|Overview of Textiles: A Priority Trade Issue (PTI)|
(01/03/2011)The textile industry represents more than $94 billion in annual imports and about 47% of all duties collected by U.S. Customs and Border Protection (CBP). There are approximately 68,000 importers of textile products. The textile industry is a key component of the U.S. manufacturing base. With over 600,000 workers, the overall textile sector is one of the largest manufacturing employers in the United States. CBP facilitates the legitimate importation of textiles and apparel, while combating the rising number of textile imports that are undervalued, misclassified, or illegally transshipped or entered. The enforcement of Free Trade Agreements (FTA) and legislative mandates continues 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, placing textiles and apparel at a high risk for non-compliance. In fiscal year 2011, CBP seized over $14 million worth of textiles for Quota/Visa and Intellectual Property Rights 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.On-Site VerificationCBP 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.Areas of RiskIn 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 rates of duty. 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 United States 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 United States, under false NAFTA claims.