II 113th CONGRESS 1st Session S. 1412 IN THE SENATE OF THE UNITED STATES July 31, 2013 Mrs. Hagan (for herself and Mr. Graham ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To provide the Department of Homeland Security, U.S. Customs and Border Protection, and the Department of the Treasury with authority to more aggressively enforce customs and trade laws relating to textile and apparel articles, and for other purposes.

1. Short title; table of contents (a) Short title This Act may be cited as the Textile Enforcement and Security Act of 2013 . (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Textile or apparel article defined. Sec. 3. Definitions. Sec. 4. Findings. Sec. 5. Sense of Congress. TITLE I—Additional authorities for U.S. Customs and Border Protection Sec. 101. Seizure and forfeiture of certain textile or apparel articles and use of amounts from fines, penalties, and forfeitures. Sec. 102. Increase in certain TTA positions and import specialist positions and biennial review of staff levels. TITLE II—Amendments to the Tariff Act of 1930 Sec. 201. Special provisions regarding certain violations relating to import documentation. Sec. 202. Electronic preference verification system for origin of textile or apparel articles under CAFTA–DR, NAFTA, and other free trade agreements. Sec. 203. Establishment of textile and apparel new importer program. Sec. 204. Nonresident importer declaration program for textile or apparel articles. TITLE III—Establishment of textile and apparel manufacturing and supplier registry Sec. 301. Establishment of textile and apparel manufacturing and supplier registry. TITLE IV—Implementation report Sec. 401. Implementation report. 2. Textile or apparel article defined (a) In general In this Act, the term textile or apparel article means any of the following: (1) Any good classifiable in chapters 50 through 63 of the HTS. (2) Any good classifiable under one of the following HTS headings or subheadings: (A) 3005.90. (B) 3921.12.15. (C) 3921.13.15. (D) 3921.90.11. (E) 3921.90.15. (F) 3921.90.19. (G) 3921.90.25. (H) 3921.90.29. (I) 3921.90.40. (J) 6601. (K) 7019.19.15. (L) 7019.19.28. (M) 7019.40 through 7019.59. (N) 8708.21.00. (O) 9404.30. (P) 9404.90. (b) HTS defined In subsection (a), the term HTS means the Harmonized Tariff Schedule of the United States. 3. Definitions In this Act: (1) CAFTA–DR country The term CAFTA–DR country has the meaning given such term in section 3(2) of the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act (19 U.S.C. 4002(2)). (2) CEE The term CEE means the Center of Excellence and Expertise for Apparel, Footwear, and Textiles of U.S. Customs and Border Protection. (3) Commissioner The term Commissioner means the Commissioner responsible for U.S. Customs and Border Protection. (4) Dedicated The term dedicated means, with respect to an import specialist, that the import specialist focuses solely on the import of textile or apparel articles. (5) Enter; entry The terms enter and entry refer to the entry, or withdrawal from warehouse for consumption, of a textile or apparel article in the customs territory of the United States. (6) Importer The term importer means one of the parties qualifying as an importer of record under section 484(a)(2)(B) of the Tariff Act of 1930 (19 U.S.C. 1484(a)(2)(B)). (7) New importer The term new importer means an importer with fewer than 3 years of history of importing textile or apparel articles into the United States. For purposes of this paragraph, a new importer that merges with or is purchased by another importer, or is otherwise altered, shall be considered to remain a new importer until such time as such new importer presents proof to the Commissioner of such merger, purchase, or other alteration for a determination regarding whether such new importer may be treated as an importer. (8) Nonresident importer The term nonresident importer means an importer who is— (A) an individual who is not a citizen of the United States or an alien lawfully admitted for permanent residence in the United States; or (B) a partnership, corporation, or other commercial entity that is not organized under the laws of a jurisdiction within the customs territory of the United States (as such term is defined in General Note 2 of the Harmonized Tariff Schedule of the United States) or in the Virgin Islands of the United States. (9) Special operations The term special operations means an initiative that is— (A) implemented to address specific instances of transactions that do not comply with the customs and trade laws of the United States with respect to textile or apparel articles; (B) used to address any import violations involving textile or apparel articles, including fraud, quota requirements, revenue collection, trade preferences or requirements under free trade agreements, product safety, antidumping and countervailing duties, or intellectual property rights; or (C) initiated to address a singular instance or a pattern of high-risk behavior, involving a particular commodity or other trade issue, including valuation, origin fraud, or trade preference violation, on the part of a country, importer, shipper, exporter, customs broker, freight forwarder, or manufacturer. (10) TTA The term TTA means the Textile and Trade Agreements division of the Office of International Trade within U.S. Customs and Border Protection. (11) T PVT s The term TPVTs means Textile Product Verification Teams. (12) Trained The term trained means, with respect to an import specialist, that such import specialist has received, at least during the last 3 years, education or training related to the import of textile or apparel articles. 