Senators Hagan And Graham Introduce Legislation To Combat Textile Fraud, Save Textile Jobs

WASHINGTON — October 13, 2011 — Earlier this week, Senator Kay Hagan (D-NC) and Senator Lindsey
(R-SC) reintroduced the Textile Enforcement and Security Act (TESA), S.1683, in the Senate. The
TESA legislation seeks to increase U.S. Customs and Border Protection enforcement activities as
well as trade facilitation through improved targeting, increased resources, and enhanced authority.

“We greatly appreciate Senator Hagan and Senator Graham for reintroducing this important
piece of legislation,” said Cass Johnson, President, and National Council of Textile Organizations.
“The integrity and enforcement of our trade preference programs, including free trade agreements,
is a pivotal issue for our industry which has seen illegal activity increase dramatically over the
last five years,” added Johnson.

“Over the last year, our industry has been opening plants and adding jobs throughout the
Southeast. However, the increasing levels of trade fraud occurring puts those jobs at risk and our
businesses in jeopardy. We applaud Senators Hagan and Graham for taking the first step and we call
on the Senate to address this issue which dramatically impacts our manufacturing base in the United
States,” said Bill Jasper, Chairman & CEO, Unifi, Inc. (Chairman, NCTO).

NCTO reports that the schemes that illegal exporters use to commit textile fraud are exactly
the same as those use to evade countervailing duties and dumping orders. These schemes have also
been the focus of House and Senate hearings during the last year. Goods are illegally transshipped,
undervalued or mislabeled. Often times phony companies will reinvent themselves as ‘new’ companies
to avoid being caught by U.S. Customs and Border Protection.

Customs efforts on textile fraud have been plagued by a lack of resources, declining staffing
and increasing sophistication of fraudulent schemes. While Customs finds an average non-compliance
rate of 40 percent in overseas factories it visits, Customs issued only 43 penalties for textile
fraud last year out of five million shipments. According to some estimates, up to one billion
dollars in federal revenue is lost through the fraudulent schemes used to evade textile duties.

The TESA legislation addresses many of the industry’s key concerns by providing U.S. Customs
with expanded authority to better target these goods, while also giving them additional tools and
resources to increase their commercial enforcement efforts and reduce the prevalence of fraud that
is occurring and damaging the U.S. textile industry sector.

The House version, H.R. 2754, was introduced in August 2011 by Congressmen Larry Kissell
(D-NC), Howard Coble (R-NC), and Walter Jones (R-NC). The House version currently has 19

Posted on October 18, 2011

Source: NCTO