By  on August 2, 2011

WASHINGTON — A bipartisan group of House lawmakers reintroduced legislation Monday night that would close enforcement loopholes leading to textile import fraud by directing U.S. Customs and Border Protection to add more inspectors at 15 U.S. ports and launch a yarn and fabric tracking system.

Led by co-sponsors Reps. Larry Kissell (D., N.C.) and Walter Jones (R., N.C.), the bill, dubbed the “Textile Enforcement and Security Act of 2011” would also require the publication of a list of companies that violate trade laws, establish a new textile and apparel manufacturing registry and provide Customs with the authority to adjust bonds higher on new importers (those with under three years of import history) based on new risk assessment guides.

Sen. Kay Hagan (D., N.C.) is expected to introduce a companion bill in the Senate when Congress returns from a month-long recess after Labor Day, according to a spokeswoman with the National Council of Textile Organizations.

“Our industry and its workers have seen job losses due to Customs fraud grow dramatically over the last decade as unscrupulous importers and producers have progressively discovered the loopholes in our enforcement rules and regulations,” said Cass Johnson, president of NCTO. “At the same time, U.S. Customs has significantly reduced resources dedicated to fighting textile fraud.”

The bulk of the fraud is carried out when foreign manufacturers use phony affidavits — often copies of certificates — from legitimate U.S. textile companies to falsely claim their yarn or denim fabric was made in the U.S. when it was actually produced in China or other countries. That allows them to take advantage of duty free benefits under U.S. trade pacts such as the Central American Free Trade Agreement and the North American Free Trade Agreement, which require U.S. or regional fabric and yarn content.

“These schemes cost textile jobs at home while also cheating the U.S. government out of more than $1 billion in uncollected duties and penalties every year,” Johnson said.

The legislation faces some opposition from importers.

“Certainly, proposals to eliminate smuggling and illegal activities are something we would support…but we are not willing to support efforts to create new requirements, new authorizations and additional examinations for textile and apparel products [in this bill],”said Julia Hughes, president of the U.S. Association of Importers of Textiles and Apparel.

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