CSMS Message: 98-000243

TO : ALL ABI BROKERS.

FROM : CARLA ZZ-DONOFRIO

SUBJECT : TEXTILE TRANSSHIPMENT REPORT

DATE : 03/20/98

MARCH 20, 1998

TO : ALL PORT DIRECTORS, CUSTOMS MANAGEMENT CENTER
(CMC) DIRECTORS AND STRATEGIC TRADE CENTER (STC)
DIRECTORS

PASS TO : ALL IMPORT SPECIALISTS NATIONAL IMPORT SPECIALISTS,
ENTRY OFFICERS, INSPECTORS, INTERNATIONAL TRADE
SPECIALISTS AND OTHER INTERESTED PARTIES

SUBJECT: TEXTILE TRANSSHIPMENT REPORT SUBMITTED TO CONGRESS
ON MARCH 10, 1998

TABLE OF CONTENTS

PAGES

I. EXECUTIVE SUMMARY PAGE 2

II. INTRODUCTION PAGE 4

III. GOAL PAGE 8

IV. THE STRATEGY PAGE 9

V. ACTIONS AND RESULTS PAGE 11

A. TEXTILE TRANSSHIPMENT TEAM PAGE 11

B. TEXTILE CLEARINGHOUSE PAGE 12

C. HONG KONG AND MACAU INITIATIVES PAGE 15

D. PARTNERSHIP WITH INDUSTRY PAGE 18

E. INTERNAL CONTROL ASSESSMENTS PAGE 19

F. PRODUCTION VERIFICATION TEAM VISITS PAGE 21

G. PORT OF ENTRY ACTIVITY PAGE 22

H. OFFICE OF INVESTIGATIONS PAGE 23

I. LINKS WITH INTELLIGENCE COMMUNITIES PAGE 25

J. 592A LIST OF FOREIGN ENTITIES PAGE 26

K. BOND SUFFICIENCY PAGE 27

L. ELVIS PAGE 28

M. TRANSSHIPMENT TRAINING PAGE 29

I. EXECUTIVE SUMMARY

MORE THAN $54.3 BILLION OF TEXTILES AND TEXTILE PRODUCTS
WERE IMPORTED FROM MORE THAN 180 COUNTRIES, TERRITORIES
AND INSULAR POSSESSIONS INTO THE UNITED STATES IN 1997.

THE UNITED STATES HAS SOUGHT TO CONTROL THE IMPORTS OF
THESE PRODUCTS BY ESTABLISHING BILATERAL AGREEMENTS
UNDER THE ARRANGEMENTS REGARDING INTERNATIONAL TRADE IN
TEXTILES (COMMONLY REFERRED TO AS MULTIFIBER
ARRANGEMENTS OR MFA).

CURRENTLY THERE ARE QUOTA RESTRICTIONS FOR 47 COUNTRIES.
THE TOTAL TEXTILE IMPORTS FROM THESE COUNTRIES IN 1997
WAS $39.3 BILLION.

CUSTOMS CONCERN IS ILLEGAL TRANSSHIPMENT WHICH OCCURS
WHEN THERE IS A FALSE DECLARATION ON IMPORTED
MERCHANDISE AS TO COUNTRY OF ORIGIN.

THE GOAL FOR THE UNITED STATES CUSTOMS SERVICE WITH
REGARD TO ILLEGAL TRANSSHIPMENT OF TEXTILES AND TEXTILE
PRODUCTS IS TO ENSURE THAT GOODS WHICH HAVE BEEN
ILLEGALLY TRANSSHIPPED TO CIRCUMVENT QUOTA AND
ADMISSIBILITY REQUIREMENTS DO NOT ENTER THE UNITED
STATES.

A NATIONAL STRATEGY FOR FY 1998 HAS BEEN DEVELOPED WHICH
OUTLINES SPECIFIC ACTIONS AND INITIATIVES TO ENSURE THIS
GOAL IS ACCOMPLISHED IN AN INTEGRATED, COORDINATED, AND
PROACTIVE MANNER.

A NUMBER OF ACTIONS HAVE BEEN INSTITUTED INCLUDING:

ESTABLISHING A NATIONAL, MULTI-DISCIPLINE TEXTILE
TRANSSHIPMENT TEAM, WHICH IS RESPONSIBLE FOR ENSURING
A
COORDINATED EFFORT TO IDENTIFY AND SOLVE THE
TRANSSHIPMENT PROBLEM.

ESTABLISHING A TEXTILE CLEARINGHOUSE, WHICH SERVES AS
THE NATIONAL CUSTOMS CENTER FOR ALL TEXTILE DATA
ANALYSIS, RESEARCH AND INFORMATION.

INITIATING A SERIES OF ACTIONS AIMED AT REDUCING THE
RISK OF ILLEGAL TEXTILE TRANSSHIPMENT THROUGH HONG
KONG AND MACAU. RESULTS HAVE INCLUDED PUBLICATION OF
NAMES OF HONG KONG FACTORIES CONVICTED OF
TRANSSHIPMENT AND DETENTION OF OVER $100 MILLION
WORTH OF GOODS AT THE PORTS OF ENTRY.

WORKING IN PARTNERSHIP WITH DOMESTIC INDUSTRY AND THE
INTERNATIONAL TRADE COMMUNITY TO SECURE THEIR
COOPERATION IN AND SUPPORT FOR CUSTOMS EFFORTS.

ESTABLISHING AN INTERNAL CONTROL PROGRAM FOR
PREVENTION OF TRANSSHIPMENT IN WHICH THE OFFICE OF
REGULATORY AUDIT ASSESSES INTERNAL SYSTEMS USED BY
IMPORTERS TO ENSURE CORRECT ORIGIN OF IMPORTED
MERCHANDISE.

SENDING TEXTILE PRODUCTION VERIFICATION TEAMS (TPVT'
S) TO 11 COUNTRIES AND ONE INSULAR POSSESSION.
RESULTS INCLUDED IDENTIFICATION OF $52.6 MILLION
WORTH OF TRANSSHIPPED GOODS AND $12.6 MILLION IN
COUNTERFEIT VISAS.

PUBLISHING THE NAMES OF FOREIGN ENTITIES WHO HAVE
BEEN ISSUED PENALTIES UNDER 19 U.S.C. 1592. THERE
HAS BEEN A SIGNIFICANT REDUCTION IN IMPORT ACTIVITY
FROM THOSE ENTITIES.

CONDUCTING TRANSSHIPMENT TRAINING IN 9 FOREIGN
COUNTRIES AND FOR 13 U.S. CUSTOMS PORTS OF ENTRY.

I. INTRODUCTION

THE UNITED STATES IMPORTED MORE THAN $54.3 BILLION OF TEXTILES AND
TEXTILE PRODUCTS FOR CONSUMPTION DURING CALENDAR YEAR 1997.1
IMPORTS HAVE BEEN DOCUMENTED AS ORIGINATING FROM MORE THAN 180
COUNTRIES, TERRITORIES, AND INSULAR POSSESSIONS.

ARRANGEMENTS REGARDING INTERNATIONAL TRADE IN TEXTILES, COMMONLY
REFERRED TO AS MULTIFIBER ARRANGEMENTS (MFA), REGULATE TRADE IN
TEXTILES AND TEXTILE PRODUCTS AMONG MANY COUNTRIES. APPROXIMATELY
$48.4 BILLION OF THE TEXTILES AND TEXTILE PRODUCTS IMPORTED DURING
CALENDAR YEAR 1997 WERE SUBJECT TO MFA.2 THE UNITED STATES
GOVERNMENT HAS SOUGHT TO CONTROL THE IMPORTATION OF THIS
MERCHANDISE BY ESTABLISHING BILATERAL TEXTILE AGREEMENTS UNDER
MFA. CURRENTLY 47 COUNTRIES HAVE QUOTA RESTRAINT LEVELS ON SOME
PORTION OF THEIR TRADE WITH THE UNITED STATES IN TEXTILES AND
TEXTILE PRODUCTS. THE TOTAL TEXTILE TRADE FROM THESE COUNTRIES IN
1997 WAS $39.3 BILLION.3

BAHRAIN BANGLADESH BRAZIL
BULGARIA CHINA COLOMBIA
COSTA RICA CZECH REPUBLIC DOMINICAN REPUBLIC
EGYPT EL SALVADOR FIJI
GUATEMALA HAITI HONG KONG
HONDURAS HUNGARY INDIA
INDONESIA JAMAICA KENYA
KOREA KUWAIT LAOS
MACAU MACEDONIA MALAYSIA
MAURITIUS MEXICO MYANMAR
NEPAL OMAN PAKISTAN
PHILIPPINES POLAND QATAR
ROMANIA RUSSIA SINGAPORE
SLOVAK REPUBLIC SRI LANKA TAIWAN
THAILAND TURKEY UNITED ARAB EMIRATES
UKRAINE URUGUAY (U.A.E.)

THE COMMITTEE FOR THE IMPLEMENTATION OF TEXTILE AGREEMENTS (CITA)
WAS ESTABLISHED IN 1972 BY EXECUTIVE ORDER 11651 (7 U.S.C. 1854
NOTE) TO SUPERVISE THE IMPLEMENTATION OF ALL TEXTILE TRADE
AGREEMENTS. THAT EXECUTIVE ORDER ALSO AUTHORIZED THE CHAIRMAN OF
CITA TO TAKE OR RECOMMEND ACTIONS, AS MAY BE NECESSARY, TO
IMPLEMENT SUCH AGREEMENTS. THE TEXTILE TRADE AGREEMENTS ARE
NEGOTIATED BY A TEAM LED BY THE U.S. TRADE REPRESENTATIVE (USTR).
THE UNITED STATES CUSTOMS SERVICE (CUSTOMS), IN ACCORDANCE WITH
EXECUTIVE ORDER 12475 (7 U.S.C. 1854 NOTE) AND THE POLICY GUIDANCE
PROVIDED BY CITA, HAS BEEN AN ACTIVE PARTICIPANT IN MONITORING AND
ENFORCING THE TEXTILE IMPORT PROGRAM. CUSTOMS HAS ALSO SERVED AS
A TECHNICAL ADVISOR TO CITA AND USTR.