4. Findings Congress finds the following: (1) The fraudulent or illegal imports of textile and apparel articles into the United States results in significant revenue loss to the Department of the Treasury. (2) The Textile and Trade Agreements division of the Office of International Trade within U.S. Customs and Border Protection or any subsequent division has, with respect to textile or apparel articles, the primary responsibility to ensure the proper enforcement of all customs and trade laws, rules, and regulations affecting textile and apparel articles. (3) The TTA has the authority to direct the implementation and enforcement of free trade agreements, multilateral agreements, bilateral textile agreements, trade preference programs, and all other customs and trade laws affecting textiles and apparel articles. (4) The primary focus of the TTA is to ensure the effective implementation of all trade enforcement activities involving textile or apparel articles with its principle focus to prevent circumvention of the requirements to obtain preferential trade treatment under free trade agreements and trade preference programs in order to avoid quotas or duties. 5. Sense of Congress It is the sense of Congress that— (1) U.S. Customs and Border Protection and the TTA should be involved in supporting the negotiation of enforcement provisions of trade preference programs and free trade agreements affecting textiles and apparel articles; (2) the TTA should conduct outreach to other Federal departments and agencies involved in overall trade policy, such as Department of Commerce and the Office of the United States Trade Representative; (3) the TTA should develop policies and procedures that provide guidance to the CEE and to the ports of entry of the textile and apparel articles, including training of officials of U.S. Customs and Border Protection; (4) officials of the TTA should coordinate and collaborate with officials of the CEE to establish enforcement priorities, based on risk assessments, and a national enforcement response; (5) the TTA headquarters office is currently below its optimal staffing levels and the TTA personnel efforts should be targeted at retaining senior staff and hiring new qualified personnel so that the division is brought up to optimal staffing levels, and these positions should be designated as not only policy positions, but enforcement positions as well; (6) the TTA should implement special operations, Textile Product Verification Teams, and other actions under U.S. Customs and Border Protection authority to ensure enforcement of customs and trade laws relating to imports of textile or apparel articles in a timely manner as concerns arise, particularly as such concerns relate to enforcement of the North American Free Trade Agreement, the Dominican Republic-Central America-United States Free Trade Agreement, and all other free trade agreements and trade preference programs, in order to prevent transshipments and origin fraud; (7) the TTA officials should coordinate and collaborate with foreign government counterparts to ensure effective enforcement of textile and apparel articles; and (8) U.S. Customs and Border Protection should ensure that seizures, detentions, special operations, and TPVTs remain the primary focus of its enforcement efforts relating to textile and apparel articles. I Additional authorities for U.S. Customs and Border Protection 101. Seizure and forfeiture of certain textile or apparel articles and use of amounts from fines, penalties, and forfeitures (a) Seizure and forfeiture (1) In general The following textile or apparel articles shall be subject to seizure and forfeiture in accordance with the customs and trade laws of the United States and title 18, United States Code: (A) Any textile or apparel article imported into the United States— (i) for which a trade preference has been claimed; and (ii) that has been either misdescribed on entry as to country of origin or for which the importer does not verify actual country of origin, for purposes of avoiding a duty or other obligation to the United States Government, including— (I) any textile or apparel article accompanied by documentation that indicates a false or fraudulent country