I 
107TH CONGRESS 
2D SESSION 
H. R. 5619
To require the Secretary of the Treasury to take certain actions with respect 
to the prevention of illegal transshipments, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 10, 2002
Mr. HAYES introduced the following bill; which was referred to the Committee 
on Ways and Means, and in addition to the Committee on the Judiciary, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of the 
committee concerned 
A BILL 
To require the Secretary of the Treasury to take certain 
actions with respect to the prevention of illegal trans-
shipments, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Illegal Transshipments 
Enforcement Act of 2002’’. 
SEC. 2. FINDINGS; PURPOSE. 
(a) FINDINGS.—Congress finds the following:
(1) The United States textile and apparel sec-
tor, which employs approximately 1,000,000 work-
ers, is being seriously hurt by smuggling and trans-
shipment of textile and apparel products. 
(2) Tens of thousands of United States textile 
workers have lost their jobs because of these illegal 
activities. 
(3) According to industry and government esti-
mates, illegal textile and apparel smuggling and 
transshipment totals billions of dollars per year. 
(4) China and other major Asian exporting 
countries have a decades-long history of illegally 
shipping textile and apparel goods to the United 
States. 
(5) A new avenue of illegal trade which involves 
the evasion of duties using countries that have free 
trade agreements with the United States has devel-
oped and is particularly harmful to the United 
States textile and apparel industry. 
(6) This new avenue of trade takes advantage 
of lax regulatory and enforcement administration of 
the in-transit or in bond programs administered by 
the Customs Service.
(7) The 1999 Report of the Interagency Com-
mission on Crime and Security in U.S. Seaports 
found that—
(A) these goods ‘‘pose the largest risk’’ 
and that ‘‘federal officials do not receive suffi-
cient information to make admissibility deci-
sions on this cargo’’; 
(B) ‘‘in-bond procedures of the United 
States Customs Service deny the federal gov-
ernment detailed information on cargo that is 
transiting the United States’’; 
(C) ‘‘existing statutes, regulations and sen-
tencing guidelines do not provide sufficient 
cause to deter criminal or civil violations related 
to the import and export of goods and contra-
band’’; 
(D) ‘‘existing criminal sanctions (for illegal 
fraud schemes) provide no deterrent value’’ and 
that ‘‘violators view the sentences as minor 
roadblocks and a cost of doing business’’; 
(E) ‘‘criminals can bypass the federal 
clearance and inspection process through under-
reporting, mis-reporting, or not reporting at 
all’’;
(F) ‘‘the number of inspectors and crimi-
nal investigations has simply not kept pace with 
the trade volume’’; 
(G) ‘‘the lack of effective cargo control 
. . . has significant negative economic con-
sequences, ranging from lost duty and tax reve-
nues to the United States, to failure to enforce 
international trade agreements and restrictions 
on import or export cargo’’; and 
(H) ‘‘due to short staffing and limited 
technology, inspectors look at only about one 
percent of containers.’’
(b) PURPOSE.—The purpose of this Act, and the 
amendments made by this Act, is to establish new admin-
istrative and regulatory guidelines which will enable the 
Customs Service to effectively deter commercial fraud in 
the United States, particularly concerning textile and ap-
parel products. 
SEC. 3. CUSTOMS ENFORCEMENT FOR IN-TRANSIT GOODS 
AND CARGO THEFT. 
Notwithstanding any other provision of law, the Sec-
retary of the Treasury shall require that the following ac-
tions are taken: 
(1) Not less than 1 out of every 10 containers 
imported into the United States, including con-
tainers to be sent to bonded warehouses and foreign-
trade zones, shall be inspected, including through 
the use of electronic and x-ray screening equipment. 
(2) Prearrival electronic filing of documentation 
equivalent to the current entry package not later 
than 72 hours prior to arrival shall be required as 
a condition for release from the custody of the Cus-
toms Service for goods that are in-transit or in 
bond. 
(3) Technology for screening of goods that are 
entered into the United States for consumption shall 
be applied to all in-transit goods. 
(4) All information in documents filed for ex-
portation of in-transit goods, including documents 
from bonded warehouses and foreign-trade zones, 
are physically verified. 