OVER THE YEARS, CUSTOMS HAS APPROACHED ENFORCEMENT OF THESE
AGREEMENTS USING A VARIETY OF METHODS. THESE INCLUDE, BUT ARE NOT
LIMITED TO: USING MULTI-DISCIPLINARY, IN-COUNTRY TEXTILE
PRODUCTION VERIFICATION TEAMS TO VERIFY AND INVESTIGATE SPECIFIC
ALLEGATIONS OF QUOTA
VISA EVASION; AUTOMATING QUOTA TRANSACTIONS;
EXAMINING SHIPMENTS AND THEIR CORRESPONDING DOCUMENTS; ANALYZING
DATA TO TARGET ILLEGAL TRANSSHIPMENT; SAMPLING FOR LABORATORY
ANALYSIS; AND CONDUCTING DOMESTIC AS WELL AS FOREIGN
INVESTIGATIONS.

TRANSSHIPMENT AS COMMONLY USED IN INTERNATIONAL TRADE IS A NORMAL
BUSINESS ARRANGEMENT, WHICH CONSISTS OF GOODS PASSING THROUGH A
SECOND COUNTRY, PORT OR TERRITORY. TRANSSHIPMENT CAN BE LEGAL OR
ILLEGAL. CUSTOMS CONCERN IS ILLEGAL TRANSSHIPMENT, WHICH OCCURS
WHEN THERE IS A FALSE DECLARATION ON IMPORTED MERCHANDISE AS TO
COUNTRY OF ORIGIN. THE TERM "TRANSSHIPMENT" IN THIS REPORT REFERS
TO ILLEGAL TRANSSHIPMENT AS USED IN THE CUSTOMS SENSE.

QUOTA RESTRAINTS LIMIT ACCESS TO THE WORLD'S LARGEST CONSUMER
MARKETS FOR TEXTILES AND TEXTILE PRODUCTS, INCLUDING THE UNITED
STATES. TRANSSHIPMENT HAS BECOME AN ECONOMICALLY VIABLE SOLUTION
IN THOSE COUNTRIES WHERE FACTORIES CAN AND DO PRODUCE MORE THAN
THEY CAN LEGALLY SHIP TO THESE MARKETS BECAUSE OF QUANTITY
RESTRAINTS. TRANSSHIPMENT IS A DIFFICULT PROBLEM TO ATTACK
BECAUSE CUSTOMS IS TRYING TO PROVE AN ECONOMIC CRIME IN A FOREIGN
COUNTRY WHERE THERE ARE EFFORTS TO KEEP FACTORIES OPEN AND
GENERATE INCOME THROUGH EXPORTS, DESPITE QUOTA RESTRAINTS.

TRANSSHIPMENT IS OF PARTICULAR CONCERN TO THE DOMESTIC TEXTILE
INDUSTRY. THE FOLLOWING SIX PARAGRAPHS REPRESENT THE INDUSTRY
VIEW AS EXPRESSED BY THE AMERICAN TEXTILE MANUFACTURERS INSTITUTE
(ATMI) ON JANUARY 26, 1998:

EFFORTS BY CUSTOMS TO DETECT AND INTERDICT TRANSSHIPPED
TEXTILES AND TEXTILE PRODUCTS ARE ESSENTIAL TO THE
ECONOMIC WELL-BEING OF THE AMERICAN TEXTILE INDUSTRY AND
ITS 604,000 TEXTILE MILL WORKERS AND 806,000 APPAREL 4
WORKERS AS THEY PREPARE FOR THE COMPLETE ABOLITION OF
QUANTITATIVE RESTRAINTS ON IMPORTS ON JANUARY 1, 2005.
WHILE THE INDUSTRY IS FULLY ENGAGED IN LEARNING TO
OPERATE IN A GLOBAL ENVIRONMENT, THE TRANSITION TO QUOTA-
FREE TRADE WILL NOT BE EASY. THE POTENTIAL FOR
ILLEGALLY TRANSSHIPPED GOODS DURING THIS TRANSITION IS
AN ADDED PROBLEM THAT THE INDUSTRY AND ITS WORKERS DO
NOT WANT TO CONTEND WITH.

IT IS OBVIOUS THAT TRANSSHIPMENT NEGATIVELY IMPACTS A
VARIETY OF INNOCENT PARTIES.

THE ACCESS OF LEGITIMATE IMPORTERS TO FOREIGN
MERCHANDISE IS DIMINISHED WHEN CHARGES AGAINST A QUOTA
ARE MADE FOR TRANSSHIPPED GOODS.

THE ACCESS OF LEGITIMATE EXPORTERS TO THE U.S. MARKET IS
REDUCED WHEN QUOTAS ARE CUT ACROSS THE BOARD FOR
TRANSSHIPMENTS.

MOST SERIOUSLY AFFECTED ARE AMERICAN WORKERS BY VIRTUE
OF THE FACT THAT THE TRANSSHIPPED MERCHANDISE COULD
DIMINISH THE POTENTIAL MARKET FOR DOMESTICALLY
MANUFACTURED PRODUCTS.

BASED ON APPAREL IMPORT PENETRATION OF ABOUT 60 PERCENT,
A REASONABLE ESTIMATE OF ACTUAL U.S. INDUSTRY JOB
DISPLACEMENT IS 40,000 JOBS PER $1 BILLION OF
TRANSSHIPMENT.

SINCE 1990 THE U.S. CUSTOMS SERVICE HAS PERFORMED PRODUCTION
VERIFICATIONS TO IDENTIFY INSTANCES OF TRANSSHIPMENT IN 75
DIFFERENT COUNTRIES, TERRITORIES, AND INSULAR POSSESSIONS.
CHARGES TO THE QUOTA RESTRAINT LEVELS HAVE BEEN CORRECTED TO
REFLECT THE TRUE COUNTRY OF ORIGIN FOR TEXTILES AND TEXTILE
PRODUCTS VALUED AT MORE THAN $736.8 MILLION.

ASSERTIONS AND ALLEGATIONS CONTINUE TO SURFACE INDICATING THAT
TRANSSHIPMENT AND FALSIFICATION OF ORIGIN OF TEXTILES ARE
OCCURRING ON A GLOBAL BASIS. IN 1997, CUSTOMS HAS FOCUSED ITS
EFFORTS ON TEXTILE AND TEXTILE PRODUCTS TRANSSHIPMENT INVOLVING
THE PEOPLES REPUBLIC OF CHINA, THROUGH HONG KONG, MACAU, AND OTHER
COUNTRIES.

WHILE REALIZING MANY SUCCESSES IN ADDRESSING THE TRANSSHIPMENT
PROBLEM, CUSTOMS HAS RECOGNIZED THAT MANY OF ITS TRADITIONAL
METHODS AND ACTIVITIES NEEDED TO BE REASSESSED AND REALIGNED.
CONSEQUENTLY, CUSTOMS HAS DEVELOPED AND IMPLEMENTED NEW APPROACHES
TO SOLVING THE PROBLEM, INCLUDING ESTABLISHING STRONGER LINKS WITH
DOMESTIC INDUSTRY AND OTHER GOVERNMENT AGENCIES. WITH THE CUSTOMS
REORGANIZATION IN FY 1996, THE TEXTILE INDUSTRY WAS IDENTIFIED
AS A PRIMARY FOCUS INDUSTRY AND A MULTI-DISCIPLINARY APPROACH TO
ADDRESSING COMPLIANCE ISSUES WITH THAT INDUSTRY, WITH AN EMPHASIS
ON TRANSSHIPMENT, WAS ESTABLISHED.

ALL CUSTOMS OFFICES ARE INVOLVED. THE OFFICES OF STRATEGIC TRADE,
FIELD OPERATIONS AND INVESTIGATIONS ARE THE THREE KEY OFFICES
RESPONSIBLE FOR CUSTOMS TRANSSHIPMENT ENFORCEMENT EFFORTS. THE
OFFICE OF STRATEGIC TRADE HAS DEVOTED ALL ITS AVAILABLE TOOLS,
SUCH AS ANALYSIS, COMPLIANCE MEASUREMENT, INTERVENTIONS, PROBLEM
SOLVING INITIATIVES, AND AUDIT TO THIS EFFORT. THE OFFICE OF
FIELD OPERATIONS HAS DEVOTED APPROXIMATELY ONE THIRD OF ITS IMPORT
SPECIALIST WORKFORCE TO TEXTILE IMPORTS. THE OFFICE OF
INVESTIGATIONS HAS APPLIED INNOVATIVE APPROACHES IN THE
APPLICATION OF CRIMINAL INVESTIGATION TECHNIQUES TO TEXTILE
TRANSSHIPMENT, INCLUDING INTRANSIT AND INBOND VIOLATIONS.

III. GOAL

IN JUNE 1997, THE COMMISSIONER AND DEPUTY COMMISSIONER OF CUSTOMS
SPONSORED A TEXTILE TRANSSHIPMENT PROBLEM SOLVING SESSION.
PARTICIPANTS INCLUDED KEY MANAGERS FROM THE OFFICES OF CHIEF
COUNSEL, FIELD OPERATIONS, INVESTIGATIONS (INCLUDING CUSTOMS
ATTACHES), REGULATIONS AND RULINGS, INTERNATIONAL AFFAIRS, AND
STRATEGIC TRADE. IN ADDITION, PRESENTATIONS WERE MADE BY
REPRESENTATIVES FROM THE OFFICE OF THE UNITED STATES TRADE
REPRESENTATIVE AND THE DEPARTMENT OF COMMERCE, OFFICE OF TEXTILES
AND APPAREL.

