Textile execs demand action on CAFTA textile enforcement
In testimony before the Small Business Committee, NCTO member companies, past Customs senior staff and government investigative agencies called on the Congress and the Administration to overhaul the textile enforcement effort in the CAFTA and other trade preference areas as textile fraud has soared to new levels.
Harding Stowe, Chairman of RL Stowe Mills, testified that his third generation textile company, the oldest in the country, was forced to close in January after Customs failed to act after Pakistani and Chinese yarn supplies surged into the CAFTA region falsely labeled as yarns made in the United States. 550 Stowe employees lost their jobs.
Stowe noted that his company supplied US Customs with regular information on which companies were using the illegal yarns and where the yarns were coming from but that Customs did not act. Stowe hosted President Bush in 2005 at his now shuttered Belmont, North Carolina plant in order to support the CAFTA effort after the administration promised tough enforcement action against illegal Chinese shipments.
Dan Nation, President of Parkdale Mills, the largest yarn spinner in the United States, testified that Parkdale Mills has been forced to lay off 1,200 employees as yarn fraud has increased throughout the CAFTA region. Nation testified that Parkdale regularly sees false affidavits of US origin being used for Chinese and Pakistani yarns and noted that CAFTA qualifying exports of a number of types of garments are far larger that the yarn actually produced in US and CAFTA yarn mills. Nation cited NCTO figures that show that seven US yarn plants have shut down over the last year simply because of the CAFTA/NAFTA yarn fraud.
Dick Crichton, a retired senior Customs officer with more than 40 years experience in textile and apparel fraud, testified that importers have been using increasingly sophisticated methods to get around trade preference rules and outlined twelve steps that Customs should take to crack down on illegal textile fraud.
Loren Yager of the General Accountability Office cited continuing resource restraints in the textile and apparel area that limit the ability of the government to enforce free trade agreement rules and confirmed that the movement of Customs to the Department of Homeland Security had created a de-emphasis on trade enforcement.
In submitted testimony, Cass Johnson, President of NCTO, noted that the textile industry support for CAFTA was predicated on commitments from the government that textile enforcement in the region would be strong but that the government quickly took steps after the agreement passed to de-emphasize enforcement.
Johnson cited figures that show importers filing trade preference claims only stand a one in one thousand chance of having their preference paperwork looked at and that total revenue charges by Customs for illegal claims of preference were only $2.2 million out of nearly $12 billion in preference claims last year (or two one-hundredths of a percent).
Johnson noted that NCTO has been meeting with Customs and other government agencies to look at ways to improve customs efforts and described two part plan to refocus, re-staff and retool Customs textile enforcement capabilities.
National Council of Textile Organizations