California Apparel News

The headaches have already begun when it comes to importing apparel from China.

Since the middle of January, U.S. customs officials in Los Angeles started stopping almost all shipments of fine-gauge, knit-to-shape sweaters, a special category not subject to quota restrictions.

To get the goods through customs, officials are asking all importers to produce sweater panels that show that all parts of the top were knit to shape and linked and looped rather than sewn in order to qualify for this quota-free status.

That sounds simple, but the problem is this: Chinese New Year started on Jan. 29 and many Chinese factories are closed for one to two weeks. That makes it difficult for importers to get a sample of a sweater panel from the factory. It seems it would be easy for customs officials to just look at a garment and see whether it qualifies under the various rules of import. But apparently it is very difficult to look at a finished knit-to-shape garment and determine whether it is looped or not. It has to be dissected, which results in the sweater unraveling.

Consequently, scores of apparel importers are worried about delivering their goods to retailers on time.

“There are a lot of people right now stuck at the port,” said Robert Krieger, president of Norman Krieger Inc., a Los Angeles freight forwarder and customs broker.

One of those people is Richard Hirsh, co-CEO of John Paul Richard Inc., a $110 million apparel maker in Calabasas, Calif., whose labels Fever and John Paul Richard are carried in major department stores across the country. “Our fine-gauge shipments are getting held up,” the apparel executive confirmed. “We are working with our customs broker to supply customs with actual production samples of what are in the boxes to prove they are knit-to-shape.”

Hirsh had some pre-production samples at his Southern California office, which means he hasn’t had to wait for his Chinese factory to send him examples. But the goods, which are in John Paul Richard’s Spring and Summer collections, have waited weeks to clear the customs hurdle.

The delay is making Hirsh a tad nervous because the goods are supposed to be delivered to retailers between Feb. 28 and March 30. “Any hold-up represents a concern with the way the retail business environment is these days. You don’t have a lot of time for goods to sit around.” Many department stores start imposing charge-backs, or fines, on manufacturers who deliver late.

Paul Davril Inc., a 32-year-old apparel and sourcing company in Los Angeles that has the license to make Kenneth Cole sportswear and Ecko Red womenswear, has a shipment of 600 fine-gauge, knit-to-shape sweaters waiting to clear customs. The problem, said John Clark, Paul Davril’s vice president of import production administration, is that the quota regulations were written so narrowly that almost nothing qualifies as fine-gauge, knit-to-shape sweaters.

Clark said he is thinking about getting new documents from the Chinese factories that produced the garments so they will be classified as cotton knit tops, which are subject to quotas that haven’t been filled yet.

The only catch is Clark will have to buy quota visas from the Chinese to reclassify the goods, adding to the cost of the tops.

Quota quandary

All these quota problems started at the beginning of 2005, when all apparel and textile quotas between the 149 members of the World Trade Organization disappeared. This cleared the way for seemingly endless imports of textiles from China.

But when domestic manufacturers complained last year that a flood of Chinese-made goods were threatening their livelihood, the U.S. government started imposing safeguard measures, or temporary quotas, on various clothing categories. The unpredictability of when clothing categories would be embargoed led to the United States and China establishing a more comprehensive agreement in November.

After several rounds of negotiations, the United States and China agreed that 34 categories of apparel and textiles would be subject to quotas until the end of 2008. Those items under quota include bras, cotton-knit shirts, cotton trousers, man-made fiber knit shirts, man-made fiber trousers, men’s and boys’ wool suits, socks, swimwear, sweaters and underwear.

However, a narrow exemption to the sweater quota was carved out after a push by a group of Hong Kong manufacturers. The two sides agreed that fine-gauge, knit-to-shape sweaters made of cotton and man-made fibers, made on flat-knitting machines, would not fall under quota restrictions. To qualify, the sweaters must have between nine and 18 stitches per two centimeters. All the components in the sweaters must be knit-to-shape and looped and linked, including the side seam and pocket.

However, these guidelines have been creating more questions than answers. Importers are wondering if you can add trim to the bottom of the sweater or which sections can be sewn to gain quota-free status.

“Goods are being stopped because very few of these sweaters do not require quota visas,” noted Janet Labuda, director of textile enforcement and operations for U.S. Customs and Border Protection. “We want to make sure that goods requiring the quota visas are not slipping through the cracks.”

Because of the questions surrounding this issue, customs executives, trade officials and importers huddled in New York on Feb. 6 to determine which elements would be included in this category. They are expected to make an announcement the week of Feb. 13 on the new regulations.

Insiders say those new regulations will probably allow cutting along lines of demarcation. Trimming will be permitted. Components will have to be linked and looped. Over-lock stitching and minor stitching for finishing and reinforcement purposes, such as creating a V-neck, will be allowed. Also, non-knit embellishments and accessories, such as appliqueacute;s, embroidery, buttons and zippers, are expected to be permitted.

Meanwhile, customs attorneys and customs brokers have been busy trying to prove these sweaters can enter the country without being subject to quotas. “Los Angeles customs people want a sample of the unassembled knitted panels to prove this category. Failure to provide that prohibits entry,” said Los Angeles customs attorney Richard Wortman. “But with the Chinese New Year, people are stuck. It is stopping the whole class of merchandise from even entering.”

Los Angeles customs attorney Brian Murphy noted that the lack of detailed information surrounding this special category has made importing these sweaters a challenge. “There is a lot of uncertainty and holding up of trade,” he said. “Customs officials are very, very busy.”