R.I.P. Enhanced Bonding Requirement
U.S. Customs and Border Protection (CBP) published a Federal Register notice Monday seeking public comment on its proposal to terminate its so-called enhanced bonding requirement (EBR), as mandated by a World Trade Organization ruling.
Shrimp traders worldwide “are very pleased this is happening,” says Susan Kohn Ross, an attorney with Mitchell Silberberg & Knupp in Los Angeles, who represents shrimp importers and exporters. “But it’s not clear why this took so long.”
Monday’s announcement came nearly a year after a WTO panel determined that the EBR violated international trade law, upholding a complaint brought in 2006 by Thailand and India, two of the world’s largest shrimp exporters. The EBR is onerous, to say the least. Essentially, shrimp exporters went from paying a $50,000 bond annually to a bond totaling hundreds of thousands, if not millions, of dollars — money that’s tied up for a year or more.
CBP — the U.S. government’s No. 2 revenue-generating agency — enacted the EBR in 2004 to prevent tariff evasion. But the measure was applied only to shrimp, a product with no history of tariff evasion at the time.
And it didn’t really work. Even the U.S. Government Accountability Office reported in 2006 that the EBR’s “degree of success cannot be known yet.” What it did do was initiate consolidation. Basically, the burdensome EBR pushed the small players out of the shrimp-trading business, which is never good for competition.
CBP is accepting public comment through Feb. 11, and then the agency will issue a final notice, at which point the EBR will no longer be required for new shrimp imports. But for old shrimp imports, companies will be required to ask CBP to cancel existing bonds and submit new bonds.
Soon the inane EBR will be a memory, freeing up millions of dollars that shrimp companies can put to better uses, like product development and marketing. It’s about time.