of origin or source of textile or apparel articles; and (II) any textile or apparel article accompanied by a counterfeit visa, license, permit, bill of lading, or similar documentation that is subsequently used by the importer for entry of textile or apparel articles. (B) A textile or apparel article imported into the United States by an importer who provides false information with respect to the physical address of the importer or who does not meet the requirements of section 484(a)(2)(B) of the Tariff Act of 1930 ( 19 U.S.C. 1484(a)(2)(B) ). (2) Exception A clerical error shall not be considered a violation of paragraph (1) unless such error is part of a pattern of negligent conduct. (b) Use of amounts from fines, penalties, and forfeitures (1) In general Notwithstanding any other provision of law, the Secretary of Homeland Security, the Commissioner, or the Secretary of the Treasury— (A) shall use amounts from fines, penalties, and forfeitures of property for violations of any law regarding the import of textile or apparel articles enforced by the Secretary of Homeland Security or the Secretary of the Treasury to pay for— (i) expenses directly related to special operations, TPVTs, and other enforcement actions; (ii) expenses related to training and education for applicable revenue positions, including import specialists, international trade specialists, and auditors who participate in the enforcement of the customs and trade laws of the United States with respect to the export or import of textile or apparel articles; and (iii) implementation of the provisions of this Act; and (B) may use amounts from fines, penalties, and forfeitures of property for violations of any law regarding the import of textile or apparel articles enforced by the Secretary of Homeland Security, the Commissioner, or the Secretary of the Treasury to pay for a reward of not less than 20 percent of the amount of the fine or penalty collected, or the value of the property forfeited, or $20,000, whichever is the lesser amount, to any person who furnishes information that leads to an arrest, conviction, civil penalty assessment, or forfeiture of property for any violation of any law regarding the import of textile or apparel articles enforced by the Secretary of Homeland Security, the Commissioner, or the Secretary of the Treasury. (2) Rule of construction Amounts described in paragraph (1) and used to pay for expenses described in subparagraph (A) of that paragraph or a reward described in subparagraph (B) of that paragraph are in addition to amounts otherwise available for such purposes. 102. Increase in certain TTA positions and import specialist positions and biennial review of staff levels (a) Increase in certain TTA positions Not later than 180 days of the date of the enactment of this Act, the Commissioner shall ensure that— (1) the Textile Enforcement Branch (or any successor or related branch) of the TTA shall consist of, at a minimum, one branch chief and 6 operations staff, of whom 3 operations staff shall be assigned to one of the CAFTA–DR countries for purposes of assisting U.S. Customs and Border Protection with verification of textile and apparel preferences claimed under the Dominican Republic-Central America-United States Free Trade Agreement; (2) the Textile Policy Branch (or any successor or related division) of the TTA shall consist of, at a minimum, one division chief and 3 operations staff, and 2 textile trade analysts; and (3) the Quota Branch (or any successor or related branch of the Interagency Collaboration Division) of the TTA shall consist of, at a minimum, one branch chief and 4 operations staff. (b) Increase in textile and apparel trained import specialists As soon as practicable after the date of the enactment of this Act, the Commissioner shall certify, with respect to the 15 largest (by value of entries) United States ports of entry for textile or apparel articles, that import specialists who are assigned to such ports of entry are trained in fraud, trade preference verification, classification, undervaluation, or other issues relating to imports of textile or apparel articles so that the number of such trained import specialist positions is not less than 150 percent of the number of trained import specialist positions as of the date of the enactment of this Act. (c) Increase in dedicated textile and apparel import specialists As soon as practicable after the date of the enactment of this Act, the Commissioner shall increase dedicated textile and import specialists by 25 percent at the 15 largest (by value of entries) United States ports of entry for textile or apparel articles over the number of such specialists as of the date of the enactment of this Act. (d) Biennial review of staff levels Not later than one year after the date of the enactment of this Act, and every 2 years thereafter, the Commissioner shall submit to the Committee on Ways and Means and the Committee on