CBP Posts Overview of Textiles as a Priority Trade Issue

(PTIs are high-risk areas that can cause significant revenue loss, hurt the U.S. economy, or threaten the health and safety of the American people. There are currently eight PTIs designated by CBP, including: (i) agriculture programs; (ii) antidumping and countervailing; (iii) import safety; (iv) intellectual property rights; (v) penalties; (vi) revenue; (vii) textiles; and (viii) trade agreements.

See ITT's Online Archives 09041515 and 10061057 for summaries of earlier overviews of the Textiles PTI. This 2011 overview provides updated information on CBP's FY 2011 actions and other ways textile imports are at risk of non-compliance.)

Textile Imports Represent 47% of All Duties Collected by CBP

The textile industry represents more than $94 billion in annual imports, with approximately 68,000 importers of textile products, and representing about 47% of all duties collected by CBP. In addition, CBP states that the enforcement of Free Trade Agreements and legislative mandates continue to make textiles a politically sensitive industry. The average duty rate for textiles is 16% and more than $17 billion of entered textiles and wearing apparel claim preferential tariff treatment. CBP states this places textiles and apparel at a high risk for non-compliance.

CBP Seized Over $14M in Textiles for Quota/Visa & IPR Violations in FY 2011

In fiscal year 2011, CBP seized over $14 million worth of textiles for Quota/Visa and Intellectual Property Rights (IPR) violations. In addition, CBP issued 48 penalty actions valued at $27 million. More than 10,000 physical exams were performed, over 1,300 textile samples were examined by the laboratories, and 36 audits were initiated.

Uses On-Site Verifications of Foreign Factories to Ensure Compliance

CBP utilizes Textile Production Verification teams (TPVTs) to conduct on-site verification of foreign textile and wearing apparel manufacturers. These teams review and verify production capability and compliance with the terms of FTAs and trade preference programs. The TPVT visits help deter circumvention of the preference program requirements, as well as educate foreign governments and manufacturers. In 2011, CBP visited 165 factories in 9 countries. 27% of the reviews showed a violation of the trade preference program claimed on the entry and 22% showed a discrepancy related to illegal transshipment.

(See ITT's Online Archives 11112112 for summary of the results of CBP's FY 2011 TPVT visits.)

Textile Imports Are Undervalued, Misclassified, Transshipped thru Mexico

In addition to non-compliance with trade preference programs, CBP is also combating the undervaluation of textile and wearing apparel by entities with no legal right to make entry. Goods are being imported under false identities and addresses, hindering CBP’s efforts to collect additional duties or penalties. Another area of risk is the misclassification of wearing apparel, often to circumvent high duty rates. In 2011, 48% of textiles sampled by the laboratories were found to be misclassified.

CBP is also looking closely at the illegal transshipment of goods through the U.S. into Mexico. These goods, falsely claiming U.S. origin, are exported to Mexico under false NAFTA claims. The exports can range from completed apparel that is using a U.S. origin claim to circumvent Mexico’s dumping duties against China, to fabric. Subsequently, the fabric exports are used in production of apparel imported back to the U.S., under false NAFTA claims.

(See ITT's Online Archives 11052303 for summary of the trade suggesting that textiles be removed as a PTI as part of CBP's 2009-2013 Trade Strategy.