Details of Senate Companion Textile Enforcement Bill

S. 3741 is a companion bill to H.R. 5393, the Textile Enforcement and Security Act of 2010 that was introduced on May 25, 2010. Currently, S. 3741 has one co-sponsor, and H.R. 5393 has 25 co-sponsors.

The text of the two bills is almost identical, with the exception that the Senate bill calls for an Operations Staff member to be assigned to each of the DR-CAFTA countries and the House bill only calls for a member to be assigned to three DR-CAFTA countries (see below for details).

Highlights of S. 3741 include:

Declaration Program for Non-Resident Importers of Textiles and Apparel

S. 3741 would require the President to establish and maintain a program which would require certain declarations and information from non-resident importers of textile or apparel articles. Such declarations and information would be required to accompany the entry summary documentation.

Non-resident importers seeking to import textile or apparel articles would be required to declare that they have:

• secured a bond in connection with the importation of the textile or apparel articles; and
• established a power of attorney in connection with the importation of the textile or apparel articles.

Non-Resident Importers Would Need to Provide Registered Agent Certification

S. 3741 would also require non-resident importers seeking to import textile and apparel articles to provide the following information:

• An identification of a resident agent in the State in which the port of entry is located who is authorized to accept service of process against the nonresident importer in connection with the importation of the textile or apparel articles.
• A certification that the resident agent (described above) has assets in the U.S. in sufficient amounts for the purpose of ensuring the payment of any additional loss of revenue not covered by any surety bond or for any civil penalties levied by the Federal Government in connection with the importation of the textile or apparel articles.
• A copy of the commercial invoice accompanying the shipment of the textile or apparel articles, including the name, address, and contact information for each person in the transaction, such as the trading house, the freight forwarder, and the ultimate purchaser of the goods.

Violators of Non-Resident Importer Declaration Program Would be Subject to Penalties

S. 3741 would make it unlawful for any person to import into the U.S. textile or apparel articles in knowing violation of the non-resident importer declaration program. Any person who violates this would be liable for a civil penalty of not more than $50,000 for each such violation. In addition, any violation that violates any other customs law of the U.S. would be subject to any applicable civil and criminal penalty, including seizure and forfeiture, that may be imposed under such customs law or 18 USC, with respect to the importation of textile or apparel articles.

Affidavit Would be Required for All Textile and Apparel Importations

S. 3741 would amend 19 USC 1484(a) by adding a new affidavit requirement which states that for textile or apparel articles, the documentation/information required under 19 USC 1484(a)(1) would have to include an affidavit (which would be permitted to be submitted to CBP in electronic form) with respect to each importation of a textile or apparel articlethat includes the following information:

• The physical address of the manufacturer.
• The contact person's name and complete contact information.
• A description of the articles, such as fiber content, yarn content, fabric type.
• The purchase order or invoice number issued for the sale with quantities included.
• The date of sale or shipment of the articles.
• If available, the container number and bill of lading number for the articles delivered to the customer.

Opportunities for Seizure and Forfeiture Would Expand

S. 3741 would make the following textile or apparel article importations subject to seizure and forfeiture:

Country of origin misdescription, etc. on preference claims. In the case of importation for which a trade preference has been claimed and with respect to which the textile or apparel article has been either misdescribed on entry as to country of origin or for which the importer of record does not verify actual country of origin, for purposes of avoiding a duty or other obligation to the U.S. Government.

False physical address information. In the case of importation by an importer of record who provides false information with respect to the physical address of the importer or who does not meet the requirements of 19 USC 1484 (a)(2)(B).

Bond Amount for Textiles and Apparel Would Reflect Risk Assessment

S. 3741 would amend the bonding requirements in 19 USC 1623(b) by adding a new requirement for textiles and apparel. This new provision would require the Secretary of the Treasury to require, or authorize Customs officers to require, the amount of the bond for the importation of textile or apparel articles to include amounts equal to any duties, fees, and penalties estimated to be payable on such articles (based on a risk assessment of the importer).

Electronic Origin Verification System for FTA Textiles and Apparel

The President, acting through the CBP Commissioner and in coordination with the head of the Commerce Department’s Office of Textiles and Apparel (OTEXA), would be required to establish an electronic verification system for tracking textile or apparel articles imported or exported under the DR-CAFTA, the North American Free Trade Agreement (NAFTA), or any other free trade agreement (FTA) to which the U.S. is a party to ensure compliance with the respective requirements of such agreements.

Fine Proceeds Would be Used for Enforcement, Etc.

Under S. 3741, notwithstanding any other provision of law, the Secretaries of Homeland Security or Treasury would:

Use fines, penalties, etc. to pay for enforcement - be required to use amounts from fines, penalties, and forfeitures of property for violations of any law regarding the import of textile or apparel articles enforced by the Secretary of Homeland Security to pay for expenses directly related to investigations of, and civil or criminal enforcement proceedings on, violations of any law regarding the import of textile or apparel articles.

Allow rewards for information on violations - be permitted to use amounts from fines, penalties, and forfeitures of property for violations of any law regarding the import of textile or apparel articles enforced by the Secretary of Homeland Security to pay for a reward of not less than 20% of the amount of the fine, penalty, or forfeiture of property collected or $20,000, whichever is the lesser amount, to any person who furnishes information that leads to an arrest, conviction, civil penalty assessment, or forfeiture of property for any violation of any law regarding the import of textile or apparel articles enforced by the Secretary.

