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USA : Sweater heats up export scam |
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2004-8-3
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When U.S. customs officials delved deep in the U.S.-Australia Free Trade Agreement, they found something strange.
To their surprise, it was found that numbers provided by US importers were contrary to Australian numbers showing that the country was not selling those many!
"When you see a $200 million discrepancy in trade data, that is significant. That''s just from one country," said Janet Labuda, director of the textile enforcement and operations division at the Bureau of Customs and Border Protection.
And where could the problem lead to: China.
So customs started a three-month program targeting and often seizing products from seven nations through which "knit-to-shape" products — sweaters — might be shipped illegally. The illegal trans-shipment avoids quotas and tariffs that would apply to products made in China.
The program targeting sweaters is the second of its kind this year. Socks were held up at ports earlier in the year.
Both are efforts to overcome textile and apparel smuggling, a multimillion-dollar problem — there are no exact figures — that breaks U.S. law, diverts income from the U.S. Treasury, and increases pressure on domestic manufacturers.
"To us, jeepers creepers, we''re not talking one or two dollars. It''s a significant amount of product," Miss Labuda said.
Meanwhile U.S. importers spoke of the program’s effects saying it was delaying sweater shipments by weeks or months as they are forced to produce documents that prove country of origin, including employment records, timecards and transportation documents.
"Our members are really feeling the pain. They are expressing a lot of concern," said Julia Hughes, vice president of international trade for the U.S. Association of Importers of Textiles and Apparel.
The association''s members include companies such as the Gap, but firms did not want to discuss the knit-to-shape program.
The sweater seizures followed a sock program that importers called thinly veiled protectionism. Importers said it was also disruptive.
"The problem you have is, you might have retailers who cancel orders. And these are things in ads, things in catalogs. It''s tying up money," said John Pellegrini, a customs lawyer who works with apparel importers.
Both, customs and importers do not offer specific dollar figures for the sweater program that runs through the middle of August.
"Then we will see what the results are and determine if we need to continue, stop, shift our efforts," said Miss Labuda.
Total textile and apparel imports last year touched almost $80 billion but it was unclear how much product was labeled illegally.
With several steps required in manufacturing of Sweater, it often passes through factories from different countries. Even as it is legal to complete some sewing in China and still label a product as, for example, made in Australia, it was illegal to complete all the work in China and label it as made elsewhere.
Some illegal shipments are expected to subside January 1, 2005, when the quota system ends. However, the incentive to mislabel products will continue as long as overseas companies seek to avoid tariffs. Clothing from Australia, for example, enters the United States duty-free under a new trade agreement, although many products from China do not.
"The fat lady hasn''t sung yet," Labuda concluded. |
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