AT THAT SESSION, THE OVERALL GOAL FOR THE CUSTOMS SERVICE WITH
REGARD TO TRANSSHIPMENT WAS CLEARLY DEFINED AS ENSURING THAT
GOODS, WHICH HAVE BEEN ILLEGALLY TRANSSHIPPED TO CIRCUMVENT QUOTA
RESTRICTIONS AND ADMISSIBILITY REQUIREMENTS, DO NOT ENTER THE
COMMERCE OF THE UNITED STATES. THIS GOAL CLEARLY IMPACTS THE U.S.
PORTS OF ENTRY. WHEN THERE IS A QUESTION AS TO THE COUNTRY OF
ORIGIN, CUSTOMS OFFICERS HAVE TO OBTAIN MORE INFORMATION REGARDING
THE ORIGIN OF THE GOODS AND EXCLUDE MERCHANDISE FOR WHICH THE
SATISFACTORY LEVEL OF PROOF IS NOT AVAILABLE.

THERE ARE ALSO IMPLICATIONS FOR FOREIGN GOVERNMENTS AND THEIR
SELF-POLICING EFFORTS. WORKING WITH FOREIGN GOVERNMENTS TO
ESTABLISH A STRONG ENFORCEMENT POSTURE WITH REGARD TO ILLEGAL
TEXTILE TRANSSHIPMENT IS A MAJOR FOCUS FOR CUSTOMS. IF COUNTRIES
CAN STOP TEXTILES AND TEXTILE PRODUCTS FROM BEING ILLEGALLY
TRANSSHIPPED THROUGH THEIR BORDERS, OR ENSURE THAT GOODS HAVE THE
CORRECT COUNTRY OF ORIGIN MARKING BEFORE EXPORTATION TO THE UNITED
STATES, THEN A MAJOR IMPACT CAN BE MADE. IN ADDITION, THE USE OF
THE ELECTRONIC VISA INFORMATION SYSTEM (ELVIS), THE COMPARISON OF
FOREIGN COUNTRY EXPORT DATA TO U.S. IMPORT DATA, UNANNOUNCED
FACTORY VISITS, ANALYSES OF OVER-SHIPMENTS HELP TO SUPPORT THE
GOAL BY REDUCING INSTANCES WHERE COUNTERFEIT DOCUMENTS COULD BE
USED TO TRANSSHIP TEXTILES AND TEXTILE PRODUCTS ILLEGALLY.

IV. THE STRATEGY

CUSTOMS HAS DEVELOPED A NATIONAL STRATEGY TO ENSURE THAT EFFORTS
TO PREVENT ILLEGALLY TRANSSHIPPED MERCHANDISE FROM BEING ENTERED
INTO THE COMMERCE OF THE UNITED STATES ARE CARRIED OUT IN AN
INTEGRATED, COORDINATED, UNIFORM AND EFFECTIVE MANNER. THE
STRATEGY BUILDS UPON SUCCESSFUL TECHNIQUES WHICH HAVE BEEN USED IN
THE PAST TO ADDRESS TRANSSHIPMENT. IT ALSO INCLUDES NEW,
PROACTIVE APPROACHES AND MEASURES WHICH WILL ENABLE CUSTOMS TO
IDENTIFY POTENTIAL TRANSSHIPMENT THREATS AND BE MORE AGGRESSIVE
AND SUCCESSFUL IN ADDRESSING THESE AREAS BEFORE THEY BECOME MAJOR
PROBLEMS.

THE MAJOR COMPONENTS OF THE STRATEGY INCLUDE:

ESTABLISHING A NATIONAL TEXTILE TRANSSHIPMENT TEAM
RESPONSIBLE FOR ENSURING A COORDINATED EFFORT TO
IDENTIFY AND ADDRESS THE TRANSSHIPMENT PROBLEM.

ESTABLISHING A TEXTILE CLEARINGHOUSE AT THE NEW YORK
STRATEGIC TRADE CENTER, WHICH SERVES AS THE NATIONAL
CUSTOMS CENTER FOR ALL TEXTILE DATA ANALYSIS, RESEARCH
AND INFORMATION.

INITIATING INVESTIGATIONS OF EGREGIOUS TEXTILE VIOLATORS
TO DETER ILLEGAL IMPORTATIONS OF TEXTILES AND TEXTILE
PRODUCTS.

OBTAINING INFORMATION AND DOCUMENTATION FROM VARIOUS
FOREIGN GOVERNMENTS ON THEIR INTERNAL CONVICTIONS,
PENALTIES AND INVESTIGATIONS ON TEXTILE TRANSSHIPMENT.
THIS INFORMATION IS USED BY CUSTOMS IN A VARIETY OF
WAYS, INCLUDING PUBLIC NOTIFICATION, INFORMED COMPLIANCE
EFFORTS AND ENFORCEMENT ACTIONS.

WORKING TO ESTABLISH PARTNERSHIPS WITH COUNTRIES TO
DEVELOP SELF-POLICING PROGRAMS AND TO ENCOURAGE THEM TO
MEET THEIR COMMITMENTS UNDER THESE PROGRAMS.

WORKING WITH U.S. GOVERNMENT REPRESENTATIVES, INCLUDING
CITA AND USTR, TO SHARE INFORMATION, ASSIST IN TARGETING
AND ENCOURAGE CONTINUED AND REGULARLY SCHEDULED FOLLOW-
UP REPORTS.

ESTABLISHING PARTNERSHIPS WITH BOTH DOMESTIC INDUSTRY
AND THE INTERNATIONAL TRADE COMMUNITY TO MAXIMIZE
COMPLIANCE WITH IMPORT REQUIREMENTS FOR TEXTILES AND
TEXTILE PRODUCTS AND SECURE THEIR FULL COOPERATION IN
AND SUPPORT FOR CUSTOMS EFFORTS. THIS HAS INCLUDED THE
DEVELOPMENT OF A TOOLKIT OF "BEST PRACTICES" FOR TEXTILE
IMPORTERS.

V. ACTIONS AND RESULTS

THE TEXTILE INDUSTRY IS ENORMOUS BOTH IN TERMS OF IMPORTATIONS AND
DOMESTIC CONSUMPTION. THE ISSUE OF TEXTILE ORIGIN HAS BEEN THE
LINCHPIN OF EACH BILATERAL AGREEMENT BETWEEN THE UNITED STATES AND
ITS FOREIGN COUNTERPARTS. IMPROVING COMPLIANCE IN AN INDUSTRY
THIS LARGE WILL HAVE SIGNIFICANT IMPACT ON RAISING THE OVERALL
IMPORT COMPLIANCE LEVEL AND SUPPORT THE UNDERPINNINGS OF THE
BILATERAL AGREEMENTS.

AS DESCRIBED BELOW, THE CUSTOMS SERVICE HAS INSTITUTED A SERIES OF
ACTIONS TO ADDRESS TRANSSHIPMENT:

A. TEXTILE TRANSSHIPMENT TEAM

THE NATIONAL TEXTILE TRANSSHIPMENT TEAM WAS CREATED TO COORDINATE
U.S. CUSTOMS EFFORTS TO ENFORCE THE BILATERAL TEXTILE AGREEMENTS
AND IDENTIFY AND ATTACK TRANSSHIPMENT. MEMBERS OF THIS TEAM
REFLECT KEY DISCIPLINES WITH RESPONSIBILITY AND ACCOUNTABILITY IN
ACHIEVING CUSTOMS GOALS WITH REGARD TO TEXTILE TRANSSHIPMENT. IT
IS COMPOSED OF REPRESENTATIVES FROM THE OFFICES OF STRATEGIC
TRADE, FIELD OPERATIONS, INVESTIGATIONS, AND CHIEF COUNSEL. THIS
TEAM REPORTS DIRECTLY TO THE COMMISSIONER AND MAINTAINS TIES TO
THE OFFICE OF THE U.S. TRADE REPRESENTATIVE, CITA AND
REPRESENTATIVES FROM DOMESTIC INDUSTRY AND THE IMPORTING
COMMUNITY.

THE FOLLOWING ARE SOME OF THE ACTIONS AND INITIATIVES IN WHICH THE
TEAM HAS BEEN INVOLVED DURING 1997:

DEVELOPING THE CUSTOMS TEXTILE TRANSSHIPMENT STRATEGY
FOR FY 1998, WHICH OUTLINES SPECIFIC ACTIONS AND INITIATIVES
TO ADDRESS ILLEGAL TEXTILE TRANSSHIPMENT.

RAISING THE BOND REQUIREMENTS FOR TEXTILE IMPORTERS TO 2
PERCENT OF THE VALUE OF THEIR TEXTILE IMPORTS, UP TO A 5
PERCENT CEILING FOR THOSE IMPORTERS DEALING WITH
EXPORTERS IDENTIFIED AS HIGH RISK FOR TEXTILE
TRANSSHIPMENT.

EXTENDING THE AUTOMATIC LIQUIDATION OF ENTRY SUMMARIES
FROM 90 DAYS TO 10-ONE HALF MONTHS TO ENSURE CUSTOMS HAS
SUFFICIENT TIME TO ADDRESS ADMISSIBILITY ISSUES.

WORKING WITH REPRESENTATIVES FROM THE GOVERNMENTS OF
HONG KONG AND MACAU TO ENSURE OPTIMUM COOPERATION WITH
REGARD TO INFORMATION SHARING AND SELF-POLICING OF
POTENTIAL ILLEGAL TEXTILE TRANSSHIPMENT.

ESTABLISHING A PROCESS TO ENSURE THAT THE NAMES OF
FACTORIES IN HONG KONG WHICH HAVE BEEN CONVICTED BY THE
HONG KONG COURTS, AND THE NAMES OF FACTORIES IN MACAU
WHICH HAVE BEEN ASSESSED PENALTIES BY THE MACAU
GOVERNMENT, ARE PUBLISHED BY U.S. CUSTOMS AS HAVING BEEN
INVOLVED IN ILLEGAL TEXTILE TRANSSHIPMENT. IN 1997, THE
NAMES OF 30 HONG KONG FACTORIES AND 14 MACAU FACTORIES
WERE PUBLISHED.

