Honey laundering, Part II

Honey laundering, Part II Washington Notebook

By Eric Kulisch
   Last week in this space I told you about the customs fraud associated with imports of honey from China to get around higher duties assigned to that country. Chinese companies are declaring honey shipments as sweetener or routing them through other countries with lower duties.
   This has U.S. honey producers buzzing mad.
   Department of Homeland Security officials say they are attuned to the problem and catching some violators.
   Validating the growth of this problem is Avalon Risk Management, which told clients last week that U.S. Customs officials in Los Angeles and New York are being asked to clear shipments of honey from Malaysia.
   Red flag: Malaysia does not produce much honey, and most of it is consumed domestically.
   Avalon, a provider of customs bonds guaranteeing payment to the government for duties and other fees owed by the importer after goods are released, warned customs brokers that shipments with documentation stating an importer is receiving honey from Malaysia likely are transshipped from China under false pretenses to avoid anti-dumping duties.
   In 2001, the U.S. Commerce Department determined that honey from China was being sold in the United States at substantially low prices and imposed stiff anti-dumping duties. Since 2006, the preliminary anti-dumping duty rate for Chinese honey for producers that did not receive a separate rate status has been 212 percent.
   Avalon cautioned brokers that illegal honey shipments from Malaysia could start arriving at other U.S. ports.
   And the surety reminded them that they had to get prior approval to issue any single transaction and/or continuous bonds to cover honey from Malaysia and China. That's because Avalon requires full collateral in cash or a letter of credit, instead of a small premium, for entries that involve anti-dumping duties. Continuous bonds are 10 percent of the estimated value of shipments for the year, plus duties and fees. If the importer that buys the bond through the broker goes out of business or reneges on its commitment, then the surety is on the hook for the full duty owned to Customs and Border Protection, which can be a hefty amount in anti-dumping cases.
   The difficulty in anti-dumping cases is that the International Trade Commission can take years to determine the final duty rate for a case involving predatory pricing. Once that happens, importers that paid less estimated duty than the final amount, will get a bill to pay the difference after Customs reviews the paperwork and terminates the entry. The anti-dumping damages are usually so large that sureties like Avalon can't afford to guarantee their payment the way they can for regular bonds.
   Avalon noted the unethical companies are adversely affecting legitimate Malaysian companies whose goods may then be targeted in anti-dumping cases because U.S. firms filing claims for relief may not be able to distinguish between legitimate Malaysian exports and transshipped Chinese-origin merchandise.

Ex-NBA player succeeds as UPS executive
   HBO's Real Sports With Bryant Gumbel just aired an interesting segment on LaRue Martin, the No. 1 pick in the 1972 National Basketball Association draft by the Portland Trailblazers.
   Martin washed out of the league in four years. He tried to drown his sorrows in alcohol, but eventually caught on with UPS as a delivery driver. The seven-footer was so tall that the company had to stitch two pairs of pants together, and he painted gym shoes black because there was no size-18 shoe when he started.
   Martin is now a community services manager for UPS in Chicago.
   At UPS, Martin found the success that was elusive as a professional basketball player.