California Apparel News

In late March, U.S. customs officials working at the Port of Newark in New Jersey confiscated $1 million worth of Chinese-made knit sweaters packaged in boxes marked as toys.

Soon after, the U.S. Bureau of Customs and Border Protection started scrutinizing knit-to-shape sweaters being imported into the United States, said Janet Labuda, director of the Textile Enforcement and Operations Division of U.S. Customs and Border Protection. The ports of Los Angeles and Long Beach, Calif., are high on that inspection list.

Labuda was in Los Angeles on May 18 speaking to California Fashion Association members about how customs officials are handling textile and apparel imports this year and what will happen next year.

This year quotas are scarce because, with the phase-out of quotas for World Trade Association members set for 2005, importers can’t borrow against the next year’s allotment of quotas, as they have in the past. Labuda said she expected this year to be the “Year of Shenanigans” as overseas manufacturers found clever ways to get around quotas and duties.

“Some of the things we are dealing with are smuggling, counterfeit documents, overseas factories not allowing us access to inspect them, and the inability by importers to support their transactions with documents,” said the customs official, who is based in Washington, D.C.

Next year probably won’t be any easier for customs officials even though import quotas between World Trade Organization members will disappear after Jan. 1, 2005. Many are worried the Chinese will flood the U.S. market with cheap apparel.

“I don’t know how the Chinese will react next year,” Labuda said. “Will the flood gates open and everything will come in or will the Chinese continue to transship and say, ’Look, we are really being very balanced and restrained and you really don’t have to put any safeguard measures on us.’”

Under WTO regulations, safeguard measures may be imposed against Chinese imports if U.S. manufacturers feel the Chinese are flooding the market with those goods and disrupting domestic production.

Currently there are safeguard measures restricting the import of knit fabric, brassieres and dressing gowns. Those safeguards expire at the end of this year but can be renewed up until the end of 2008.

Labuda said that more safeguard measures will surely be enacted next year, but it will be about six to eight months before they are implemented. That leaves many manufacturers who source overseas wondering what kinds of prices they should expect next year.

In addition to safeguard measures, anti-dumping charges are expected to be filed against China early next year. Again, it will probably take at lease nine months to enact those charges.

While U.S. importers are wondering about 2005, U.S. customs officials are busy making sure that goods are not brought into the country illegally. Starting on May 10, customs officials began scrutinizing knit sweaters imported from three countries. Labuda would not name those countries, but said the inspections will last until June 9.

Previously customs officials were stopping socks imported from 22 different countries.

Knit sweaters popped up on customs’ radar screen after U.S. officials negotiating a free trade agreement with Australia noticed that country allegedly shipped $226 million worth of sweaters to the United States. Surprised Australian negotiators said they only had capacity to ship directly $17 million of sweaters and joined U.S. customs officials in the investigation.

Meanwhile, Labuda expects transshipments to continue next year as large apparel producers try to skirt tariffs and avoid safeguard measures. —Deborah Belgum