PARTICIPATING AS TECHNICAL ADVISORS TO THE CHIEF TEXTILE
NEGOTIATOR FOR THE NEGOTIATION OF THE BILATERAL TEXTILE
AGREEMENT WITH THE PEOPLES REPUBLIC OF CHINA.

PARTICIPATING AS TECHNICAL ADVISORS IN CONSULTATIONS
WITH THE GOVERNMENTS OF MACAU, CAMBODIA, THE
PHILIPPINES, PAKISTAN, CANADA, INDONESIA AND THE
EUROPEAN UNION.

MAKING PRESENTATIONS TO VARIOUS IMPORTING ASSOCIATIONS
(E.G., UNITED STATES ASSOCIATION OF IMPORTERS OF
TEXTILES AND APPAREL, NATIONAL RETAIL FEDERATION)
REGARDING UPDATES ON CUSTOMS EFFORTS INVOLVING
TRANSSHIPMENT.

B. TEXTILE CLEARINGHOUSE

THE TEXTILE CLEARINGHOUSE IS LOCATED IN THE NEW YORK STRATEGIC
TRADE CENTER (STC). THE CLEARINGHOUSE IS DESIGNED TO INTEGRATE
THE EXPERTISE, PRODUCTS AND RESULTS OF ACTIVITIES OF ALL CUSTOMS
DISCIPLINES REGARDING TEXTILES AND TEXTILE PRODUCTS.

THE NEW YORK STC IS IN A UNIQUE POSITION TO SERVE AS THIS NATIONAL
CENTER. IT HAS RESPONSIBILITY FOR TEXTILES AS A PRIMARY FOCUS
INDUSTRY. IT IS COLLOCATED WITH TWO MAJOR TEXTILE PORTS OF ENTRY,
AN AIRPORT AND A SEAPORT; A MAJOR SPECIAL AGENT-IN-CHARGE OFFICE
WITH EXPERIENCE IN TEXTILE INVESTIGATIONS AND A SIGNIFICANT AREA
INTELLIGENCE UNIT; AND THE NATIONAL COMMODITY SPECIALIST DIVISION,
WHICH IS A CRITICAL LINK FOR THE OFFICE OF REGULATIONS AND RULINGS
FOR TEXTILE ISSUES.

BECAUSE THE CLEARINGHOUSE IS THE NATIONAL CUSTOMS TEXTILE CENTER,
IT RECEIVES, ANALYZES AND LINKS INFORMATION FROM A WIDE VARIETY OF
INTERNAL AND EXTERNAL SOURCES, INCLUDING DATA FROM THE CUSTOMS
AUTOMATED COMMERCIAL SYSTEM (ACS), PORT INFORMATION, TEXTILE
PRODUCTION VERIFICATION TEAM (TPVT) RESULTS, COMPLIANCE ASSESSMENT
AND OTHER REGULATORY AUDIT REVIEWS, CURRENT AND EMERGING INDUSTRY
TRENDS, AND OTHER GOVERNMENT AGENCY INFORMATION. ALL OF THIS
INFORMATION IS USED TO IDENTIFY THE SCOPE AND EVALUATE THE
SIGNIFICANCE OF TEXTILE ISSUES AND PROVIDE ANALYTICAL SUPPORT FOR
NATIONAL AND PORT INITIATIVES.

THE CLEARINGHOUSE SERVES A WIDE RANGE OF INTERNAL AND EXTERNAL
CUSTOMERS WITH AN ARRAY OF PRODUCTS AND SERVICES. INTERNAL
CUSTOMERS RANGE FROM PORT PERSONNEL, TO CUSTOMS ATTACHES, TO
HEADQUARTERS EXECUTIVES. EXTERNAL CUSTOMERS INCLUDE OTHER
GOVERNMENT AGENCIES, TRADE AND INDUSTRY REPRESENTATIVES, AND
CONGRESSIONAL INTERESTS.

ANALYTICAL SUPPORT INVOLVES THE PRESENTATION OF STRATEGICALLY
FOCUSED PRODUCTS WHICH IDENTIFY SIGNIFICANT IMPORT TRENDS AND
CHANGES WHICH MAY WARRANT NATIONAL ACTION OR SUPPORT POLICY
DECISIONS AND NEGOTIATIONS BETWEEN GOVERNMENTS. MORE DETAILED,
TACTICAL SUPPORT IS PROVIDED TO HEADQUARTERS AND THE FIELD, AND
INCLUDES MANUFACTURER TARGETS FOR TPVT'S, ANALYSIS IN RESPONSE TO
PORT REQUESTS IN SUPPORT OF TRANSACTION AND ACCOUNT LEVEL
PROCESSING, AND COUNTRY ANALYSIS FOR CUSTOMS ATTACHES.

ANALYSES AND PRODUCTS OF THE CLEARINGHOUSE DURING THE PAST YEAR
INCLUDE:

ANALYSIS OF IMPORT ACTIVITY FROM HONG KONG AND MACAU TO:
(1) LINK IMPORTS FROM CONVICTED AND SUSPECTED
TRANSSHIPPERS BY CATEGORY, IMPORTER AND PORT; (2)
PROVIDE CATEGORY AND MANUFACTURER LEVEL ANALYSIS
TARGETS FOR IN-COUNTRY VERIFICATION VISITS; (3) IDENTIFY
SIGNIFICANT INCREASES, DECREASE OR OTHER IMPORT TRENDS
AND, (4) SUPPORT NEGOTIATIONS REGARDING THE TWO
COUNTRIES' EFFORTS TO ADDRESS TRANSSHIPMENT PROBLEM.

AN ANALYSIS OF TEXTILE IMPORTS FROM COUNTRIES,
IDENTIFIED AS HIGH RISK, TO SUPPORT THE TEXTILE
TRANSSHIPMENT TEAM IN FORMULATING FY 98 NATIONAL TEXTILE
TRANSSHIPMENT PLAN AND IN SELECTING FY 98 TARGETS FOR
TPVT'S.

DETAILED COUNTRY ANALYSES, WITH CATEGORY AND
MANUFACTURER TARGETS, IN SUPPORT OF TPVT VISITS TO
COUNTRIES SUCH AS HONG KONG, MACAU, AND JAMAICA. THE
RESULTS OF THESE IN-COUNTRY VISITS ARE ANALYZED TO
MONITOR AND ASSESS ACTIVITY OF CONFIRMED-SUSPECTED
TRANSSHIPPERS.

MONITORING AND ANALYZING THE ACTIVITY OF THE FOREIGN
ENTITIES PUBLISHED IN THE 592A LIST IN THE FEDERAL
REGISTER AS HAVING VIOLATED 19 U.S.C. 1592.

COUNTRY SPECIFIC ANALYTICAL SUPPORT FOR CUSTOMS ROLE AS
TECHNICAL ADVISOR IN BILATERAL NEGOTIATIONS WITH THE
PEOPLES REPUBLIC OF CHINA, AND IN CONSULTATIONS WITH
MACAU, CAMBODIA, AND THE PHILIPPINES.

A VISIT BY TWO INTERNATIONAL TRADE SPECIALISTS TO HONG
KONG IN DECEMBER 1996 TO DISCUSS TEXTILE DATA AND TRENDS
IN VIEW OF THE HONG KONG INITIATIVE. AS A RESULT,
DURING 1997 THE CLEARINGHOUSE HAS BEEN INVOLVED IN A
DATA EXCHANGE AND RECONCILIATION PROGRAM WITH THE HONG
KONG TRADE DEPARTMENT. THE PROJECT GOAL IS TO FOSTER
TRADE DATA EXCHANGE AND SHARE ANALYTICAL APPROACHES AND
TECHNIQUES. KEY MEMBERS OF THE HONG KONG TEAM VISITED
THE NEW YORK STC IN DECEMBER 1997 TO LEARN ABOUT THE
CLEARINGHOUSE AND TO REFINE POTENTIAL PROJECTS FOR THIS
PROGRAM.

IN ADDITION TO ANALYTICAL SUPPORT, THE CLEARINGHOUSE MAINTAINS
INFORMATION, DATA AND REPORTS FROM A WIDE VARIETY OF EXTERNAL AND
INTERNAL SOURCES, INCLUDING COMPLIANCE ASSESSMENT AND OTHER AUDIT
REPORTS, IMPORTER AND COUNTRY PROFILES, TRADE AND INDUSTRY
PUBLICATIONS, INFORMATION FROM ACADEMIC INSTITUTIONS AND OTHER
GOVERNMENT AGENCIES. IN SHORT, THE CLEARINGHOUSE HAS PROVIDED "
ONE STOP SHOPPING" FOR ALL CUSTOMS OFFICES AS IT RELATES TO
TEXTILE INDUSTRY ISSUES.

THE ESTABLISHMENT OF THE TEXTILE CLEARINGHOUSE RESULTED IN THE
DEVELOPMENT OF A SINGLE, UNIFORM, AND CONSISTENT APPROACH IN THE
ACQUISITION, MANIPULATION AND ANALYSIS OF DATA. THE CUSTOMS
AUTOMATED COMMERCIAL SYSTEM WAS IDENTIFIED AS THE PRIMARY DATA
SOURCE. AN EXTENSIVE TEXTILE DATABASE WAS ESTABLISHED BY THE
CLEARINGHOUSE AND INCLUDES ALL ENTRY SUMMARY LINE DATA FROM 1995
TO PRESENT. USING A SINGLE, SYSTEMATIC ANALYTICAL APPROACH AND
STANDARDIZING THE TYPE OF DATA TO BE ANALYZED ENSURES CONSISTENCY
IN DATA COLLECTION AND ANALYSIS AND ESTABLISHES ACCURATE AND
CONSISTENT BASELINES FOR COMPARISON.

