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Textile News

Congressmen Mount Attack On Textile Fraud

James A. Morrissey, Washington Correspondent

Twenty-four members of Congress have signed onto legislation granting U.S. government agencies more authority and resources to attack what they say is a "high level of fraud and illegal trade" in textiles and apparel." The Textile Enforcement and Security Act of 2010 is believed to be the first-ever textile-specific customs enforcement legislation.

The bill, developed by the Congressional Textile Caucus, was introduced by Rep. Larry Kissell, D-N.C., with bipartisan support and includes cosponsors from 15 states. As he introduced the bill, Kissell said: "Our government has an obligation to protect American jobs and to help the American economy grow. By not enforcing trade deals and holding other countries accountable to honor their end of these agreements, it has continued to cause undue harm to American manufacturers and industry. We have to do a better job of enforcing the protections put in place and protecting the interests of American manufacturers so they have the opportunity to compete in the global market place."

Speaking at a Capitol Hill news conference as the bill was introduced, William Jasper, president of Greensboro, N.C.-based Unifi Inc., a major yam producer, said: "The Textile Enforcement and Security Act is a vital piece of legislation that is greatly needed as textile and apparel fraud is increasing at our ports and borders. This legislation will provide our U.S. Customs with the necessary tools, resources and direction to effectively enforce our trade laws and help to bring a level playing field to U.S. workers."

Noting that the U.S. textile industry has lost more than half of its 1 million employees over the past decade, Anderson Warlick, president of Gastonia, N.C.-based sales yarn spinner Parkdale Mills Inc., said, "I can testify with absolute certainty that our industry was forced to lay off at least half of those employees due to illegal shipments of yam and fabric entering into the United States through CAFTA and our other preference regions illegally."

According to the National Council of Textile Organizations (NCTO), the U.S. textile industry is the third-largest exporter of textile products in the world, with exports totaling $13 billion in 2009. With the majority of these exports going to free trade agreement countries or others with preferential agreements, NCTO says, the industry relies heavily on strong Customs enforcement for its livelihood.

The far-reaching customs enforcement bill focuses to a large extent on abuses with preferential trade agreements in which textile and apparel products from participating countries enjoy duty-free entry into the United States.

The bill would:

  • Establish an electronic verifications system for textiles and apparel. At the present time, this is done with paper documents that make it difficult to process and verify the actual country of origin of apparel components.
  • Allow the Departments of Homeland Security and/or the Treasury to use funds from fines, penalties and forfeitures collected from import violations to pay for expenses directly related to investigations of violations. Rep. John Spratt, D-S.C., who is chairman of the House Budget Committee, said costs of investigations would be more than paid for by fines.
  • Increase the staff and provide more training for textile and apparel specialists at high-volume ports for textiles and apparel.
  • Establish a non-resident importer program to ensure that resident agents are held accountable for products imported under their name. At present, many non-resident exporters can violate labeling laws with impunity because it is difficult to find them.
  • Establish an Office of Textile and Apparel Trade Enforcement within the Department of Justice to carry out functions related to enforcement.
  • Provide Customs with expanded authority to seize goods illegally imported from trade preference areas. Currently, these goods can only be penalized.
  • Hold all parties in the supply chain -- not just the importer of record -- accountable for intentionally undervalued transactions in order to collect revenue and assess penalties.
  • Mandate the government to publish the names of companies that intentionally violate the rules of trade agreements.
When asked what the chances of the bill's passage are, Kissell said he hopes it can be attached to an overall customs reform bill being considered by the House Ways and Means Committee. He believes that would expedite its passage.

June 1, 2010

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