GAO Testifies to Congress on CBP Efforts to Address Textile Transshipment

On June 18, 2009, the Government Accounting Office (GAO) issued a report of its testimony before the Subcommittee on Rural Development, Entrepreneurship, and Trade, Committee on Small Business of the U.S. House of Representatives entitled, "International Trade - Observations on U.S. Government Efforts to Address Textile Transshipment.

In the report, the GAO summarized its key findings from prior reports on (1) U.S. government efforts to enforce laws related to imports of textiles and other goods, including transshipment, and (2) the revenue implications of these efforts, as well as discuss the recommendations GAO has made to improve those efforts. In its prior reports on the matter, the GAO identified three key challenges confronting CBP relating to: (1) the timeliness of finalizing reports and follow up by CBP's Textile Production Verification Team; (2) improvements needed to support information from overseas Customs Attache offices and enforcement personnel; and (3) improvements needed to the in-bond program that allows importers to circumvent trade rules, including those applying to textile imports. The GAO found that CBP responded and made improvements to the first two challenges, but:

Despite prior audit recommendations, important management weaknesses persisted in CBP's tracking of in-bond cargo, with the result that CBP still does not know whether in-bond cargo shipments of greatest security or revenue interest are in fact entered into U.S. commerce or exported as required. In particular, CBP continued to have high numbers of open in-bond transactions with uncertain disposition. In addition to needed improvements on specific programs, we also found that CBP had to find a way to better balance security and important trade functions such as revenue collection. Although CBP's priority mission relates to homeland security, it collected more than $34 billion in fiscal year 2008, making it the second largest revenue generator for the federal government. Because of the high concentration of duties collected on textiles and apparel--four percent of U.S. imports generate approximately 40 percent of U.S. duties collected--any efforts to focus on revenue functions would likely generate improved oversight of textile and apparel imports.