THE MOST FREQUENTLY USED ANALYTICAL APPROACH IS TO START FROM A
BROAD PERSPECTIVE AND WORK TOWARD FINER FOCUSED TARGETS AND
ISSUES. BEGINNING AT THE COUNTRY LEVEL, TEXTILE IMPORT TRENDS
WITHIN SPECIFIC COUNTRIES ARE ANALYZED TO IDENTIFY SIGNIFICANT
INCREASES, SURGES OR SHIFTS IN IMPORTS. THIS LEADS TO A MORE
DETAILED LEVEL ANALYSIS OF ACTIVITY BY COUNTRY, CATEGORY,
MANUFACTURER, VALUE, VOLUME OR TIME PERIOD TO IDENTIFY SIGNIFICANT
SHIFTS, UNUSUAL PATTERNS, OR ANOMALIES. THE GOAL OF THIS APPROACH
IS NOT JUST TO IDENTIFY SIGNIFICANT CHANGES, BUT ALSO TO DETERMINE
THE RELEVANCE OF THOSE CHANGES IN RELATION TO THE TOTAL TRADE
WITHIN A COUNTRY AND THE RELATIONSHIP TO OR IMPACT ON GLOBAL
ACTIVITY OR TRADING PATTERNS.

C. HONG KONG AND MACAU INITIATIVES

IN RESPONSE TO THE CONTINUED ALLEGATIONS FROM THE DOMESTIC
INDUSTRY, THE IMPORTING COMMUNITY AND OTHER GOVERNMENT AGENCIES
THAT MUCH OF THE TEXTILE AND WEARING APPAREL EXPORTED FROM HONG
KONG IS ILLEGALLY TRANSSHIPPED, U.S. CUSTOMS HOSTED A TEXTILE
TRANSSHIPMENT CONFERENCE IN WASHINGTON, D.C., IN APRIL 1996. AS A
RESULT OF THIS CONFERENCE, A SERIES OF ACTIONS WAS IMPLEMENTED
WHICH WERE AIMED AT REDUCING THE RISK OF ILLEGAL TEXTILE
TRANSSHIPMENT FROM THE PEOPLES REPUBLIC OF CHINA THROUGH HONG KONG
AND MACAU. THESE ARE DESCRIBED IN DETAIL UNDER THE HONG KONG
INITIATIVE AND MACAU INITIATIVES SECTIONS OF THIS REPORT. WHILE
THESE ACTIONS BEGAN LATE IN 1996, THE GREATEST IMPACT WAS ACHIEVED
IN 1997.

HONG KONG INITIATIVE

ON JUNE 17, 1996, BECAUSE OF THE INABILITY TO VERIFY THE ORIGIN OF
THE TEXTILES, U.S. CUSTOMS ESTABLISHED SINGLE ENTRY BOND
REQUIREMENTS AND ADDITIONAL DOCUMENTATION REQUIREMENTS (AN
ORIGINAL SIGNATURE FROM HONG KONG MANUFACTURERS ON TEXTILE
DECLARATION AND CERTIFICATION BY IMPORTER DECLARING THE ACCURACY
OF THE TEXTILE DECLARATION) ON 10 TEXTILE CATEGORIES (351 -
NIGHTWEAR, 352-652 - UNDERWEAR, 336-636 - DRESSES, 342-442-642 -
SKIRTS, AND 443-643 - SUITS).

ON JUNE 24, 1996, CITA AUTHORIZED CUSTOMS, CONSISTENT WITH 19 CFR
12.130(G) TO DENY ENTRY OF TEXTILE AND TEXTILE PRODUCTS WHEN THE
COUNTRY DECLARED TO BE THE COUNTRY OF ORIGIN DOES NOT PERMIT
CUSTOMS TO CONDUCT AN ON-SITE VERIFICATION OF PRODUCTION OF
TEXTILES AND TEXTILE PRODUCTS.

ON JULY 2-3, 1996, A MEETING WAS HELD IN WASHINGTON, D.C. WITH THE
U.S. CUSTOMS DEPUTY COMMISSIONER AND BOTH CUSTOMS AND TRADE
DEPARTMENT OFFICIALS FROM HONG KONG TO DISCUSS THE PROBLEM. IN
ARGUING AGAINST THE ADDITIONAL ENTRY REQUIREMENTS, THE OFFICIALS
FROM HONG KONG EXPLAINED THEIR SYSTEMS FOR COMBATING ILLEGAL
TRANSSHIPMENT, INCLUDING A NEWLY ESTABLISHED PROGRAM CALLED THE
PRODUCTION NOTIFICATION SYSTEM (PNS), AND REITERATED THEIR
DETERMINATION TO INTENSIFY THEIR EFFORTS. THE PNS PROGRAM IS
DESIGNED TO REQUIRE MANUFACTURERS TO NOTIFY THE HONG KONG TRADE
DEPARTMENT OF THE COMMENCEMENT OF GARMENT PRODUCTION TO ENABLE
REAL TIME VERIFICATION OF PRODUCTION. ANYTIME DURING THIS
MANUFACTURING PROCESS, THE FACTORY MAY BE VISITED BY HONG KONG
CUSTOMS AND EXCISE TO VERIFY PRODUCTION. HONG KONG CUSTOMS AND
EXCISE, UNDER THE CONSIGNMENT AND FACTORY INSPECTION SYSTEM (CFI),
CONDUCTS INSPECTIONS ON FACTORY BASIS, AND IF NECESSARY, PUTS
FACTORIES WHERE INDICATIONS OF TRANSSHIPMENT ARE UNCOVERED UNDER
THE FACTORY AUDIT CHECK (FAC). UNDER THE FAC, FACTORY OPERATIONS
ARE REVIEWED OVER AN EXTENDED PERIOD OF TIME TO ENSURE THAT
TRANSSHIPMENT HAS NOT INVOLVED OTHER PREVIOUS EXPORTS.

THE ISSUE OF U.S. CUSTOMS VERIFICATION TEAM VISITS WAS A MAJOR
TOPIC OF DISCUSSION AND DEBATE. (HONG KONG CUSTOMS AND EXCISE HAS
REFUSED TO AGREE TO ANY TYPICAL PRODUCTION VERIFICATION TEAM
VISITS ^ONE WHICH HAS ACCESS TO THE CORPORATE BOOKS AND RECORDS
TO HONG KONG FACTORIES TO VERIFY PRODUCTION.) ON AUGUST 15, 1996,
AFTER A NUMBER OF INFORMAL MEETINGS, THE U.S. CUSTOMS COMMISSIONER
ACCEPTED THE HONG KONG CUSTOMS COMMISSIONER'S INVITATION TO ALLOW
U.S. CUSTOMS OFFICERS TO ACT AS OBSERVERS IN THE FOREIGN
MANUFACTURING FACILITIES TO EVALUATE THE EFFECTIVENESS OF THE NEW
PNS, CFI AND FAC SYSTEMS.

IN, HONG KONG CUSTOMS AND EXCISE CONDUCTED 2,248 FACTORY VISITS
UNDER THE CFI. ONE HUNDRED AND SEVENTY-NINE (179) ILLEGAL
TRANSSHIPMENT CASES INVOLVING GOODS DESTINED FOR THE U.S. MARKET
WERE ESTABLISHED FOR THESE VISITS AND THESE CASES ARE NOW BEING
INVESTIGATED AND PROCESSED THROUGH THE HONG KONG COURT OF LAW.5

IN 1997, THE NAMES OF 28 FACTORIES WHICH WERE CONVICTED OF
TRANSSHIPMENT TO THE UNITED STATES WERE PUBLISHED BY THE U.S.
CUSTOMS SERVICE. OBVIOUSLY, THE NUMBER WILL GROW AS THE FACTORIES
FOUND TO BE ILLEGALLY TRANSSHIPPING CONTINUE TO BE PROCESSED
THROUGH THE HONG KONG COURT SYSTEM.

THE TEXTILE CLEARINGHOUSE HAS ANALYZED THE ACTIVITY OF THESE 28
MANUFACTURERS. BASED ON THAT ANALYSIS, OUR ACTIONS HAVE LED TO
THE FOLLOWING RESULTS:

THERE HAS BEEN NO ACTIVITY FOR 23 OF THE 28
MANUFACTURERS SINCE THE CONVICTED FACTORY LIST WAS
PUBLISHED. THE TOTAL VALUE OF SHIPMENTS OF ALL
PUBLISHED MANUFACTURERS DECREASED BY 79 PERCENT OR $5.2
MILLION WHEN COMPARING AUGUST THROUGH NOVEMBER 1997, TO
THE SAME TIMEFRAME DURING 1996.

THE ACTIVITY OF THE LARGEST MANUFACTURER, WHOSE ACTIVITY
ACCOUNTED FOR OVER 24 PERCENT OF THE LIST'S VALUE,
DECREASED BY 91 PERCENT OR $3.7 MILLION IN 1997. THERE
HAVE BEEN NO IMPORTS FROM THIS MANUFACTURER SINCE THE
LIST WAS PUBLISHED.

THE ACTIVITY OF THE SECOND LARGEST MANUFACTURER
DECREASED 63 PERCENT OR $2.3 MILLION IN 1997. THERE HAS
BEEN NO IMPORT ACTIVITY FROM THIS MANUFACTURER SINCE THE
LIST WAS PUBLISHED.

AS A RESULT OF THESE CONVICTIONS, CUSTOMS DETAINED MORE THAN $100
MILLION WORTH OF GOODS FROM ENTERING THE UNITED STATES TO MORE
CLOSELY SCRUTINIZE PRODUCTION DOCUMENTS. THE IMPORTERS HAVE
CONTINUED TO TRANSACT BUSINESS WITH THE CONVICTED FACTORIES AND
THERE IS AN ALERT AT OUR PORTS OF ENTRY TO REQUIRE A GREATER LEVEL
OF PROOF REGARDING THE COUNTRY OF ORIGIN.

