes intended for processing. Processing is defined as preserving by any commercial process such as canning, dehydrating, frying, or the addition of chemical substances, or converting the tomato product into juices, sauces, or purees. This does not include tomatoes shipped for cutting up, such as fresh salsa or salad bars.
Duty Impact
This additional duty will range from 4.16 percent to 188.45 percent. The individual rate will be assessed based on the individual Mexico grower/exporter. If the grower does not have an individual rate, they will be assigned the ‘all others’ rate of 17.56 percent.
The duty paid at the time of entry are cash deposits of estimated AD duties. The final amount of duties owed is not determined until the DOC conducts an administrative review to establish the final ADD rates on past entries. In other words, the final duties are assessed retrospectively on prior entries. The final AD/CVD amount may increase, decrease, or remain unchanged from the AD cash deposit paid at the time of entry. After the DOC sends instructions to CBP on the final AD rate for the entry, CBP will assess this final duty.
CBP will issue a bill for any increase in duty plus interest or refund any overpayment plus interest as a result of a decrease of a duty. Interest is not applicable to entries made during the provisional measures period in the original AD investigation. On average, this entire process, from the date of importation, takes approximately three years.
Non-reimbursement Statements
If the AD duty is resumed on May 7th, your company will want to file a non-reimbursement statement. This form certifies that the importer of record (resident or non-resident) has not entered into any agreement for the payment or refunding of the anti-dumping duties. If a non-reimbursement statement is not filed, the AD duties will be doubled when the entry liquidates.
Customs Surety Bond Impact
The effects of AD duty will impact all companies that are involved in the industry. We would like to remind importers of customs bond requirements and the potential for quick saturation of existing bonds.
Continuous bond amounts are calculated using 10% of the total duties, taxes, and fees paid for the previous 12-month period. The minimum continuous bond amount allowable is $50,000 USD, which covers up to $500,000 USD in duties, taxes, and fees to U.S. Customs and Border Protection (CBP).
The sharp increase in tariffs could result in rapid saturation of your customs bond. If your company’s bond becomes saturated and rendered insufficient by CBP, your company will not be permitted to import goods into the United States until a new bond with a higher limit of liability is established. Please be aware of the duties, taxes, and fees your company is paying and proactively monitor your bond saturation level.
If your bond begins to approach saturation, you will be notified by either CBP, the service provider that manages your bond, or the surety company. If your company is notified, your firm will have only fifteen (15) days to increase the bond.
Please note that the surety company may request your company’s financial statements or a deposit to support the added liability of AD entries due to the financial impact and the uncertainty of the final AD rates at the time of liquidation.
Conclusion
If a new suspension agreement can be made before Tuesday, May 7th, 2019, these duties will be avoided. However, we would like our clients to be prepared for the potential financial and regulatory impact these duties could have on the industry.