News From the
Committee on Small Business
Subcommittee on Rural Development, Entrepreneurship & Trade
Heath Shuler , Chairman

For Immediate Release                       CONTACT:  Small Business Committee Press Office
June 18, 2009                                                          202-226-3636

Smuggled Textiles, Clothing Products Undercutting U.S. Producers, Costing Jobs

WASHINGTON, D.C. — Lax customs enforcement is letting overseas companies smuggle illegal textiles and apparel into the U.S. at a rate that is decimating U.S. textile manufacturers and costing American jobs, witnesses told a Congressional panel today.  Legislators called on U.S. Customs and Border Protection (CBP) to do more to stem the flow of illegal goods coming into the country at a hearing of the House Small Business Committee’s Subcommittee on Rural Development, Entrepreneurship and Trade.

“If the average person can track an overnight package from a home computer, then Customs can do more to stem the tide of illegal goods that is devastating our textile industry,” Subcommittee Chairman Heath Shuler (D-NC) said.  “U.S. companies and thousands of hardworking Americans are counting on Customs to step up and adequately enforce our import laws.”

CBP is responsible for inspecting textile products and ensuring they are imported into the U.S. legally, in accordance with appropriate tariffs.  However, witnesses told the Committee that in recent years textile enforcement has plummeted.  Between 2007 and 2008, the value of commercial fraud penalties dropped by 93 percent.  In addition, the number of overseas factories inspected by CBP has dropped precipitously. 

As CBP’s enforcement activities have dropped off, the U.S. textile industry has been forced to shed jobs.    Between 2002 and 2007 employment at textile mills declined from 409,000 to 130,000. At today’s hearing, one witness representing a North Carolina-based yarn spinning company testified that effective border enforcement could have prevented 1,200 job losses at the company’s facilities across the Southeast.  In light of these stark facts, Shuler and other members of the Subcommittee said that CBP needs to rededicate itself to effectively enforcing trade laws.

“Small business textile producers in the U.S. follow the rules, but unbalanced trade policies and weak customs enforcement are forcing them to compete on an unfair playing field,” Shuler said.  “The textile industry is facing enough challenges without having their prices undercut by criminal products that are smuggled in from abroad.”

Dishonest foreign textile manufacturers have been known to use free trade agreements like the Central American Free Trade Agreement (CAFTA) to dodge U.S. tariffs.  For example, Chinese businesses can ship T-shirts to a country that has a free trade agreement with the U.S., like Peru.  Once there, smugglers can change the product’s label to indicate it was made in Peru and then ship the merchandise into the U.S., duty-free.

“It is no coincidence that after the implementation of CAFTA, we saw a spike in illegal textile trafficking,” Shuler added.  “Not only are agreements like CAFTA a bad deal for the American worker by shipping jobs offshore, but they serve as convenient camouflage for those who want to break our import laws.”

North Carolina is home to over 1,500 textile complex facilities with 130,000 employees, the top textile-mill employer in the nation. As with textile production throughout the nation, the state’s textile industry and apparel manufacturers have flagged in recent years. More than 100,000 North Carolina textile industry jobs were eliminated, according to the U.S. Bureau of Labor Statistics, from 1997 to 2002.

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Click here for video of the hearing.