A troubling decline in U.S. government enforcement activities against predatory trade practices from China and others has pushed the U.S. textile and apparel industry to its tipping point.
This industry that I represent is a vital manufacturing sector producing a broad range of components for consumer goods, critical items such as personal protective equipment, and military products, but it is facing a severe crisis—one that needs an immediate multi-agency government solution.
In fact, the dire situation for this critical domestic manufacturing sector recently prompted a bipartisan group of senators, led by Senator Thom Tillis (R-N.C.) and Senator Sherrod Brown (D-Ohio) to call on President Biden to immediately convene an interagency meeting and develop a strategic plan to combat illegal trade practices.
Related Stories
In their letter, the senators outline a number of concerns regarding a plethora of unfair trade practices ranging from slave labor in supply chains to fraudulent origin claims to a gaping loophole in U.S. trade law known as “de minimis” that is facilitating illegal trade.
The senators call on the administration to take the following specific actions:
— Step up enforcement of forced labor-subsidized textiles and apparel flooding into the U.S. market from Asia as well as fraudulent origin claims under free trade agreements
— End duty-free treatment under de minimis for textiles and clothing made with forced labor
— Review all executive authorities to hold China accountable for its predatory trade practices
Without immediate increased enforcement, this essential domestic supply chain is facing imminent danger.
Decline in customs enforcement of the UFLPA
Despite the intense global scrutiny around apparel supply chains containing products made with slave labor, and the implementation of the Uyghur Forced Labor Prevention Act, or UFLPA, which bans tainted cotton products made with forced labor from entering the U.S. market, U.S. Customs and Border Protection (CBP) enforcement of these shipments is minuscule in relation to the extent of the problem and the amount of global imports of apparel, footwear and textiles.
Key Facts:
— The average number of CBP detentions of textile, apparel and footwear shipments per month is down 50 percent by value ($1.7 million vs $3.5 million) and 24 percent by average monthly shipment count (53.8 vs 70.4) in 2023 compared to 2022.
— Although UFLPA specifically identifies cotton as a high-priority sector, other sectors have seen much greater levels of scrutiny by CBP. From June 2022 through August 2023, CBP has subjected 2,412 shipments of electronics equating to $1.5 billion to UFLPA reviews. Only 923 shipments of textiles, apparel and footwear equating to $39 million were reviewed for UFLPA.
— For scale, total U.S. imports of textile, apparel and footwear totaled $184 billion in 2022, and only $39 million in shipments were detained for possible UFLPA violations over the last 15 months.
Astoundingly, the chances of a vessel in water being struck by lightning are greater (1 in 1,000) than CBP reviewing any of its textiles/apparel/footwear contents for UFLPA violations (1 in 5,000). The odds are even greater for a large cargo ship.
Given that 20 percent of the world’s cotton is grown in Xinjiang and 72 percent of cotton-based apparel in China is made of Xinjiang cotton, we should be seeing stopped shipments multiple times a day for vast quantities of cotton-containing apparel from China and elsewhere. But we aren’t seeing the enforcement expected and needed to counter this predatory trade behavior that is undermining and crippling U.S. manufacturers as a result.
Further, apparel imports from Vietnam are skyrocketing, primarily made of Chinese cotton yarn and fabrics that are being imported and made into apparel then shipped into the U.S. market, crippling our domestic industry. Additional scrutiny must be paid to shipments from secondary markets, like Vietnam, which are helping mask and facilitate illegal and subsidized trade.
Perhaps even more baffling is the fact that CBP was allocated $101 million to enforce bans on forced labor products yet their enforcement in the textile and apparel sector has weakened, not strengthened. This raises questions as to why more testing isn’t being done to ensure compliance with UFLPA since the resources have already been allocated.
Free-trade agreement false origin claims
Meanwhile, customs enforcement of imports under free trade agreements has inexplicably declined substantially in recent years.
In FY 2022, CBP’s illegal transshipment verifications resulted in a total of 38 visits (a combination of semi-virtual and on-site inspections) versus a total of 139 visits in FY 2018, which reflects CBP activity in a pre-pandemic year.
In addition, the amount of commercial fraud penalties levied were just $2.5 million for FY 2022 compared to $19 million in FY 2018.
If Customs aggressively stepped-up enforcement activities targeting textile fraudulent claims—aimed at bypassing U.S. trade agreement rules and gaining duty-free access to our market—and other enforcement activities, our industry’s business would rebound.
De minimis loophole is facilitating illegal trade
At the same time, nearly 3 million shipments per day are entering the U.S. market largely uninspected and duty free through a legal loophole in U.S. trade law that is not only facilitating the exportation of goods made with slave labor but also undermining the UFLPA legislation designed to curb and eliminate slave labor in our supply chains.
If the administration does not act quickly, China and others will continue taking advantage of the duty-free access afforded under our free trade deals and de minimis as a workaround to UFLPA and other safeguards the government has put in place.
With the support of an inter-agency task force, a strategic plan and increased enforcement, we can thrive for the long term as an industry that is vital to the backbone of this economy and the health and national security of this nation.
Kim Glas is the president and CEO of the National Council of Textile Organizations and is the former Deputy Assistant Secretary for Textiles and Apparel at the U.S. Department of Commerce.