Homeland Security of the House of Representatives, the Committee on Finance and the Committee on Homeland Security and Governmental Affairs of the Senate, and the co-chairs of the Congressional Textile Caucus a report on the staffing levels specified in this section, including a determination of whether or not there is need for additional staff to carry out the duties of the TTA. II Amendments to the Tariff Act of 1930 201. Special provisions regarding certain violations relating to import documentation (a) Publication of names of certain violators Section 592A(a)(1) of the Tariff Act of 1930 ( 19 U.S.C. 1592a(a)(1) ) is amended— (1) in the matter preceding subparagraph (A), by striking is authorized to and inserting shall ; and (2) in subparagraph (A), by inserting before the comma at the end the following: , including for violations of quotas, duties, or trade preference programs . (b) List of high-Risk countries Section 592A(b)(1) of the Tariff Act of 1930 ( 19 U.S.C. 1592a(b)(1) ) is amended, in the first sentence— (1) by striking is authorized to and inserting shall ; and (2) by inserting or duties or violate trade preference programs after quotas . 202. Electronic preference verification system for origin of textile or apparel articles under CAFTA–DR, NAFTA, and other free trade agreements (a) Establishment Not later than 180 days after the date of the enactment of this Act, the President, acting through the Commissioner and in coordination with the head of the Office of Textiles and Apparel of the Department of Commerce, shall establish an electronic verification system for tracking textile or apparel articles imported or exported under the Dominican Republic-Central America-United States Free Trade Agreement, the North American Free Trade Agreement, or any other free trade agreement to which the United States is a party, to ensure compliance with the respective requirements of such agreements. (b) Implementation The President shall seek to enter into consultations and agreements, as appropriate, with the government of each foreign country that is a party to an agreement referred to in subsection (a) for purposes of implementing the electronic verification system established under that subsection. (c) Confidentiality The electronic verification system established under subsection (a) shall ensure that proprietary information, such as information about supply chain participants, is coded so that only U.S. Customs and Border Protection and Office of Textiles and Apparel personnel can access the information. (d) Sense of Congress It is the sense of Congress that the President should seek to make the integration of the electronic verification system established under subsection (a) in future free trade agreements a priority in negotiations for such agreements. 203. Establishment of textile and apparel new importer program (a) In general Not later than 180 days after the date of the enactment of this Act, the Commissioner shall establish a new importer program that directs U.S. Customs and Border Protection to adjust bond amounts for new importers of textile and apparel articles based on the level of risk with respect to protection of the revenue of the Federal Government presented by each new importer. (b) Requirements The Commissioner shall ensure that, as part of the new importer program established under subsection (a), U.S. Customs and Border Protection— (1) develops risk assessment guidelines for new importers of textile and apparel articles; (2) adjusts bond amounts for new importers in accordance with the risk assessment guidelines developed under paragraph (1); (3) maintains a centralized database of new importers; and (4) ensures accuracy of required information provided to U.S. Customs and Border Protection by new importers. (c) Bonding authority Section 623(b) of the Tariff Act of 1930 ( 19 U.S.C. 1623(b) ) is amended by adding at the end the following new paragraph: (5) In the case of importation of textile or apparel articles, by regulation or specific instruction require, or authorize U.S. Customs and Border Protection officers to require, the amount of the bond to include amounts equal to any duties, fees, or penalties estimated to be payable on such articles. For purposes of this paragraph, amounts equal to any penalties estimated to be payable on such articles shall be based on a risk assessment of the new importer carried out in accordance with section 203 of the Textile Security and Enforcement Act of 2013. Any person who violates a requirement imposed pursuant to this paragraph shall be liable for a civil penalty of $50,000 for each such violation. . (d) Other penalties In addition to the penalties specified in paragraph (5) of section 623(b) of the Tariff Act of 1930 ( 19 U.S.C. 1623(b) ), as added by subsection (c) of this section, for a violation of such paragraph, any person who violates any other customs or trade law of the United States with respect to the importation of textile or apparel articles shall be subject to any applicable civil or criminal penalty, including seizure and forfeiture that may be imposed under such customs or trade law, including section 592 of the Tariff Act of 1930 (19 U.S.C. 1592). 