Violators liable for storage and disposal costs. Any person found in an administrative or judicial proceeding to have violated a law regarding the import of textile or apparel articles enforced by the Secretaries of Homeland Security or Treasury would be liable for the cost incurred in the storage and disposal of any textile or apparel articles seized in connection with the violation.

List of Parties Subject to 1592 Would be Specified

S. 3741 would provide greater specificity as to the types of persons subject to the fraud, gross negligence, and negligence prohibition specified in 19 USC 1592(a)(1) so that it would read as follows (deleted text is struck, new text is denoted by ++):

Without regard to whether the U.S. is or may be deprived of all or a portion of any lawful duty, tax, or fee thereby, no person, ++no producer, manufacturer, supplier, seller, importer, exporter, or other person++ by fraud, gross negligence, or negligence (A) may enter, introduce, or attempt to enter or introduce any merchandise into the commerce of the U.S. by means of (i) any document or electronically transmitted data or information, written or oral statement, or act which is material and false, or (ii) any omission which is material, or (B) may aid or abet any other person to violate subparagraph (A).

Mandatory Publication of Certain Textile and Apparel Violators

S. 3741 would amend 19 USC 1592a(a)(1)) to require the semi-annual publication of a list of any producer, manufacturer, supplier, seller, exporter, importer, or other person located outside the customs territory of the U.S. (i) against whom CBP has issued a penalty claim under 19 USC 1592, and (ii) if a petition with respect to that claim has been filed under 19 USC 1618, against whom a final decision has been issued under such section after exhaustion of administrative remedies, citing any of the violations of the customs laws referred to in 19 USC 1592a(a)(2).

(19 USC 1592a currently authorizes, but does not require, the publication of this list and does not specify importers as a party to be included on the list.)

Mandatory Publication of List of High Risk Countries

S. 3741 would amend 19 USC 1592a(b)(1) to require the annual publication of a list of countries in which illegal activities have occurred involving transshipped textile or apparel products or activities designed to evade quotas or duties of the U.S. on textile or apparel products, if those countries fail to demonstrate a good faith effort to cooperate with U.S. authorities in ceasing such activities.

(19 USC 1592a(b)(1) currently authorizes, but does not require, the publication of this list and does not specify duty evasion as one of the activities subject to listing.)

Additional Specialist Positions, Biennial Staffing Review

S. 3741 would require the CBP Commissioner, as soon as practicable after the date of enactment, to ensure certain minimum staffing levels for CBP’s Textile and Apparel Policy and Programs (TAPP) Division (as outlined in S. 3741).

Staff for DR-CAFTA and China. The minimum staffing levels for the TAPP Textile Operations Branch would include not less than one Operations Staff assigned to each of the different Dominican Republic-Central America-U.S. Free Trade Agreement (DR-CAFTA) countries and not less than one Operations Staff assigned to the People's Republic of China for purposes of Customs services and textile or apparel preference verification.

(H.R. 5393 only called for Operations Staff in three DR-CAFTA countries. The following are DR-CAFTA countries: Costa Rica, the Dominican Republic, El Salvador, Guatemala, Nicaragua, and Honduras.)

Import specialists at largest textile and apparel ports. S. 3741 would also require the allocation to the 15 largest (by value of entries) U.S. ports of entry for textile or apparel articles, Import Specialists that are trained in fraud relating to imports of textile or apparel articles so that the level of Import Specialist positions is not less than 150% of the level of Import Specialist positions (as of the date of enactment) at such ports of entry.

Biennial review of staff levels. Not later than two years after the date of enactment, and every two years thereafter, the CBP Commissioner would be required to review the TAPP staff levels and determine whether there is need for additional staff to carry out the duties of the TAPP.

DOJ Office of Textile and Apparel Trade Enforcement

The Attorney General would be required to establish within the Department of Justice the Office of Textile and Apparel Trade Enforcement which would be responsible for carrying out all functions of the Department of Justice relating to relevant enforcement cases.

¹S. 3741 defines textile or apparel article to be (1) Any good classifiable in chapters 50 through 63 of the HTS; and (2) Any good classifiable under one of the following HTS headings or subheadings: 3005.90, 3921.12.15, 3921.13.15, 3921.90.2550, 4202.12.40-80, 4202.22.40-80, 4202.32.40-95, 4202.92.05, 4202.92.15-30, 4202.92.60-90, 6405.20.60, 6406.10.77, 6406.10.90, 6406.99.15, 6501, 6502, 6504, 6505.90, 6601.10-99, 7019.19.15, 7019.19.28, 7019.40-59, 8708.21, 8804, 9113.90.40, 9404.90, and 9612.10.9010.

²Nonresident Importer means (1) an individual that is not a citizen of the U.S. or an alien lawfully admitted for permanent residence in the U.S.; or (2) a partnership, corporation, or other commercial entity that is not organized under the laws of a jurisdiction within the customs territory of the U.S. (as such term is defined in HTS General Note 2) or in the U.S. Virgin Islands.

(See ITT’s Online Archives or 08/13/10 news, 10081313, for previous BP summary announcing that the companion textile bill was introduced in the Senate, with links to other relevant summaries.

See ITT’s Online Archives or 08/05/10 news, 10080512, for most recent BP summary of CBP textile enforcement under Operation Mirage, its special textile and enforcement operation.)