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WASHINGTON — Retailers and apparel brands importing billions of dollars worth of apparel, footwear and textiles to the U.S. every year are poised to take advantage of a new one-stop government import processing center that promises to streamline the flow of their products into the country.
This story first appeared in the March 26, 2013 issue of WWD. Subscribe Today.
U.S. Customs and Border Protection is set to open the Apparel, Footwear and Textiles Center for Excellence and Expertise, or CEE, in June in San Francisco, and major apparel brands and retailers are “chomping at the bit” to participate, according to Dora Murphy, who was named director of the center and is also the assistant director of field operations for trade at CBP.
One of the long-standing complaints of importers is that Customs regulations and processes are overly burdensome and often disrupt the flow of $124.2 billion worth of apparel, textile and footwear imports that enter the U.S. annually. The government collects $14 billion in duties on those imports every year.
The centers aim to increase uniformity of practices at all ports of entry, facilitate timely resolution of trade compliance issues and enhance enforcement of intellectual property violations, product safety and compliance with free trade agreement rules, in addition to strengthening the agency’s knowledge of key industry practices. The CEEs bring all of CBP’s functions under one virtual roof, focusing on a specific industry. They serve as a single point of processing for importers and perform validation activities, post-entry amendment and post-entry correction reviews of cargo, as well as reviews of prior disclosure for participating importers.
“A big complaint from some importers is ‘I import into 150 ports of entry and I get [several] requests for information for the same product,’” said Murphy. “Importers should only get one request for information from the center, not directly from the ports of entry where the cargo is cleared, and that is a big change for not just the industry, but for CBP. It is a big step toward uniformity.”
Murphy said the center will be a virtual organization that is coordinated from one strategic location, San Francisco. It will be the fifth industry-specific CEE, with five more on the way in fiscal year 2013, which ends Sept. 30. Other centers are dedicated to imports of electronics, automotive and aerospace, base metals, consumer products and mass merchandising, and agriculture and prepared products.
“The apparel center will be virtual in that we have import specialists, national account managers and auditors who will be physically located throughout the nation but work for the center,” Murphy said. “It will have certain access that in the past was limited to the port of entry.”
Some 68,000 entities import apparel, textiles and footwear into the U.S., Murphy said. Of those, 3,144 participate in the public-private program known as the Customs-Trade Partnership Against Terrorism, or C-TPAT, in which foreign cargo is prescreened before entering the U.S. so that shipments can be expedited. Another 378 participate in the Importer Self-Assessment program. Forty-two import entities participate in both programs.
Achieving security certification under C-TPAT streamlines the search process at the ports and other points of entry for goods into the U.S. Benefits include reduced inspections, priority processing or front-of-the-line border access. The C-TPAT program involves some 5,800 companies that have to meet supply-chain security criteria to become participants, including most major U.S. retailers and apparel manufacturers, such as J.C. Penney Co. Inc., Gap Inc., Limited Brands Inc. and Fifth & Pacific Inc.
The ISA program is a partnership between Customs, the Consumer Product Safety Commission and importers to ensure product safety compliance. Murphy said developing more “trusted partners” will be a goal for the center.
While trade facilitation is the top priority of the center, another big focus area is enforcement. Of the total number of counterfeit seizures by federal authorities in fiscal year 2012, 59 percent was apparel, footwear and textiles, Murphy said.
“That is a big area of concern for the industry and also for CBP,” she said. “From time to time, we see false preferential claims, which undermines the integrity these trade agreements.”
Another enforcement area is evasion of duties under free-trade preferences. The average duty on imported products is 17 percent, and the revenue collected on fashion merchandise accounts for 48 percent of all duties collected by CBP.
“There are some schemes to evade duty submission, such as misclassification of products and undervaluation, and that is going to be another enforcement area the center will focus on,” she said.
Julia Hughes, president of the U.S. Association of Importers of Textiles and Apparel, said apparel importers welcome the streamlining of import processing.
“There have been port inconsistency problems,” Hughes said. “If one port interprets the rules differently than others, it creates havoc. In the old system, the port director had the final say. By changing the structure, the center is where the decisions will be made.”
For example, companies can run into problems with free-trade agreement rules and interpretations by different Customs officials.
“What happens is the cargo is released, but Customs can send a bill for duties later that you did not anticipate when you set the price for products and when you budgeted for the year,” Hughes said.
Building a direct and central chain of command could cut down on the “inconsistencies,” she added.
Stephen Lamar, executive vice president of the American Apparel & Footwear Association, said there are high expectations in the industry that some of the problems importers face will be addressed in the new center.
“Some companies might have the same products brought into two different ports and they get a post-entry review of the exact same item at two different ports, which represents a lot of duplication,” Lamar said.
Another problem that some companies face are rules at some ports to inspect a certain number of apparel shipments, regardless of whether the importer is a “trusted partner” and has already gone through the rigors of qualifying for Customs’ programs.
“The CEE will try to concentrate all of the best practices in place and run all decision making through that,” Lamar said. “So people won’t have to reinvent the wheel each time they bring in products.”