Bill closes tariff loophole

DENVER– Rocky Mountain Farmers Union (RMFU) President John Stencel applauded the U.S. Senate’s passage of a U.S. House bill (H.R. 4) that includes a provision terminating the privilege of new shippers to post a bond in lieu of making cash deposits for tariffs on products imported into the U.S. market. The measure, which was attached to a bill changing pension regulations, is expected to be signed by President George W. Bush.

“We are very glad to see this loophole closed,” said Paul Hendricks, an Englewood-based beekeeper and RMFU member. “The bonding option enabled dishonest traders to set up companies in the United States, take out a bond for a fraction of the estimated tariff amount, and then declare bankruptcy when the tariff came due.”

According to honey producer Richard Adee, Bruce, S.D., who is legislative chair for the American Honey Producers Association, this practice had become commonplace in certain importing sectors, including honey, garlic, mushrooms, stainless steel, crawfish, shrimp, and apple juice. He gave the example of a new company, claiming to be a new honey shipper. It paid 10 percent of a $50,000 bond to a bonding company, then, over several months imported 11 million pounds of honey. When the U.S. Customs Service went to collect the $18 million in tariffs that were due, the company disappeared.

“Representing the beekeepers, in March, Paul Hendricks spoke with National Farmers Union and called their attention to this problem,” Stencel said. “Farmers Union was glad to work alongside the American Honey Producers and other commodity groups to get this legislation passed.”

The bonding provision hurt domestic producers because it enabled imported product to be dumped into the U.S. market, depressing U.S. prices. The uncollected tariffs also shorted government coffers of millions of dollars.

“We’ve had a hard time selling honey because of the extremely low prices of imported honey, particularly honey from China,” said Adee. “Now I think the market will be such that producers can at least break even and maybe even make a profit.”

Hendricks agrees the impact should be very significant, “I am so glad that Farmers Union—both locally and at the national level—aggressively addressed this important issue!”

A vibrant U.S. bee population is important not only for the honey produced but also for the vital role played by bees in pollinating an array of crops, from alfalfa hay to melons to almonds. Hendricks said that while beekeepers may see better prices now that all importers will be paying their tariffs, he says consumers should not expect an increase in retail prices.

“The non-payment of tariffs negatively affects beekeepers financially, but the dumping of cheap Chinese honey never translated into lower retail prices,” Hendricks said.