CBP textile enforcement teams head to Hong Kong
The Hong Kong Trade and Industry Department notified exporters Wednesday that U.S. Customs and Border Protection “jump teams” will visit textile factories in August to verify the country of origin of apparel products.
CBP trade specialists from Aug. 10 to 24 will survey production facilities in the city and Hong Kong’s system of controls for ensuring articles of clothing are genuinely manufactured in the city, according to a memo posted on the agency’s Web site.
U.S. Customs usually conducts overseas visits to textile production regions such as Hong Kong on an annual or bi-annual basis. Special agents and import specialists check whether factories have the capability to produce the type of textile and amount that they claim to produce.
As goods increasingly go through interim production steps in multiple countries it has become more difficult for customs agencies to determine the country where the majority of the work was completed. Some importers mislabel the country of origin on their goods to avoid higher duties, quotas or embargoes in place for certain countries. Hong Kong is a frequent area of scrutiny because many goods are often produced in China and trucked across the border for final packaging and shipment.
More than $90 billion of textile products entered the United States last year and textiles represent about 45 percent of all import duties collected by CBP. The agency and domestic textile producers believe that from $2 billion to $8 billion worth of textiles enter the country illegally each year.
Under arrangements for the joint exercise, Hong Kong Customs and Excise will notify plants of a pending visit and conduct a joint fact-finding only with the consent of factory management. But companies that do not agree to the joint visits may be subject to separate checks by Hong Kong Customs officers.
CBP officers cannot take enforcement action against factories, but the agency can use information gathered about the manufacturing process to detain shipments upon arrival in the United States until the importer can prove the clothing was primarily produced in the country.
CBP can detain the shipment at the port of entry or can demand redelivery of the goods if they have been released to the importer for distribution to stores. Import specialists require information about the entire life history of the import transaction, from the purchase order, to cutting and sewing tickets, payroll stubs and other production records that provide evidence of where the labor input was conducted. The document review process can take several weeks and lead to extensive storage costs and potential lost sales even if the shipment is ultimately approved.
Trade attorney Arthur Bodek, a partner at Grunfeld, Desidario, Lebowitz, Silverman and Klestadt LLP, urged clients in a memo to alert their Hong Kong suppliers about the CBP visits so they will not be surprised.
Bodek said the vast majority of shipments detained by CBP are released because they are found to be legitimate. Importers can avoid delays by making sure that overseas facilities are open for business, have records on hand for the particular order that CBP is auditing and have a manager on duty with authority to respond to information requests. Otherwise CBP will consider the plant high risk and detain its shipments.