204. Nonresident importer declaration program for textile or apparel articles (a) Establishment of program Not later than 180 days after the date of the enactment of this Act, the Commissioner shall establish and maintain a nonresident importer declaration program with respect to the importation of textile or apparel articles. The program shall require nonresident importers of textile or apparel articles to provide the information required under subsection (b) and declare the information required under subsection (c), and require that such information accompany the entry summary documentation for such textile or apparel articles. (b) Information required The Commissioner shall require the following information to be submitted by any nonresident importer seeking to import textile or apparel articles: (1) An identification of a resident agent in the State in which the port of entry is located who is authorized to accept service of process against the nonresident importer in connection with the importation of the textile or apparel articles. (2) A certification that the resident agent described in paragraph (1) has assets in the United States in sufficient amounts for the purpose of ensuring the payment of any additional loss of revenue not covered by any surety bond or for any civil penalties levied by the Federal Government in connection with the importation of the textile or apparel articles. (3) A copy of the commercial invoice accompanying the shipment of the textile or apparel articles, including the name, address, and contact information for each person in the transaction, such as the trading house, the freight forwarder, and the ultimate purchaser of the goods. (c) Declarations required Pursuant to procedures prescribed by the Commissioner, any nonresident importer seeking to import textile or apparel articles shall declare the following: (1) The nonresident importer has secured a bond in connection with the importation of the textile or apparel articles as required by paragraph (5) of section 623(b) of the Tariff Act of 1930 ( 19 U.S.C. 1623(b) ) (as added by section 203(c) of this Act). (2) The nonresident importer has established a power of attorney in connection with the importation of the textile or apparel articles. (d) Authority A resident agent under this section shall accept service of process on behalf of the nonresident importer of such agent for the purpose of duties, penalties, or other fines issued by the Secretary of Homeland Security or the Commissioner if the Secretary or the Commissioner is unable to collect duties, penalties, or other fines from such nonresident importer. (e) Penalties (1) In general It shall be unlawful for any person to import into the United States any textile or apparel article in violation of this section. (2) Civil penalties Any person who violates paragraph (1) shall be liable for a civil penalty of $50,000 for each such violation. (3) Other penalties In addition to the penalties specified in paragraph (2), any violation of this section that violates any other customs or trade law of the United States shall be subject to any applicable civil and criminal penalty, including seizure and forfeiture, that may be imposed under such customs or trade law or title 18, United States Code, with respect to the importation of textile or apparel articles. III Establishment of textile and apparel manufacturing and supplier registry 301. Establishment of textile and apparel manufacturing and supplier registry Not later than 180 days after the date of the enactment of this Act, the President, acting through the Commissioner and in coordination with the head of the Office of Textiles and Apparel of the Department of Commerce, shall establish an electronic Textile and Apparel Manufacturing Supplier Registry pilot program to serve as a centralized database of United States producers and manufacturers of thread, yarn, fabric, and apparel that supply products to companies in the United States, countries that are parties to the North American Free Trade Agreement, the Dominican Republic-Central America-United States Free Trade Agreement, and other free trade agreements or eligible for preference programs for countries in the Western Hemisphere. IV Implementation report 401. Implementation report Not later than one year after the date of the enactment of this Act, the Commissioner shall submit to the Committee on Ways and Means and the Committee on Homeland Security of the House of Representatives, the Committee on Finance and the Committee on Homeland Security and Governmental Affairs of the Senate, and the co-chairs of the Congressional Textile Caucus a report on the implementation of this Act.