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U.S. Customs and Border Protection Textile Law Enforcement Challenges

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U.S. Customs and Border Protection Textile Law Enforcement Challenges

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    1. 1 U.S. Customs and Border Protection Textile Law Enforcement Challenges

    2. 2 What is the Role of Customs?

    3. 3 The Textile Import Industry

    4. 4 The Textile Import Industry

    5. 5 Textile Trade Preferences Free Trade Agreements Guatemala Implemented July 1, 2006 Peru and Colombia Negotiations Completed Bahrain Implemented August 1, 2006 and Oman Completed Thailand Stopped Due to Coup d’Etat South Korea and Malaysia Negotiations Started

    6. 6 Textile Trade Preferences Trade Preference Legislation Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 aka Haiti HOPE Allows Cumulation with All U.S. Free Trade and Trade Preference Partners Allows Third Country Fabric from China with a Capped Limit Value-Based Rule of Origin as Opposed to a Tariff Shift Annual Aggregation

    7. 7 Textile Enforcement Quota Eliminated for all WTO Member Nations EXCEPT China Safeguard Mechanism Replaced by Comprehensive Quota Agreement Textile Bilaterals Expire MOUs; CBP Instrumental in the Negotiation of Agreements with Hong Kong, Macao, the Philippines and Indonesia Enforcement Focus Unchanging

    8. 8 Textile Enforcement Focus Textiles and Wearing Apparel Industry Designated As a Priority Trade Issue for FY 07 Enforcement Focus Origin Fraud; Illegal Transshipment; Quota Circumvention; Inadmissibility of Merchandise Enforcement of Various Legislative Trade Initiatives and Free Trade Agreement Preference Claims Protection of the Revenue 5 Year Enforcement Strategy Reported to Congress

    9. 9 Textile Enforcement Focus Risks FTA and other Trade Legislation $22+ Billion in Trade Preference Claims out of a Universe of $104.2 Billion in Imports China Quota Illegal Transshipment Misdescription of Merchandise Smuggling; Unmanifested Goods General Misdescription to Avoid Duties and Quota 42% of Duties Collected Involve Textile Goods

    10. 10 Textile Production Verification Teams In 2006 TPVTs Were Conducted in: Hong Kong Macao Swaziland Vietnam Egypt Mauritius South Africa Thailand Kenya Chile El Salvador Guatemala Honduras

    11. 11 Textile Production Verification Team Statistics 2006 13 Countries Visited 428 Factories Visited 8 Transshipment Found 97 Permanently Closed 95 High Potential for Transshipment 20 Refused Admission to the Team 51% Not Compliant for Illegal Transshipment 41% Not Compliant for Trade Preference

    12. 12

    13. 13 Current Investigation Seizure of $46 Million in Smuggled Textiles Criminal Organization Based in Hong Kong Goods Declared as Furniture; C/O China Undercover Investigation/Operation China Quota Circumvention and Duty Circumvention Loss of Revenue in Excess of $50 Million Landed Duty Paid Transactions; Middlemen Acting As Importers/Ultimate Consignees Buying from a “Domestic” Supplier

    14. 14 Textile Enforcement Thailand Ghost Factories 8 Factories Existed on Paper Only Were Shipping to the U.S. Goods Suspected c/o China CBP Working Closely with Thailand 328,802 Pieces T-shirts, Underwear, Pants, Jackets, Baby Garments $727,796 Value of Garments CBP Requested Redeliveries for Shipments Valued at $3.2 Million Entered from March – May 2006

    15. 15 Textile Enforcement Identity Theft of U.S. Firms Shipments of Denim Jeans Stopped at Numerous Ports of Entry Goods Chinese in Origin Claiming Made in the U.S.A. Seized by CBP

    16. 16 Textile Enforcement Use of Counterfeit Certificates of Origin Russia, the Philippines Use of Forged Government Communications Russia Most of the Counterfeits Link Back to Korean, Hong Kong Trading Houses/Middlemen

    17. 17 Textile Enforcement Last Year vs. This Year 64% Increase in Enforcement Actions 7100% Increase in the Number of Liquidated Damages Penalties Exclusions of Merchandise Increased by 368% Detentions Increased by 1000%

    18. 18 Trade Preference Enforcement Additional 1,377 Targeted Verifications Performed $53.6 Million in Value 37% Non-Compliance Rate $1.7 Million in Additional Revenues Collected

    19. 19 Textile Penalties 502 Liquidated Damages Penalties Issued Totaling $ 21.8 Million 65 Penalties Issued Totaling $6.5 Million

    20. 20 Thank You Questions??????

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