THROUGHOUT 1997, U.S. CUSTOMS REPRESENTATIVES HAVE MAINTAINED A
CLOSE AND COOPERATIVE WORKING RELATIONSHIP WITH THEIR COUNTERPARTS
IN HONG KONG CUSTOMS AND EXCISE AND WITH THE HONG KONG TRADE
DEPARTMENT. ANALYSTS FROM BOTH COUNTRIES ARE WORKING ON JOINT
ANALYTICAL PROJECTS IN ORDER TO DETECT, MORE QUICKLY, INSTANCES OF
ILLEGAL TEXTILE TRANSSHIPMENT.

MACAU INITIATIVE

BECAUSE OF CONTINUED ALLEGATIONS OF ILLEGAL TEXTILE TRANSSHIPMENT
INVOLVING MACAU, ON JUNE 5, 1996, U.S. CUSTOMS INSTITUTED SINGLE
ENTRY BOND REQUIREMENTS AND ADDITIONAL INFORMATION REQUIREMENTS ON
WEARING APPAREL SHIPMENTS FOR TARGETED CATEGORIES FROM MACAU. IF
THE TEXTILE DECLARATION WAS NOT COMPLETED OR SIGNED BY THE
MANUFACTURER, SUBCONTRACTOR, AND ANY PARTY INVOLVED IN THE
MANUFACTURE OF THE GOODS AND CERTIFIED BY THE IMPORTER, THE GOODS
WERE TO BE DENIED ENTRY.

MACAU AGREED TO ALLOW A TPVT TO VIEW FACTORY OPERATIONS. U.S.
CUSTOMS OFFICERS VISITED FACTORIES FOR 120 DAYS, FROM JULY-OCTOBER
1996 AND CERTIFIED THE MANUFACTURE OF EACH SHIPMENT, IN THE
TARGETED CATEGORIES, BEFORE EXPORT TO THE UNITED STATES. AS A
RESULT OF CONFIRMING THAT THERE WAS NOT A GREAT DEAL OF
TRANSSHIPMENT OF THE TARGETED CATEGORIES DURING THE 120-DAY
PERIOD, THE SINGLE ENTRY BOND REQUIREMENT WAS REMOVED ON THE
TARGETED GOODS BEING EXPORTED FROM MACAU. THE U.S. CUSTOMS
SERVICE IS CONTINUING TO MONITOR EXPORTS FROM MACAU TO EVALUATE
CONFORMITY WITH THE BILATERAL AGREEMENT.

U.S. CUSTOMS IS WORKING WITH THE MACAU ECONOMIC SERVICES (MES), TO
CONTINUE A PROGRAM OF TPVT VISITS AS WELL AS ESTABLISHING A
PROGRAM OF SELF-POLICING. THE GOVERNMENT OF MACAU HAS AGREED TO
QUARTERLY MEETINGS WITH THE SENIOR CUSTOMS REPRESENTATIVE IN HONG
KONG ON THE ISSUE OF ILLEGAL TRANSSHIPMENT. IN ADDITION, THEY
HAVE AGREED TO SUSPEND THE ISSUANCE OF COUNTRY OF ORIGIN
CERTIFICATES TO THOSE FACTORIES WHICH ARE FOUND TO BE
TRANSSHIPPING. ON THEIR OWN INITIATIVE, IN 1997, MACAU MADE 71
VISITS TO 36 FACTORIES IN THE TARGETED CATEGORIES. TWO OF THESE
FACTORIES HAVE BEEN CLOSED. AN ADDITIONAL 26 FACTORIES WERE
VISITED FOR CATEGORY 239 INFANTS' AND BABY WEAR. THREE OF THESE
FACTORIES CLOSED AND THE ISSUANCE OF THE CERTIFICATE OF ORIGIN WAS
SUSPENDED FOR FOUR OTHER FACTORIES.

D. PARTNERSHIP WITH INDUSTRY

IN 1997, U.S. CUSTOMS ESTABLISHED A PARTNERSHIP WITH THE MAJOR
TEXTILE IMPORTERS AND TRADE ASSOCIATIONS TO MAXIMIZE COMPLIANCE
WITH IMPORTING REQUIREMENTS REGARDING THE ORIGIN OF TEXTILE AND
TEXTILE PRODUCTS AND TO SUPPORT THE BILATERAL TEXTILE AGREEMENT
QUOTA REQUIREMENTS. THE PARTNERSHIP APPROACH HAS PROVIDED THE
TRADE WITH THE OPPORTUNITY AND ABILITY TO CONTINUE TO WORK WITH
CUSTOMS IN ORDER TO MAKE SIGNIFICANT COMPLIANCE IMPROVEMENT, WITH
REGARD TO THE ORIGIN OF TEXTILES AND TEXTILE PRODUCTS.

BOTH THE TRADE AND THE CUSTOMS SERVICE ARE FOCUSED ON SOLVING THE
ROOT CAUSES OF NONCOMPLIANCE. THE PARTNERSHIP APPROACH HAS MADE
THE IMPORTING COMMUNITY REALIZE THAT THEY HAVE A SIGNIFICANT ROLE
TO PLAY IN THIS PROCESS. THIS HAS ELEVATED CUSTOMS MATTERS TO THE
ATTENTION OF SENIOR MANAGEMENT IN THE IMPORTING COMPANIES AND HAS
RESULTED IN RESOURCES BEING ALLOCATED TO IMPROVE THE COMPANIES'
COMPLIANCE PROCESSES. IT IS THE FIRST TIME THAT INDUSTRY HAS
RECOGNIZED AND RESPONDED TO THE SERIOUSNESS OF THE ISSUE OF THE
ILLEGAL TRANSSHIPMENT OF TEXTILE AND TEXTILE PRODUCTS.

INDUSTRY, IN PARTNERSHIP WITH THE CUSTOMS SERVICE, PREPARED A
GUIDE FOR IMPORTERS OF TEXTILE AND TEXTILE PRODUCTS, WHICH
CONSISTED OF THE "BEST PRACTICES" COMPANIES SHOULD USE IN ORDER TO
AVOID DEALING IN ILLEGAL TRANSSHIPPED TEXTILES. INDUSTRY HAS MADE
THIS GUIDE AVAILABLE TO ITS CONSTITUENCY AT A NOMINAL COST IN
ORDER TO ENCOURAGE COMPANIES TO EITHER: (1) REEVALUATE THEIR
INTERNAL CONTROLS TO BE SURE THE CONTROLS THEY HAVE AND THE STEPS
THEY HAVE INSTITUTED ENSURE THAT THEIR MERCHANDISE IS IMPORTED
FROM THE CORRECT COUNTRY OF ORIGIN, OR (2) INSTITUTE STRONG
CONTROLS WHERE CURRENT CONTROLS ARE EITHER WEAK OR NONEXISTENT.

USING THE PRODUCT OF THIS "BEST PRACTICES" EFFORT, THREE LEADING
IMPORTERS OF TEXTILE AND TEXTILE PRODUCTS HAVE MADE MAJOR CHANGES
TO THEIR INTERNAL CONTROLS AND DEVELOPED COMPLIANCE SYSTEMS.

E. INTERNAL CONTROL ASSESSMENTS

UNDER SECTION 484(A) OF THE TARIFF ACT OF 1930 (19 U.S.C. 1484
^A ), AS AMENDED BY THE CUSTOMS MODERNIZATION ACT, THE IMPORTER
HAS THE LEGAL OBLIGATION TO EXERCISE REASONABLE CARE WHEN FILING
WITH CUSTOMS SUCH INFORMATION AS IS NECESSARY TO ENABLE CUSTOMS TO
DETERMINE WHETHER TO RELEASE MERCHANDISE. THE OBLIGATION TO USE
REASONABLE CARE ALSO EXTENDS TO THE IMPORTER'S DECLARATIONS AS TO
VALUE, CLASSIFICATION AND RATE OF DUTY OF IMPORTED MERCHANDISE AND
WHEN FILING ANY OTHER INFORMATION NECESSARY TO ENABLE CUSTOMS TO
ASSESS DUTIES PROPERLY, AND COLLECT ACCURATE STATISTICS. THE
IMPORTER IS RESPONSIBLE FOR PROPERLY DESCRIBING THE IMPORTED
MERCHANDISE, USING PROPER QUOTA CATEGORIES, SHOWING THE CORRECT
COUNTRY OF ORIGIN, ACCOUNTING FOR THE PROPER QUANTITIES AND
DECLARING THE PROPER VALUES.

THE INTERNAL CONTROL PROGRAM FOR THE PREVENTION OF TRANSSHIPMENT
WAS ESTABLISHED BY THE CUSTOMS REGULATORY AUDIT DIVISION AND BEGAN
WITH THE NEED TO HOLD THE IMPORTERS RESPONSIBLE FOR EXERCISING
REASONABLE CARE AS REQUIRED BY THE MODERNIZATION ACT. CUSTOMS
BELIEVES THAT AN ASSESSMENT OF IMPORTERS' INTERNAL CONTROL SYSTEMS
TO ENSURE THE CORRECT ORIGIN OF THEIR MERCHANDISE COMPLEMENTS THE
RESULTS OF TEXTILE PRODUCTION VERIFICATION TEAM REVIEWS OF THE
FOREIGN MANUFACTURERS' RECORDS AT THE FOREIGN FACTORY LOCATIONS.

TEAMS OF IMPORT SPECIALISTS AND AUDITORS WERE FORMED TO CONDUCT
THESE REVIEWS. A SPECIFIC, DETAILED AUDIT PROGRAM WAS DEVELOPED
AND INCLUDED A QUESTIONNAIRE WHICH WAS SENT TO THE FIRST GROUP OF
17 IMPORTERS SELECTED TO BE REVIEWED. THE AUDIT PROGRAM CONSISTS
OF THE FOLLOWING STEPS:

IMPORT SPECIALIST SELECTION OF VARIOUS ENTRIES FROM HONG
KONG AND MACAU WERE BASED ON THE SPECIFIC TARGETED
CATEGORIES.

