Textile Enforcement Bill Introduced in House

(This bill has just been introduced and is not in effect. Generally, in order for a bill to be implemented, identical versions of that bill must be passed by both the House and Senate, and then the bill must be approved (enacted) by the President.)

DR-CAFTA, NAFTA, Andean Programs are of Greatest Concern

According to the National Council of Textile Organizations (NCTO), the U.S. textile industry depends on customs enforcement for its livelihood. The U.S. textile industry is the third largest exporter of textile products in the world with over $12 billion in exports last year, with three quarters of the industry’s exports going to trade preference countries, most notably DR-CAFTA (Dominican Republic-Central America-United States Free Trade Agreement), NAFTA (North American Free Trade Agreement) and the Andean region.

TESA Provisions Could be Included in a Customs Reauthorization Bill

NCTO has previously indicated that Customs Reauthorization legislation could be amended by the addition of these TESA provisions.

Highlights of TESA Bill

Spratt’s press release states that TESA would:

• Make supply chain accountable. Broaden scope of entities to hold all parties in the supply chain accountable for intentionally undervalued transactions (not just the importer of record) in order to collect revenue or assess penalties.

• Nonresident importer program. Establishes a Nonresident Importer Program which mandates that nonresident importers: (1) identify a resident agent in the state which the port of entry is located and who is authorized to accept service of process; (2) certify that the resident agent has assets in the United States in sufficient amounts for ensuring payment of any loss of revenue not covered by the bond or for civil penalties, and (3) provide a copy of the commercial invoice accompanying the shipment that includes name, address, and contact information for each person in the transaction such as trading house, freight forwarder, and the ultimate purchaser of goods.

• Increased bond coverage. Increases bond requirements to include amounts equal to any duties, fee, and estimated penalties. Bond amounts are based off a formula of taxes and fees paid annually, which does not take into account risk assessment. This provision provides CBP the authority to modify these amounts based on assessment.

• Declare bond. Declare a secured bond and established a power of attorney.

• Increase info on affidavits. Requires additional information on affidavits to help decrease use of ‘blanket’ affidavits including ‘date of sale or shipment’ and ‘container number and bill of lading’

• Electronic tracking of inputs. Instruct the U.S. government to establish an electronic verification program that tracks yarn and fabric inputs in free trade agreements. Under the current DR-CAFTA agreement, all product verification documentation must be submitted in paper form making it almost impossible for CBP to conduct the necessary investigations. An electronic system would streamline the process for imports, while providing Customs with the pertinent information prior to port arrival to better target shipments, as well as conduct investigations.

• Expand CBP seizure authority. Provide Customs with expanded authority to seize goods imported from Trade Preference Areas. Currently, these goods can only be penalized.

• Expand penalties. Applies penalties to importer who provide false information, such that the articles are subject to seizure and forfeiture.

• Use penalty proceeds for investigations. Direct Department of Homeland Security and Department of Treasury to use amounts from fines, penalties and forfeitures collected from import violations to pay for expenses directly related to investigations of violations or proceedings of any unlawful import of textile and apparel goods.

• Cash rewards for information. Provide Department of Homeland Security or Department of Treasury to use amounts from fines and penalties to reward (of not less than 20 percent of the amount of fine, penalty, etc or $20,000 whichever is lesser) any person who furnished information that leads to arrest, conviction, civil penalty, or forfeiture for violation of these imports.

• Publish names of violators. Mandates the government to publish names of companies that intentionally violate the rules of trade agreements.

• Add textile specialists. Increases Import Specialists at the largest 15 U.S. ports (by value), which are high traffic ports for textile and apparel imports. According to information provided to the Small Business Committee, following a hearing on textile enforcement, the number of import specialists at these high traffic ports is concerning. (I.e. the Miami, Florida port which is the top port for textile and apparel imports ($2.2 billion) has only 8 import specialists on hand to verify these imports and these specialists are not solely appointed to textiles, but are trained to handle textiles.

• Assign CBP staff to China, DR-CAFTA. Directs Customs to assign staff to three DR-CAFTA countries and to the People’s Republic of China for purposes of customs services and preference verification.

• DOJ textile office. Establishes an Office of Textile and Apparel Trade Enforcement within the Department of Justice to carry out all the functions relating to enforcement cases.

(See ITT’s Online Archives or 05/21/10 news, 10052168, for BP summary stating that this bill would be introduced during the week beginning May 24, 2010.)