U'S' Customs and Border Protection Textile Law Enforcement Challenges

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U.S. Customs and Border ProtectionTextile Law
Enforcement Challenges
Department of Homeland Security ? Customs
and Border Protection
And the Plot Thickens California Fashion
Association May 9, 2007
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What is the Role of Customs?
Department of Homeland Security ? Customs
and Border Protection

• Enforce all Laws Involving the Imports of
  Textile and Clothing Products
• Correct Description
• Quantity
• Value
• Country of Origin
• Ensure the Compliance of all Import Transactions

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The Textile Import Industry
Department of Homeland Security ? Customs
and Border Protection
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The Textile Import Industry
Department of Homeland Security ? Customs
and Border Protection
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Textile Trade Preferences

• Free Trade Agreements
• Guatemala Implemented July 1, 2006
• Peru and Colombia Negotiations Completed
• Bahrain Implemented August 1, 2006 and Oman
  Completed
• Thailand Stopped Due to Coup dEtat
• South Korea and Malaysia Negotiations Started

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Textile Trade Preferences

• Trade Preference Legislation
• Haitian Hemispheric Opportunity through
  Partnership Encouragement Act of 2006 aka Haiti
  HOPE
• Allows Cumulation with All U.S. Free Trade and
  Trade Preference Partners
• Allows Third Country Fabric from China with a
  Capped Limit
• Value-Based Rule of Origin as Opposed to a Tariff
  Shift
• Annual Aggregation

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Textile Enforcement

• Quota Eliminated for all WTO Member Nations
  EXCEPT China
• Safeguard Mechanism Replaced by Comprehensive
  Quota Agreement
• Textile Bilaterals Expire
• MOUs CBP Instrumental in the Negotiation of
  Agreements with Hong Kong, Macao, the Philippines
  and Indonesia
• Enforcement Focus Unchanging

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Textile Enforcement Focus

• Textiles and Wearing Apparel Industry Designated
  As a Priority Trade Issue for FY 07
• Enforcement Focus
• Origin Fraud Illegal Transshipment Quota
  Circumvention Inadmissibility of Merchandise
• Enforcement of Various Legislative Trade
  Initiatives and Free Trade Agreement Preference
  Claims
• Protection of the Revenue
• 5 Year Enforcement Strategy Reported to Congress

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Textile Enforcement Focus

• Risks
• FTA and other Trade Legislation
• 22 Billion in Trade Preference Claims out of a
  Universe of 104.2 Billion in Imports
• China Quota
• Illegal Transshipment
• Misdescription of Merchandise
• Smuggling Unmanifested Goods
• General Misdescription to Avoid Duties and Quota
• 42 of Duties Collected Involve Textile Goods

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Textile Production Verification Teams

• In 2006 TPVTs Were Conducted in
• Hong Kong
• Macao
• Swaziland
• Vietnam
• Egypt
• Mauritius
• South Africa
• Thailand
• Kenya
• Chile
• El Salvador
• Guatemala
• Honduras

428 Factories Visited
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Textile Production Verification Team Statistics
2006

• 13 Countries Visited
• 428 Factories Visited
• 8 Transshipment Found
• 97 Permanently Closed
• 95 High Potential for Transshipment
• 20 Refused Admission to the Team
• 51 Not Compliant for Illegal Transshipment
• 41 Not Compliant for Trade Preference

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Seizures for Quota Circumvention
Quota Eliminated January 1, 2005
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Current Investigation

• Seizure of 46 Million in Smuggled Textiles
• Criminal Organization Based in Hong Kong
• Goods Declared as Furniture C/O China
• Undercover Investigation/Operation
• China Quota Circumvention and Duty Circumvention
• Loss of Revenue in Excess of 50 Million
• Landed Duty Paid Transactions Middlemen Acting
  As Importers/Ultimate Consignees Buying from a
  Domestic Supplier

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Textile Enforcement

• Thailand Ghost Factories
• 8 Factories Existed on Paper Only
• Were Shipping to the U.S.
• Goods Suspected c/o China
• CBP Working Closely with Thailand
• 328,802 Pieces T-shirts, Underwear, Pants,
  Jackets, Baby Garments
• 727,796 Value of Garments
• CBP Requested Redeliveries for Shipments Valued
  at 3.2 Million Entered from March May 2006

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Textile Enforcement

• Identity Theft of U.S. Firms
• Shipments of Denim Jeans Stopped at Numerous
  Ports of Entry
• Goods Chinese in Origin Claiming Made in the
  U.S.A.
• Seized by CBP

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Textile Enforcement

• Use of Counterfeit Certificates of Origin
• Russia, the Philippines
• Use of Forged Government Communications
• Russia
• Most of the Counterfeits Link Back to Korean,
  Hong Kong Trading Houses/Middlemen

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Textile Enforcement

• Last Year vs. This Year
• 64 Increase in Enforcement Actions
• 7100 Increase in the Number of Liquidated
  Damages Penalties
• Exclusions of Merchandise Increased by 368
• Detentions Increased by 1000

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Trade Preference Enforcement

• Additional 1,377 Targeted Verifications Performed
• 53.6 Million in Value
• 37 Non-Compliance Rate
• 1.7 Million in Additional Revenues Collected

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Textile Penalties

• 502 Liquidated Damages Penalties Issued Totaling
  21.8 Million
• 65 Penalties Issued Totaling 6.5 Million

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• Thank You
• Questions??????