IMPORTERS ARE ADVISED THAT THEY HAVE BEEN SELECTED FOR
AN INTERNAL CONTROL REVIEW FOR THE PREVENTION OF
TRANSSHIPMENTS. A DATE FOR THE REVIEW IS ESTABLISHED
AND THE IMPORTER IS INFORMED THAT A TWO-PAGE
QUESTIONNAIRE WILL BE MAILED AND THAT THEIR RESPONSES TO
THAT QUESTIONNAIRE WILL BE DISCUSSED ON THE REVIEW DATE.

THE FOLLOWING DOCUMENTS ARE REVIEWED AND VERIFIED AT THE
IMPORTER'S PREMISES AGAINST SPECIFIC IMPORT
TRANSACTIONS: PURCHASE ORDERS, CONTRACTS, COMMERCIAL
INVOICES, FACTORY INSPECTION REPORTS, RATINGS FROM THE
FACTORIES, PROFILES OF FACTORIES (INCLUDING CAPACITY AND
EQUIPMENT), AND PAYMENTS FOR THE MERCHANDISE AND ITS
RELATED QUOTA PAYMENTS.

ONCE THE REVIEW IS COMPLETED, WEAKNESSES FOUND DURING
THE REVIEW ARE DISCUSSED WITH THE IMPORTER AND INCLUDE
RECOMMENDATIONS TO IMPROVE AND STRENGTHEN THEIR INTERNAL
CONTROLS.

AN INITIAL GROUP OF 17 IMPORTERS WAS SELECTED FOR REVIEW UNDER
THIS PROGRAM, BASED ON THE VOLUME OF THEIR IMPORTS IN THE TARGET
CATEGORIES FROM HONG KONG AND MACAU. THE RESULTS OF THESE INITIAL
17 INTERNAL CONTROL ASSESSMENTS ARE AS FOLLOWS:

SEVEN OF THE 17 COMPANIES HAD ADEQUATE INTERNAL CONTROLS
AND WERE NOT USING KNOWN TRANSSHIPPERS.

FIVE OF THE 17 COMPANIES HAD ADEQUATE INTERNAL CONTROLS
BUT WERE FOUND TO BE USING KNOWN TRANSSHIPPERS.

ONE COMPANY WAS FOUND TO HAVE INADEQUATE INTERNAL
CONTROLS, EVEN THOUGH THERE WAS NO EVIDENCE OF
TRANSACTIONS WITH KNOWN TRANSSHIPPERS.

TWO COMPANIES WERE FOUND TO HAVE WEAK INTERNAL CONTROLS
AND A HISTORY OF BEING INVOLVED IN TRANSSHIPMENT.

TWO OF THE INITIAL 17 REVIEWS ARE STILL IN PROCESS.

ADDITIONAL INTERNAL CONTROL REVIEWS OF COMPANIES WHOSE IMPORTS ARE
PRIMARILY FROM HONG KONG AND MACAU WERE CONDUCTED. THE RESULTS
ARE AS FOLLOWS:

EIGHT IMPORTERS WERE FOUND TO HAVE ADEQUATE INTERNAL
CONTROL SYSTEMS.

ONE IMPORTER WAS FOUND TO HAVE INTERNAL CONTROLS, BUT
WAS CONDUCTING BUSINESS WITH A SUPPLIER WHO
SUBCONTRACTED TO A KNOWN TRANSSHIPPER.

TWO IMPORTERS WERE INFORMED THAT THEIR INTERNAL CONTROLS
NEEDED ADDITIONAL REVISIONS.

NINE REVIEWS ARE STILL ONGOING.

CUSTOMS IS CONTINUING TO WORK WITH COMPANIES TO ENSURE COMPLIANCE
IMPROVEMENT PLANS ARE DEVELOPED AND IMPLEMENTED TO ADDRESS
WEAKNESSES IDENTIFIED DURING THESE INTERNAL CONTROL REVIEWS.

F. PRODUCTION VERIFICATION TEAM VISITS

IN 1997 TPVT'S VISITED 11 COUNTRIES AND ONE INSULAR POSSESSION:

BELIZE CANADA GUATEMALA
INDIA JAMAICA KOREA
MAURITIUS NEPAL NORTHERN MARIANAS ISLANDS
(SAIPAN)
PALAU PANAMA PORTUGAL

TPVT MEMBERS ALSO PARTICIPATED IN THE HONG KONG INITIATIVE AS
OBSERVERS DURING VISITS TO 249 HONG KONG FACTORIES. (NOTE SECTION
V, PART C, HONG KONG INITIATIVE, FOR MORE DETAILED INFORMATION.)

SIGNIFICANT RESULTS IN 1997 OF U.S. CUSTOMS SERVICE TPVT VISITS TO
324 FACTORIES AND SUBCONTRACTORS INCLUDED IDENTIFYING $52.6
MILLION IN GOODS TRANSSHIPPED THROUGH CANADA, EL SALVADOR (VISITED
IN DECEMBER 1996), GUATEMALA, HONDURAS (VISITED IN DECEMBER 1996),
JAMAICA, JORDAN (FURTHER DEVELOPED DURING HONG KONG OBSERVER
VISITS FROM INFORMATION FROM JORDAN TPVT VISIT), KOREA, MAURITIUS,
AND PANAMA.

IN SOME INSTANCES, INFORMATION OBTAINED FROM TPVT'S RESULTS IN THE
SEIZURE OF TRANSSHIPPED MERCHANDISE AS WELL AS THE INITIATION OF
INVESTIGATIONS. IN OTHER INSTANCES, TPVT'S OBTAINED INFORMATION
WHICH ASSISTED TEXTILE NEGOTIATIONS BY OTHER AGENCIES TO ESTABLISH
QUOTA LIMITATIONS, THUS PROTECTING U.S. INDUSTRY WHILE PERMITTING
INDUSTRIAL DEVELOPMENT IN DEVELOPING COUNTRIES. FOR EXAMPLE,
KOREA SOUGHT ADDITIONAL QUOTA AS COMPENSATION FOR THE 1996 U.S.
CHANGE IN TEXTILE RULES OF ORIGIN. TPVT VISITS TO 59 FACTORIES
AND SUBCONTRACTORS IN KOREA VERIFIED THAT THERE WERE SIGNIFICANT
DISCREPANCIES BETWEEN THE AMOUNT OF FABRIC SHIPPED AS KOREAN
ORIGIN AND THE AMOUNT OF FABRIC THE FACTORIES ACTUALLY PRODUCED.
KOREA DID NOT RECEIVE ANY QUOTA COMPENSATION.

SOMETIMES INFORMATION OBTAINED BY A TPVT ADDRESSES CONCERNS OF
DOMESTIC INDUSTRY. FOR EXAMPLE, DOMESTIC INDUSTRY EXPERTS
BELIEVED THAT THERE WAS NO PRODUCTION OF SHOP TOWELS IN NEPAL. A
TPVT VISITED SOUTHERN NEPAL TO VERIFY PRODUCTION AND PROVIDED
INFORMATION ON ALL PRODUCERS AND EXPORTERS WHICH WAS USED TO
NEGOTIATE QUOTAS AT THE CORRECT LEVEL FOR NEPAL.

IN OTHER INSTANCES, TPVT'S RESULTED IN SIGNIFICANT DECREASES IN
TEXTILE IMPORTS FROM COUNTRIES FOUND BY THE TPVT'S TO BE MAJOR
TRANSSHIPMENT SITES. FOR EXAMPLE, TPVT'S DETERMINED THAT THERE
WERE FIRMS WITH NO MANUFACTURING CAPABILITY WHICH WERE CLAIMING
COLON FREE TRADE ZONE ORIGIN FOR THEIR EXPORTED GOODS. THESE
FIRMS WERE SIMPLY RELABELING THE GOODS. SINCE THOSE VISITS, VERY
FEW TEXTILE EXPORTERS HAVE BEEN CLAIMING PANAMA, COLON FREE TRADE
ZONE ORIGIN.

THE TPVT'S HAVE ESTABLISHED A COOPERATIVE RELATIONSHIP WITH
FOREIGN GOVERNMENTS TO IDENTIFY TRANSSHIPPED GOODS AND HAVE
PROVIDED INFORMATION TO U.S. AUTHORITIES. CONVERSELY, THE TPVT'S
SOMETIMES PROVIDE INFORMATION TO FOREIGN GOVERNMENTS WHICH PERMIT
THEM TO INITIATE INVESTIGATIONS AND OBTAIN CONVICTIONS. TPVT'S
HAVE ALSO PROVIDED LEADS AND INFORMATION WHICH THE U.S. USES TO
INITIATE FOREIGN INVESTIGATIONS.

