From Russia With Love
Port investigates transshipping claims on goods from Russia
It’s not exactly a James Bond tale, but it does involve smuggling and foreign lands.
U.S. customs officials inspecting containers of goods unloaded at the Port of Los Angeles and the Port of Long Beach have been scrutinizing apparel imported from Russia. Officials believe some of the apparel has actually been manufactured in China.
Los Angeles importers of clothing coming from the former communist country have been seeing their goods sit in local warehouses for months while officials verify documentation and certificates of origin and often try to check in with Russian officials to make sure factories really exist. Sources said there are hundreds of containers waiting to be cleared.
“I think customs believes this is the next natural place for any unlawful transshipment [from China],” said Richard Wortman, a Los Angeles customs attorney who has been trying to get a client’s $2 million worth of knit tops and bottoms from Russia cleared through customs ever since the goods were unloaded on Aug. 4. He said he has the appropriate documentation showing the goods were made in Russia.
“Based on customs’ conduct, they must believe nothing is made there if they are stopping every single shipment,” he said.
Los Angeles is only the most recent area where customs officials have cracked down on apparel coming from Russia, which has no apparel quota restrictions to the United States. The sweep started on the East Coast and extended to Southern California this summer.
“We started cracking down on it about a year ago,” said Janet Labuda, director of the textile enforcement and operations division of the U.S. Bureau of Customs and Border Protection in Washington, D.C. “The way things are going, they are shipping port to port. We started examining Los Angeles about two months ago.”
Labuda said she believes most of the apparel carrying Russian labels is made in China. “It’s a variety of apparel—it doesn’t seem to be one particular category,” she noted.
While no one would reveal the names of the Los Angeles importers waiting for goods tagged from Russia, several people said they believe the apparel is headed to major discount- retail chains that rely on low prices to bring in customers.
Terror and trade
The Bureau of Customs and Border Protection (CBP) has always cracked down on the illegal transshipment of apparel and textile goods. But ever since the terrorist attacks on Sept. 11, imports have been under a higher level of scrutiny. Customs officials are not only looking for smuggled apparel items but are also searching for bombs and weapons of mass destruction that could be hidden inside metal containers.
Last year, the CBP created a new system that asks importers to ensure the security of the entire supply chain, from point of origin to final destination. The system is part of the Customs-Trade Partnership Against Terrorism [CTPAT] initiative that began on April 17, 2002. Customs normally does not question the origins of goods from importers and manufacturers enrolled in CTPAT because those importers and manufacturers should be familiar with their overseas clothing plants. But not all importers and manufacturers are enrolled in the C-TPAT program.
As China has grown to be a major apparel supplier to the United States, many factories have been quickly using up their annual quotas. The result is that some have been devising ingenious ways to circumvent U.S. quota restrictions by sending their Chinese-made garments to other countries, where new labels are sewn on before goods are shipped to the United States. This could be the case with goods coming from Russia, according to customs officials. China and Russia share a common border.
Or, officials said, manufacturers could be sewing “Made in Russia” labels into goods at Chinese factories and then creating false documents that say the goods were made in Russia— even though they never entered that country.
“If I were customs, I would stop goods coming from Russia,” said Robert Krieger, president of Norman Krieger Inc., a Los Angeles customs broker and freight forwarder that handles several apparel accounts. “There are a lot of rumors about transshipments going through Russia.”
Krieger noted it is often difficult for customs officials to determine where goods are really sewn. “There is no Russian-made machine that produces a woven or knit garment different from a Chinese machine,” he said.
He still tells his clients to have extensive documentation that proves where their imported garments were made to expedite goods through customs in Los Angeles.
This method is in keeping with an announcement the CBP made in early September to its field operations directors. The announcement stated that additional documents will be required for textiles and textile products imported to the United States. “In order for CBP to ascertain if goods are being legally entered into the United States, additional documents may be requested on specific shipments,” stated a Sept. 5 memo written by Labuda.
Labuda noted there are six countries whose apparel exports to the United States have been scrutinized lately. “We have seen stuff saying it was coming from Kenya, South Africa, Maldives, Uzbekistan and Vietnam, but we suspect they are coming from China,” said Labuda, adding that customs seized $20 million in smuggled apparel last year.
Michael Doram, a customs attorney in Pasadena, Calif., said his apparel clients have been seeing the effects of the memo. He said they have been under the gun to provide detailed documentation verifying where their goods were manufactured—especially when those goods have been imported from Russia, any former Soviet country, Swaziland, Cambodia or Vietnam.
“It is really an astonishing amount of data they want,” Doram said. “Customs has decided they should ask not only for the normal extensive paperwork but also for things like timecards from the factory. They want the daily work schedules of the employees who work in the different departments of the factories. They want transit records through different countries.”
Political year
Some customs attorneys claim the Bush administration has put intense pressure on the CBP to crack down on imports.
“A cynic might say it has something to do with the elections,” Doram said.
But Labuda denies that politics have anything to do with the increased scrutiny on imported apparel.
“No way,” she said. “We’ve been cracking down on this stuff for a while.”
