CBP INDUSTRY FOCUS: TEXTILES

CBP issued its 2007 textiles findings and concluded that textile importers are not reporting quantity, country of origin, classification and manufacturer correctly on the import entries.

CBP Recommendations for textile importers:

Perform internal post entry reviews to verify data elements reported to CBP
Define supplier documentation requirements to prove country of origin and preferential trade qualification
Document how goods are classified and provide detailed description of merchandise
Secure advise from qualified, licensed consultants and attorneys

Bottom-line: Many textile importers need to develop better internal controls for reporting data to CBP. K&A can be of major help to this industry and here’s how:

We assimilate import information (internal, broker and CBP) to inventory and financial records
We identify data inconsistencies by style or part number- SKU level, vendor, port, value, classification

Drawback

This industry typically lacks sufficient information on the import documents to meet the drawback requirements for product specifications (style, color, size). Classification is based on style, fabric and other criteria rather than on color and size. One way to be eligible for drawback is to trace the import transactions into inventory. Although this can be a tedious and time-consuming process requiring valuable time and resources, one benefit is drawback.

K&A is Your Solution!

In performing drawback services, we can audit your present import systems for compliance in the areas of classification, value and quantity allowing you to use your precious resources to address country of origin, admissibility and recordkeeping issues. With the ever growing emphasis on compliance, shouldn't you seek the service of drawback professionals emphasizing compliance and systems management?

CBP Textile Enforcement 2007 Fiscal Year in Review

(Thursday, December 13, 2007)

Contacts for this news release

Washington - During fiscal year 2007, CBP continued to focus on its textile enforcement strategy on imports of high risk textiles and apparel. CBP uses a variety of actions, ranging from verifying foreign production to targeting suspect supply chain movements to auditing high risk firms to seizing violative goods. Among this year’s accomplishments are:

In FY 2007 CBP increased foreign factory visits by 57%. CBP visited 671 foreign factories to monitor for illegal transshipment by sending textile production verification teams (TPVT) to confirm actual country of origin and compliance with trade preference programs. These teams examine production documents at foreign factories to ensure that potentially violative shipments are stopped before being shipped to the United States.
CBP visited 168 foreign factories in 10 countries in FY 2007 to verify claims involving Free Trade Agreements like the Central America - Dominican Republic Free Trade Agreement and other trade preference programs such as the African Growth and Opportunity Act.
CBP auditors conducted 66 audits on textile importers and recommended additional revenue collections of $5.61 million in FY 2007 - an increase of 57% in audit activity.
CBP officers at the ports of entry examined 13,327 shipments in FY 2007 and found more than 2,300 shipments where discrepancies were identified.
Further, Import Specialists initiated 1,905 reviews of entry documents resulting in 959 detained shipments and 314 seized shipments worth $48.1 million for violations of China quota restraints.
CBP also initiated 68 actions totaling $50.1 million in penalties for commercial fraud.

In FY 2008 CBP will continue its robust enforcement efforts focusing on textile quota evasion and improper claims for duty-free preference using Free Trade Agreements and other trade preference programs. CBP will apply a multi-layered approach to identify and address the areas of greatest risk.

Textiles Designated a Priority Trade Issue

(03/04/2008) U.S. Customs and Border Protection (CBP) maintains a robust trade enforcement program to ensure compliance with laws and regulations governing all imports. Due to the high-risk nature of imports of textile and apparel products, CBP has designated the industry as a priority trade Issue for fiscal year 2008. There are numerous requirements placed on textile products entering the United States under various free trade agreements and legislative preference programs. In addition, the United States maintains quantitative limits (quotas) on the amount of textile products that may enter the United States from China. Approximately 42% of all duties collected by CBP are from textile imports. Many different schemes are used to evade duty or quotas on imported goods being brought into the country. Some importers circumvent quotas by transshipment-changing the country of origin of their goods. Still others use false documents or labels or provide incorrect descriptions of the merchandise.

CBP uses a multi-faceted/layered, but complementary approach consisting of trade pattern analysis, on-site verification, review of production records, audits, and laboratory analysis to enforce our trade laws and to ensure that appropriate revenue is collected.

Import specialists in CBP with specialized commodity knowledge analyze and review textile imports for possible violations. Focusing on textile violations has paid off with seizures of major shipments. CBP has seized more than $100 million in goods since the beginning of calendar year 2006 and close to $50 million in 2007 for violations of the China quota agreement. In addition, CBP issued 68 penalty actions valued at $50.1 million. More than 13,000 physical examinations were performed, 1,527 fiber samples analyzed by the laboratories and 66 audits conducted.

On-Site Verification
one of the enforcement tools being used is on-site verification of manufacturers. CBP Textile Production Verification teams travel to foreign factories to review and verify that wearing apparel that is shipped to the U.S. is produced at those facilities. As a result of these site visits CBP Import Specialists will target shipments that are in violation. Sites are selected after extensive trade analysis. The Textile Production Verification Team visited 15 countries in FY 2007. Approximately 671 factories were visited, a 57% increase in the numbers over the previous year.

Misdescribed Merchandise
CBP has initiated operations to address the misdescription of merchandise. CBP has seized millions in misdescribed goods. Import Specialists have identified schemes to circumvent safeguards by misdescribing merchandise at a much lower rate of duty. In recent textile enforcement operations over $12 million in goods have been seized that were misdescribed. In addition, CBP import specialists have identified significant Intellectual Property Rights (IPR) violations. Approximately $27 million was seized in 2007 for violating IPR laws involving textile products.

For more information on U.S. Customs and Border Protection importing requirements, visit the U.S. Customs and Border Protection website, and click on “Import” at the top.

Penalties Designated a Priority Trade Issue (PTI)

(04/04/2008)
The goal of the Penalties Trade Strategy is as follows: “To improve the effectiveness of the trade fraud penalty process by emphasizing national direction, uniformity, swift action, applying trade compliance alternatives to traditional commercial fraud penalties, and by focusing trade fraud resources on Priority Trade Issues (PTI).” The trade fraud penalty process is a PTI because: 1) considerable CBP resources are expended to achieve modest penalty collections; and 2) a penalty is often the only tool available to CBP to deter non-compliance in the trade environment.