G. PORT OF ENTRY ACTIVITY

POLICY AND REGULATIONS RELATING TO THE NATIONAL INITIATIVE TO
PREVENT TRANSSHIPMENT ARE HEADQUARTERS RESPONSIBILITY. HOWEVER,
THE ENTRIES MUST BE STOPPED AT THE PORTS OF ENTRY IN ORDER TO
PREVENT INADMISSIBLE, OR POTENTIALLY INADMISSIBLE, TEXTILES AND
TEXTILE PRODUCTS FROM ENTERING THE COUNTRY AFTER BEING
TRANSSHIPPED. TO DETERMINE WHETHER THE PORTS ARE ACTIVELY
RESPONDING TO THE INITIATIVE, THE PORT DIRECTORS RESPONDED TO
SURVEYS TO DETERMINE THE VALUE OF SEIZURES, DETENTIONS, AND
EXCLUSIONS RELATED TO THE ANTI-TRANSSHIPMENT INITIATIVE AT THEIR
PORTS FOR CALENDAR YEAR 1997. THE RESULTS FOLLOW:

VALUE
TEXTILE ARTICLES SEIZED DUE TO TRANSSHIPMENT: $ 8,474,528
TEXTILE ARTICLES DETAINED - SUSPECTED TRANSSHIPMENT: $ 59,151,303
TEXTILE ARTICLES EXCLUDED FROM ENTRY: $ 20,206,615
TEXTILE ARTICLES REEXPORTED: $ 892,881
TEXTILE ARTICLES ABANDONED BY IMPORTER: $ 8,312
TEXTILE ARTICLES SUBJECT TO OTHER ENFORCEMENT ACTION: $ 20,975,140
TOTAL: $109,570,828

H. OFFICE OF INVESTIGATIONS

DURING CALENDAR YEAR 1997, THE OFFICE OF INVESTIGATIONS (OI) HAS
CONDUCTED TEXTILE-RELATED INVESTIGATIONS WHICH HAVE RESULTED IN
THE FOLLOWING ENFORCEMENT ACTIONS: 29 ARRESTS, 25 INDICTMENTS, 32
CONVICTIONS AND 35 PENALTIES.

THE FOLLOWING CASE SUMMARIES RELATE TO SOME OF THE SIGNIFICANT
TEXTILE ENFORCEMENT ACTIONS CONDUCTED BY THE OFFICE OF
INVESTIGATIONS DURING CALENDAR YEAR 1997:

INDICTMENTS IN CUSTOMS FRAUD CASE: IN JANUARY 1997,
THREE SUBJECTS WERE EACH INDICTED IN THE SOUTHERN
DISTRICT OF FLORIDA ON EIGHT COUNTS EACH OF ENTRY OF
GOODS BY MEANS OF FALSE STATEMENTS AND ONE COUNT EACH OF
CONSPIRACY, SMUGGLING AND AIDING AND ABETTING. IT IS
ALLEGED THAT THE SUBJECTS CONSPIRED TO TRANSSHIP
ILLEGALLY CHINESE T-SHIRTS, VALUED AT APPROXIMATELY $8
MILLION, THROUGH A SUBSIDIARY COMPANY IN VENEZUELA AND
INTO THE UNITED STATES. THE T-SHIRTS WERE LABELED AS
PRODUCTS OF VENEZUELA, THEREBY EVADING APPLICABLE
QUOTA-VISA REQUIREMENTS.

PENALTY ISSUED IN CUSTOMS FRAUD CASE: IN MARCH 1997, THE
PORT DIRECTOR IN NEW YORK ISSUED A PENALTY TO A COMPANY
IN THE AMOUNT OF $719,390.88. THIS PENALTY WAS ISSUED
PURSUANT TO AN INVESTIGATION WHICH SUBSTANTIATED THAT
THE COMPANY MISDESCRIBED AND MISCLASSIFIED SHIPMENTS OF
BACKPACKS AND QUOTA-VISA RESTRICTIONS. THE RESULTING
LOSS OF REVENUE WAS $88,000.

COLLECTION IN CUSTOMS FRAUD CASE: ON MAY 30, 1997, A
COMPANY SUBMITTED A TENDER IN THE AMOUNT OF $265,886.60
TO THE NEWARK, NEW JERSEY PORT DIRECTOR. THIS TENDER
REPRESENTED THE FINAL PAYMENT MADE TO SATISFY DUTIES
OWED CUSTOMS, WHICH RESULTED FROM THE IMPORTER'S
FRAUDULENT UNDERVALUATION OF QUOTA-SENSITIVE WEARING
APPAREL FROM CHINA. INVESTIGATION ESTABLISHED THAT THE
COMPANY ILLEGALLY TRANSSHIPPED, UNDERVALUED AND FALSELY
CLASSIFIED 40 SHIPMENTS OF TEXTILE PRODUCTS IMPORTED
INTO THE U.S. THE TOTAL DUTY AND INTEREST COLLECTED AS
A RESULT OF THIS INVESTIGATION IS IN EXCESS OF $1.5
MILLION.

SEIZURE IN CUSTOMS FRAUD CASE: IN JUNE 1997, AGENTS
EXECUTED A FEDERAL SEARCH WARRANT AT A BUSINESS PREMISE.
SEIZED PURSUANT TO THE WARRANT WERE 1,608 CHINESE
MANUFACTURED FUR, LEATHER AND CASHMERE COATS, VALUED AT
APPROXIMATELY $2 MILLION. THE INVESTIGATION DISCLOSED
THAT THE COMPANY REMOVED CHINESE COUNTRY OF ORIGIN
MARKINGS FROM SHIPMENTS OF IMPORTED TEXTILE COATS,
ATTEMPTING TO CIRCUMVENT QUOTA-VISA RESTRICTIONS.

CONVICTION IN CUSTOMS FRAUD CASE: IN JULY 1997, A
SUBJECT ENTERED A GUILTY PLEA TO A TWO-COUNT INDICTMENT
CHARGING THE SMUGGLING OF TWO SHIPMENTS OF CHINESE
MANUFACTURED TEXTILE PRODUCTS THROUGH THE FOREIGN TRADE
ZONE IN LOS ANGELES, CALIFORNIA. THE INVESTIGATION
DISCLOSED THAT THE SUBJECT (A MEXICAN NATIONAL), AND
OTHERS, CONSPIRED TO SMUGGLE AND MANIPULATE NUMEROUS
IMPORTED SHIPMENTS OF CHINESE MANUFACTURED TEXTILE ITEMS
AND WEARING APPAREL THROUGH THE FOREIGN TRADE ZONE. IT
IS ESTIMATED THAT THE SUBJECT CAUSED A LOSS OF REVENUE
TO THE UNITED STATES OF AT LEAST $900,000.

EXECUTION OF SEARCH WARRANT AND SEIZURES IN CUSTOMS
FRAUD CASE: IN AUGUST 1997, AGENTS EXECUTED A SEARCH
FEDERAL WARRANT ON A COMPANY LOCATED WITHIN THE MIAMI
FOREIGN TRADE ZONE. SEIZED PURSUANT TO THE WARRANT WERE
TWO 40-FOOT AND ONE 20-FOOT SHIPPING CONTAINERS OF
FABRIC IMPORTED FROM THE FAR EAST. IT IS ALLEGED THAT
THE SUBJECT COMPANY WAS INVOLVED IN A LARGE SCALE SCHEME
TO AVOID VISA-QUOTA RESTRICTIONS AND CUSTOMS DUTIES ON
KOREAN AND TAIWANESE MANUFACTURED FABRIC. THE FABRIC
WAS PURPORTED TO BE EXPORTED OUT OF THE UNITED STATES,
WHEN IN FACT IT WAS SUBSTITUTED WITH DOMESTIC FABRIC AND
DIVERTED TO CO-CONSPIRATOR COMPANIES LOCATED IN THE NEW
YORK CITY AREA.

IN ADDITION, THE OFFICE OF INVESTIGATIONS WORKS IN PARTNERSHIP
WITH THE WORLD CUSTOMS ORGANIZATION (WCO). THE ROLE OF THE OFFICE
OF INVESTIGATIONS IS TO ENSURE THAT U.S. ENFORCEMENT INITIATIVES
WERE INTRODUCED AND ADVANCED. OI HAS INTRODUCED A MULTITUDE OF
ENFORCEMENT INITIATIVES INCLUDING TEXTILE TRANSSHIPMENT AND
MOVEMENT OF MERCHANDISE IN TRANSIT. ACCOMPLISHMENTS INCLUDE:

PREPARED WRITTEN DOCUMENTS ON DETECTING AND
INVESTIGATING TRANSSHIPMENT AND TRANSIT FRAUDS.

DIRECTED THE WORK OF REPRESENTATIVES FROM OTHER CUSTOMS
ADMINISTRATIONS AND TOGETHER IMPLEMENTED CHAPTERS FOR
INCLUSION IN THE WCO'S WORKING TEXTBOOK ON COMBATING
COMMERCIAL FRAUD.

IMPLEMENTED PROPOSALS THAT MEMBER NATIONS WORK TOGETHER
TO ESTABLISH MULTINATIONAL PROGRAM EXERCISES FOR THE
PURPOSE OF COMBATING TEXTILE TRANSSHIPMENT AND TRANSIT
FRAUD.

DIRECTED AND PARTICIPATED IN SEVERAL TRANSSHIPMENT FRAUD
CONTROL TECHNICAL ASSISTANCE MISSIONS TO SUCH MEMBERS AS
JAMAICA.

DIRECTED AND PARTICIPATED IN SEVERAL TRANSSHIPMENT FRAUD
CONTROL TECHNICAL ASSISTANCE MISSIONS IN JAMAICA.

I. LINKS WITH INTELLIGENCE COMMUNITIES

AN EXTENSIVE OUTREACH IS ONGOING WITH THE INTELLIGENCE COMMUNITY
TO RAISE THE LEVEL OF SUPPORT ON CUSTOMS TRADE PRIORITIES.
INFORMATION IS BEING DEVELOPED FROM OPEN AND CLASSIFIED SOURCES TO
IDENTIFY CHINESE MANUFACTURERS, THE COUNTRIES AND COMPANIES USED
FOR TRANSSHIPMENT AND A DESCRIPTION OF THE WEARING APPAREL THAT IS
EVADING QUOTA. THE INTELLIGENCE HAS PROVEN TO BE TIMELY AND
ACTIONABLE. PARTNERSHIPS HAVE ALSO BEEN ESTABLISHED WITH OTHER
CUSTOMS SERVICES CONFRONTED WITH THE CHALLENGE OF ILLEGAL
TRANSSHIPMENT. THERE HAS BEEN A FULL EXCHANGE OF INFORMATION WITH
HM CUSTOMS AND EXCISE, REVENUE CANADA, AUSTRALIA CUSTOMS AND THE
FRAUD DIVISION O