Circumvention of duties and assessments

Underpayment of duties and taxes
Tax avoidance

Nature

The methods employed in underpaying or avoiding local, national and international assessments of various kinds correspond to the method of assessment. Most illegal acts in the private sector deal with concealment or under-valuation of assets, whether these be a farmer's crops, a corporation's income, or a private individual's inherited wealth. Other acts of avoidance apply to manufacturing, sales and usage taxes, and similarly are of the nature of non-declaration or understatement of quantities manufactured, sold, or used, and their worth. An industry for detecting avoidance exists, but it is almost entirely a government monopoly, administered by inland revenue or treasury offices. In some countries a reward is paid to private persons giving information on avoidance. Corruption in the form of bribe-taking by collectors or inspectors is a recurrent phenomenon.

The payment of duties is also circumvented in many ways, including illegal shipment or smuggling. The losses to local or national governments by tax subterfuges, illegal business, or recordkeeping, and by the various other methods of avoiding payment is significant, and as a result penalties are severe. Avoidance also hurts the private sector of the economy when taxes and duties relating to imports are circumvented, to the extent that such taxes and duties are protectionist and are designed to discourage a high level of importation of a commodity or product. Finally, governments which themselves may be taxed or proportionally assessed, for example, for their share of international costs of projects, or international organizational budgets, may also seek avoidance in the form of truant payments or defaults.

Background

The global significance of circumvention of duties and assessments emerged in the late 20th century as international trade expanded and complex tariff systems were established. Authorities first recognized the problem through patterns of transshipment, mislabeling, and undervaluation, which undermined trade agreements and national revenues. Subsequent investigations and high-profile cases, such as those documented by the World Customs Organization, highlighted the sophistication and scale of circumvention, prompting coordinated international efforts to detect and address these evasive practices.

Incidence

Circumvention of duties and assessments is a persistent global issue affecting international trade, with significant financial implications for governments and industries. The problem is widespread, as companies and individuals employ various tactics—such as mislabeling goods, rerouting shipments, or minor product modifications—to evade tariffs and anti-dumping duties. This undermines fair competition, erodes public revenues, and complicates enforcement efforts across multiple jurisdictions, making it a matter of international concern.
In 2023, the European Union reported a surge in Chinese steel products entering the market via third countries, notably Vietnam, to bypass anti-dumping duties. Investigations revealed deliberate transshipment and false declarations, prompting stricter customs controls.

Claim

Circumvention of duties and assessments is a grave and urgent problem undermining fair trade and national economic security. It allows unscrupulous actors to dodge legal obligations, eroding government revenue and putting honest businesses at a severe disadvantage. This blatant evasion not only distorts markets but also weakens the integrity of our trade enforcement systems. Immediate, robust action is essential to protect jobs, industries, and the rule of law from this unacceptable practice.

Counter-claim

The so-called "circumvention of duties and assessments" is vastly overstated as a problem. In reality, it has minimal impact on national economies or industries. Most businesses comply with regulations, and the few that don't are easily managed through existing enforcement. Obsessing over circumvention wastes resources and distracts from more pressing economic issues. It's time to stop inflating this minor concern and focus on challenges that truly matter.