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New Customs Report Highlights Heightened Enforcement in Light of Trade Tensions

In light of continued tensions and threats of increased textile and apparel tariffs between the U.S. and China, Customs & Border Protections (CBP) 2017 “Textile Enforcement” report reveals the importance of the sector in global trade.

According to CBP’s report, textile and apparel imports generated $13.5 billion in duty revenue in 2017, representing 41 percent of all duties collected. Textile and apparel goods have some of the highest import duty rates in the U.S., which, according to CBP, makes them susceptible to fraud and a top priority for federal enforcement efforts.

“Schemes designed to circumvent textile tariff and trade laws include false invoicing, false marking and labeling, false claims of origin, illegal transshipment, misdescription, undervaluation, false declarations of right to make entry, false trade preference claims and outright smuggling,” the report noted.

More than 77,900 textile and apparel importers account for 20 percent of all U.S. importers, CBP said.

“These importers expect CBP to enforce textile trade law to ensure a fair playing field for the goods in the U.S. market,” the report noted. “Although these stakeholders may have differing motivations, they share CBP’s enforcement focus in the textile arena.”

The CBP report also noted that domestic manufacturing employs more than 550,000 U.S. workers and is the fourth largest exporter of textiles globally. Many U.S.-produced textiles are sold to Free Trade Agreement partner countries, where they are used to make finished goods that benefit from duty breaks.

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CBP stressed that it maintains a “robust and comprehensive enforcement strategy” to make sure U.S. and global trade rules are followed. Its strategy includes capacity building with industry partners, development of actionable trade intelligence, and international verifications and enforcement operations. CBP made note that its textile enforcement efforts were heightened by the Trade Facilitation and Trade Enforcement Act of 2015.

To maximize information sharing and enforcement opportunities, CBP said it collaborates with the trade community, U.S. Immigration and Customs Enforcement Homeland Security Investigations, and various other internal and external stakeholders.

“CBP partners with the domestic producers and the textile importing community, who are often the best advocates in developing an effective enforcement regime,” the report noted. “They have assisted our efforts in identifying violations in key areas of textile trade.”

In December 2015, CBP’s Office of Field Operations established the Apparel, Footwear and Textile (AFT) Center of Excellence and Expertise. The AFT center is one of 10 CBP centers of excellence that processes trade nationally using account-based principles within an industry sector. The AFTs allow CBP to direct workload efficiency, increase uniformity of practices, facilitate legitimate trade, and focus enforcement efforts to high risk and non-compliant areas.

In 2017, visited 145 factories in 10 countries, 20 percent of which were found to be involved in illegal transshipment, up from 18.7 percent in 2016. Another 40.6% were noncompliant with preference program rules, compared to 34 percent the prior year.

CBP made 6,175 seizures worth $7.04 million for intellectual property rights (IPR) violations last year, down from 7,224 seizures worth $11.1 million the prior year, while 252 seizures of illegal shipments last year worth $4.75 million were made for non-IPR violations, up from 47 seizures worth $2.8 million in 2016. The agency initiated 147 liquidated damages claims, down from 559 the previous year, including 142 for entry, four for redelivery, and one for temporary importation under bond.

CBP made 7,600 cargo examinations in 2017 compared to 7,444 the prior year, and 37 audits were completed, down from 60, with $4.4 million in recommended or accepted recoveries, down from $17.1 million. In addition, 450 laboratory samples were tested compared to 475 in 2016), nearly 50 percent of which were found to be discrepant for classification. Four national special enforcement operations were initiated and four were completed, compared to five and two, respectively, the previous year.