By  on November 18, 2004

WASHINGTON — U.S. Customs & Border Protection is scrutinizing a year’s worth of shipments of bra imports from Macau and Hong Kong after finding numerous entries not claiming China as the country of origin despite documentation proving otherwise.

One of the aspects the agency is trying to determine in its investigation is whether deliberate circumvention or simple negligence was involved.

Janet Labuda, director of the textile enforcement and operations division, said Wednesday she could not quantify the size of the misclassification, but noted Customs is concerned about “numerous shipments” of bras from Hong Kong and Macau over the course of a year and some 7,000 lines of information.

“Technically, this should not be happening,” Labuda said. “I don’t know how you could make a mistake like that. Some could scream fraud, but we are not doing that yet. We want to get a better picture of the entire situation.”

Labuda stressed that she didn’t yet know if importers were purposely transshipping to circumvent China’s quota limit on bras.

“The documents [showing China as the country of origin] were correct, but whoever made the electronic entry [for the shipments] made it incorrectly,” she explained. “I can say right now if there appears to be a pattern here, we will strongly pursue penalties.”

For the year ended Sept. 30, imports of cotton and man-made fiber bras from Hong Kong totaled 5.2 million square meters equivalent and were valued at $29 million, according to Commerce Department figures. Cotton bra imports from Hong Kong rose 73.4 percent, on a volume basis, during the period while man-made fiber bra imports rose 34.5 percent.

Bra imports from Macau totaled 1.1 million SME and were valued at $3.9 million. Cotton bra imports rose 56.6 percent but man-made fiber bra imports fell 27.9 percent over the past 12 months.

It is unclear what action Customs will take if it determines a year’s worth of bra shipments from Macau and Hong Kong were entered improperly. The charge could be “negligence” or “gross negligence” against the offending parties, or, if determined the goods were deliberately transshipped, it could constitute “outright fraud.”The only certainty is the agency will charge the amount against China’s quotas, but that limit is already close to filled and if Customs does not make a final determination soon, the category will embargo anyway as importers and retailers — aware of the review — rush to beat the import limit. Labuda said the agency could pursue monetary penalties if it finds a pattern.

She said the problem “popped up on the Customs radar screen” three weeks ago when officials sent import specialists to Hong Kong as part of a routine review.

The Bush administration imposed quotas on bras, dressing gowns and robes and knit fabric from China last December after determining the imports were causing market disruption and hurting the domestic industry. The safeguard quotas on bras, dressing gowns and robes and knit fabric are set to expire in a little over one month. A transshipment determination could bolster an apparel and textile industry coalition’s case for extending quotas on these products for another year.

“At the very least, this should be gross negligence. It is one thing to have gotten two or three entries wrong and it’s another to have [hundreds of entries wrong],” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “Unfortunately, we end up paying the price for the inability to fully address these issues or to create an environment where there is a significant enough deterrent to prevent this type of activity.”

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