Fashion Intel & Analysis

U.S. Customs and Border Protection (CBP) has released the Fiscal Year 2019 Textile Enforcement Statistics, reflecting the various CBP enforcement activities taken to minimize and analyze the various textile risk areas. 

In 2019, the number of non-IPR seizures (including smuggling) increased from 309 ($3.94M in value) to 645 ($11.78M in value). The total number of IPR-related seizures decreased from 7,457 to 4,396 but increased in value from $12.78M to $19.52M. In 2019, CBP found 5 commercial fraud penalties ($138K in value) and 473 liquidated damages. 

The statistics also highlight CBP’s findings from the foreign factory visits of Textile Production Verification Teams (TPVTs). In 2019, CBP visited 6 countries, 76 factories, and found 34% discrepant. In 2018, CBP visited 9 countries, 139 factories, and found 34% discrepant. 

The total number of cargo examinations increased in 2019 from 8,863 to 12,794. Of those examinations, 6.6% were found discrepant in 2019, decreasing from 7.91% in 2018. CBP completed 51 audits in 2019 and recommended / recovered $7.691M. In the statistics laboratory analyses, CBP tested 620 samples and found 51.3% discrepant. CBP initiated and completed 23 Special Enforcement Operations (SEO) in 2019. Lastly, in 2019, CBP collected $1,539,328,211 in textile related Section 301 duties. 

The textile enforcement statistics can be found here on CBP’s website

The White House has issued a Presidential Proclamation increasing the tariffs on derivative steel products by an additional 25 percent and on derivative aluminum products by an additional 10 percent, saying that some foreign producers have been circumventing duties originally imposed by the President in March 2018. The increased tariffs will take effect February 8. Argentina, Australia, Brazil, Canada, Mexico and South Korea will be exempt from the additional tariffs on derivative steel products, and Argentina, Australia, Canada and Mexico will be exempt from the added duties on derivative aluminum articles. There will be a product exclusion process for the additional duties. 

This represents another escalation in the tariff wars and shines a light on the fact that higher tariffs do not guarantee more US production.

The U.S. has agreed to delay the imposition of tariffs on French goods in exchange for France’s commitment to put the collection of taxes on digital services on hold. The announcement came after President Trump and French President Emmanuel Macron met at the World Economic Forum in Davos, Switzerland. The U.S. was prepared to impose duties of up to 100 percent on products of France, including handbags, after determining France’s Digital Services Tax discriminated against U.S. companies. In case you missed it, earlier this month USFIA filed comments with USTR opposing the tariffs, explaining retaliatory tariffs will only harm American fashion brands and retailers, as well as consumers. 

The Organization for Economic Cooperation and Development (OECD) is working on an international digital tax policy.  Treasury Secretary Steve Mnuchin said the U.S. will participate in the negotiations, which are supposed to conclude by the end of this year.  However in an interview Commerce Secretary Wilbur Ross called the digital tax talks “silly” and “protectionist,” and threatened retaliation against countries that impose taxes on digital services. Several other countries, including Canada and the U.K., say they are also developing digital services tax plans so this issue will continue.

The U.S. Department of Homeland Security (DHS) has released a new report to the President, Combating Trafficking in Counterfeit and Pirated Goods. The report was required from the Executive Order issued last year and includes many recommendations for further action. USFIA supports the need for the Administration to do more to combat counterfeit and pirated goods. Wearing apparel, accessories and footwear are the products that are most often seized for IPR violations. However, some of the proposals raise concerns about the impact on legitimate business, especially e-commerce and 321 de minimus shipments. Please let us know if you have questions or concerns. 

USFIA will provide additional updates, and we want to share with members the report's proposals for immediate actions and recommendations for the U.S. Government and the recommended best practices for business.  Those sections of the report are printed below.

Immediate Actions by DHS and Recommendations for the U.S. Government:

1. Ensure Entities with Financial Interests in Imports Bear Responsibility
2. Increase Scrutiny of Section 321 Environment
3. Suspend and Debar Repeat Offenders; Act Against Non-Compliant International Posts
4. Apply Civil Fines, Penalties and Injunctive Actions for Violative Imported Products
5. Leverage Advance Electronic Data for Mail Mode
6. Anti-Counterfeiting Consortium to Identify Online Nefarious Actors (ACTION) Plan
7. Analyze Enforcement Resources
8. Create Modernized E-Commerce Enforcement Framework
9. Assess Contributory Trademark Infringement Liability for Platforms
10. Re-Examine the Legal Framework Surrounding Non-Resident Importers
11. Establish a National Consumer Awareness Campaign
 
Best Practices for E-Commerce Platforms and Third-Party Marketplaces:

1. Comprehensive "Terms of Service" Agreements
2. Significantly Enhanced Vetting of Third-Party Sellers
3. Limitations on High Risk Products
4. Rapid Notice and Takedown Procedures
5. Enhanced Post-Discovery Actions
6. Indemnity Requirements for Foreign Sellers
7. Clear Transactions Through Banks that Comply with U.S. Enforcement Requests for Information (RFI) 8. Pre-Sale Identification of Third-Party Sellers
9. Establish Marketplace Seller ID
10. Clearly Identifiable Country of Origin Disclosures

President Trump will sign the U.S.-Canada-Mexico Agreement (USMCA) on Wednesday, January 29th during a ceremony at the White House, an administration official told Reuters. “Invitations had been sent out and the White House location would allow lawmakers from all over the country to attend,” the official said. To be prepared for the new agreement and learn what USMCA means for the fashion industry, register for USFIA’s upcoming USMCA Update webinar with Associate Member Akin Gump.