The Textile Enforcement and Security Act (TESA) was introduced in the House of Representatives on May 25th. It will contain more than a dozen measures to help U.S. Customs and Border Protection crack down on customs textile fraud. The legislation is backed by the National Council of Textile Organizations (NCTO), and stated that there has been a sharp increase in illegal trafficking particularly in the Central American Free Trade Zone (CAFTA).

Cass Johnson, president of the NCTO, in testimony to the US House of Representatives Committee on Ways and Means Subcommittee on Trade, said that increasing textile fraud is taking place in trade preference and free trade areas. Johnson testified that Customs and Border Protection (CBP) needs new resources, new direction and new authority to tackle the problem. It is hoped that this action will strengthen the demand for domestic product.

"This has meant good manufacturing jobs leaving this country because our members are losing more and more orders to Asian yarn and fabric producers that are illegally claiming their goods are made in the United States."

Johnson described other impacts that textile fraud is having, stating that the Treasury Department may be losing as much as $1Billion a year because importers are undervaluing apparel products from China or improperly claiming free trade preferences.

Fraudulent schemes occurring around textiles and the free trade areas include:

• 'phony' companies repackaging Pakistani and Chinese yarns as US yarns;

• undervaluation of Chinese apparel in order to avoid duty payments;

• a flood of Chinese denim through the United States into Mexico illegally claiming duty-free preferences under NAFTA.

Source:Tala Bulletin