The Department of Homeland Security announced April 5 an enhanced strategy to combat illicit trade in textile and apparel products. In light of the “strengthened enforcement efforts” outlined in this strategy, importers of such goods are advised to begin validating documents throughout their supply chains.
“We are pulling out all the stops to stay one step ahead of the bad actors that try to threaten this essential industry,” said acting U.S. Customs and Border Protection commissioner Troy Miller. “This plan ensures we are holding them accountable: violators will not qualify for preferential duty treatment under USMCA, CAFTA-DR, or other trade agreements, and will be subject to payment of duties owed, penalties, seizures, and criminal investigations.”
According to a DHS press release, the new plan focuses on the following actions.
- improving screening of packages claiming the Section 321 de minimis exemption for textile, Uyghur Forced Labor Prevention Act, and other violations, including expanded targeting, laboratory and isotopic testing, and focused enforcement operations
- conducting joint U.S. Customs and Border Protection/Homeland Security Investigations trade special operations (15 of which are already underway) to ensure cargo compliance, including physical inspections (300 of which have been done to date); country-of-origin, isotopic, and composition testing; and in-depth reviews of documentation
- issuing civil penalties for violations of U.S. laws and developing and conducting criminal investigations when warranted
- better assessing risk by expanding customs audits (which have already been initiated on more than $10.5 billion in textile imports) and increasing foreign verifications, including textile production verification team visits to high-risk foreign facilities, to ensure that textiles qualify under the U.S.-Mexico-Canada Agreement or the Central America-Dominican Republic Free Trade Agreement (visits have already been completed to 44 factories and five raw material providers covering $800 million in textile imports)
- engaging in an education campaign to ensure that importers and suppliers in the USMCA and CAFTA-DR regions understand compliance requirements and are aware of CBP’s enforcement efforts
- leveraging U.S. and Central American industry partnerships to improve facilitation for legitimate trade
- reviewing additional entities in the high-priority textile sector for inclusion in the UFLPA Entity List (ten textile sector entities have already been added)
Elise Shibles, who heads ST&R’s textile and apparel practice, said one key aspect of this plan that importers should be aware of is CBP’s actions to verify that textile and apparel imports qualify for claimed duty preferences under USMCA and CAFTA-DR. “We have reason to believe CBP is contacting the issuers of certifications and affidavits for raw materials and validating the authenticity of those documents,” Shibles said. “And we believe that in some cases this leads CBP to believe those documents are inaccurate or falsified in some way.”
As a result, Shibles is encouraging textile and apparel importers that have a longstanding practice of seeking such documents to take the additional step of directly contacting the manufacturers to validate documents from anyone with whom they don’t have a direct relationship. This is particularly important when purchasing raw materials indirectly through a third party; e.g., ensuring that yarn affidavits provided by a fabric producers, or that fabric affidavits provided by a fabric converter or middleman, are valid.
For more information on the new DHS strategy and what steps your company may need to take in response, please contact Elise Shibles at (415) 490-1403 or via email.
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