(5) The Commissioner of the Customs Service 
shall establish procedures to physically verify that 
in-transit goods that are declared to be exiting the 
United States are in fact actually exported from the 
United States. In addition, the Commissioner shall 
coordinate systems with other foreign Customs Serv-
ices, particularly those in Mexico and Canada, to as-
sist in verifying the exportation of goods referred to 
in the preceding sentence and to assist those coun-
tries in ensuring that such goods, upon importation, 
are not declared to be products of the United States. 
(6) Random inspections of at least 1 out of 
every 10 containers carried on rail cars, barges, 
pipelines and trucks after importation shall be re-
quired, including importation into bonded ware-
houses and foreign-trade zones, and before expor-
tation of in-transit goods. 
(7) Security and background investigations of 
all employees of all freight forwarders, booking han-
dlers, and bonded carriers, including bonded ware-
housemen and operators of foreign-trade zones, in-
volved in the import or export of in-transit goods 
shall be undertaken. 
(8) Ensure that penalties imposed for any viola-
tion of any law or regulation arising from trans-
actions involving in-transit and in-bond textile and 
clothing goods and declarations regarding textile and 
apparel products made on vessel manifests are not 
mitigated. 
(9) Establish that a mis-description of a textile 
or apparel product, either regarding the quantity or 
the nature of the product, on an entry document, a 
manifest or in-bond or in-transit documentation is 
considered a purposeful and intentional act and con-
stitutes fraud. The penalty, which shall not be miti-
gated by the port director or Customs Headquarters, 
for such an act is the domestic value of the goods 
in question. 
(10) Increase the total number of field agents, 
import specialists, and inspectors dedicated to fraud 
and cargo enforcement to equal 25 percent of total 
number of employees of the Customs Service. 
(11) Establish cargo enforcement teams con-
sisting of agents, inspectors, and import specialists 
whose sole function is the detection of cargo thefts, 
frauds, and diversions, including those thefts, 
frauds, and diversions occurring in bonded ware-
houses and foreign-trade zones. 
(12) Establish a cargo fraud enforcement unit 
in the headquarters of the Customs Service that is 
composed of special agents, inspectors, and import 
specialists whose sole function is to manage, direct, 
and provide oversight of the program and which in-
cludes goods destined for bonded warehouses and 
foreign-trade zones. 
(13) Conduct all inspections at ports and elimi-
nate centralized inspection stations outside of ports. 
Establish rail inspection facilities within proximity of 
the border at all rail entry points. Ensure that con-
tainer rail traffic is inspected to the same extent as 
container port traffic. 
SEC. 4. PUNISHMENT OF CARGO THEFT. 
(a) IN GENERAL.—Section 659 of title 18, United 
States Code, is amended—
(1) by striking ‘‘with intent to convert to his 
own use’’ each place that term appears; 
(2) in the first undesignated paragraph—
(A) 
by 
inserting 
‘‘trailer,’’ 
after 
‘‘motortruck,’’; 
(B) by inserting ‘‘air cargo container,’’ 
after ‘‘aircraft,’’; and 
(C) by inserting ‘‘, or from any intermodal 
container, trailer, container freight station, 
warehouse, or freight consolidation facility,’’ 
after ‘‘air navigation facility’’; 
(3) in the fifth undesignated paragraph, by 
striking ‘‘one year’’ and inserting ‘‘3 years’’; 
(4) in the penultimate undesignated paragraph, 
by inserting after the first sentence the following: 
‘‘For purposes of this section, goods and chattel 
shall be construed to be moving as an interstate or 
foreign shipment at all points between the point of 
origin and the final destination (as evidenced by the 
waybill or other shipping document of the shipment),
regardless of any temporary stop while awaiting 
transshipment or otherwise.’; and 
(5) by adding at the end the following: 
‘‘It shall be an affirmative defense (on which the de-
fendant bears the burden of persuasion by a preponder-
ance of the evidence) to an offense under this section that 
the defendant bought, received, or possessed the goods, 
chattels, money, or baggage at issue with the sole intent 
to report the matter to an appropriate law enforcement 
officer or to the owner of the goods, chattels, money, or 
baggage.’’. 
(b) FEDERAL SENTENCING GUIDELINES.—Pursuant 
to section 994 of title 28, United States Code, the United 
States Sentencing Commission shall review the Federal 
sentencing guidelines under section 659 of title 18, United 
States Code, as amended by this section and, upon com-
pletion of the review, promulgate amendments to the Fed-
eral Sentencing Guidelines to provide appropriate en-
hancement of the applicable guidelines.
Æ