Centers for Excellence and Expertise; CBP s Plan to Change Its Relationships with Importers

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Nº 1 APRIL 2013, YEAR 14 Centers for Excellence and Expertise; CBP s Plan to Change Its Relationships with Importers Jon Fee and BJ Sh

Customs and Border Protection (CBP) has embarked on an ambitious program to centralize important trade functions for the full spectrum of imported products in ten newly-created Centers for

Following a three-year test period, CBP s ultimate goal is to transfer these trade-related functions away from the ports of entry, where they have resided in various forms for more than 200 years,

CBP will evaluate the test in three years, after which time CEE participation in some form could apparently become mandatory for all apparel, footwear and textile importers.

1 Nº 1 APRIL 2013, YEAR 14 Centers for Excellence and Expertise; CBP s Plan to Change Its Relationships with Importers Jon Fee and BJ Shannon Alston & Bird LLP April 8, 2013 U.S. Customs and Border Protection (CBP) has embarked on an ambitious program to centralize important trade functions for the full spectrum of imported products in ten newly-created Centers for Excellence and Expertise (CEEs). The CEE for apparel, footwear and textiles will be in San Francisco, California. Following a three-year test period, CBP s ultimate goal is to transfer these trade-related functions away from the ports of entry, where they have resided in various forms for more than 200 years, until they are conducted entirely by the CEEs. CBP will evaluate the test in three years, after which time CEE participation in some form could apparently become mandatory for all apparel, footwear and textile importers. The CEE program was initiated in 2011 with the establishment of an electronics CEE in Long Beach, California and a pharmaceuticals, health and chemicals CEE in New York, New York. It was championed by former CBP Commissioner Alan Bursin, President Obama s nominee and recess appointee who had to resign at the end of 2011 because the Senate did not act on his nomination, and the program has been promoted by the two Acting Commissioners who succeeded Bursin. CBP will start accepting applications from apparel, textile and footwear companies desiring to participate voluntarily in the San Francisco CEE test program on June 3, 2013 and will select the first participants by July 3,

Two more CEEs, an automotive and aerospace CEE in Detroit, Michigan and a petroleum, natural gas and minerals CEE in Houston, Texas, were established in 2012.

for other products in other parts of the United St

2 Two more CEEs, an automotive and aerospace CEE in Detroit, Michigan and a petroleum, natural gas and minerals CEE in Houston, Texas, were established in On April 4, 2013, CBP published a notice broadening the general authority of the CEEs and confirming the establishment of the apparel, footwear and textiles CEE in San Francisco along with other CEEs for other products in other parts of the United States. According to the notice of April 4, 2013, more than 80 different sections of the U.S. Customs Regulations, plus all of the sections of those regulations concerning administration of free trade agreements and trade preference programs, are waived for the duration of the test so that CEE directors will have the authority to make decisions formerly reserved for port directors at the several U.S. ports of entry. The April 4, 2013 notice refers to CEE guidelines published in August 2012 and requires participants to check those guidelines on a weekly basis for updates and changes. Together, the notice and the guidelines make clear that most post-entry activity will be handled by the CEEs. Participants will continue to file entries and entry summaries at ports of entry where they import their merchandise and will pay duties at those ports; but entry data will be transmitted to the CEE for virtually all further processing. Thus, for example, if a participant s entry is rejected, the rejection notice will be issued by the CEE. The CEEs, and not the ports, will issue requests for information and notices of action to participants. CBP often issues requests for information to request samples or documentation to confirm tariff classification, value, or other entry claims and issues notices of action to make corrections and to collect additional duties where CBP disagrees with the importer s entry. In the apparel industry, requests for information and rate advances often relate to documentation supporting eligibility for free trade agreements (such as NAFTA and CAFTA) or preference programs (such as duty free treatment for eligible imports from Haiti or sub-saharan African countries) and to deny free trade agreement or preference program treatment if CBP finds the documentation to be insufficient. 2

Most other post entry summary processes will also be handled by the CEEs. These include liquidations of entries, protests and requests for internal advice.

Protests are filed by importers, usually seeking refunds of duties, who disagree with liquidations and certain other CBP decisions.

3 Most other post entry summary processes will also be handled by the CEEs. These include liquidations of entries, protests and requests for internal advice. Liquidation is the final computation of duties on imported merchandise. Protests are filed by importers, usually seeking refunds of duties, who disagree with liquidations and certain other CBP decisions. Internal advice requests are filed by importers seeking rulings on pending transactions. According to the CEE guidelines, reconciliation processing will still take place at assigned ports of entry. Reconciliation is a program under which participating importers periodically file information (such as value information) pertaining to groups of their entries that is not known at the times of entry of the affected merchandise. CBP evidently intends to transfer the reconciliation program to the CEEs at some time in the future. disclose violations to curtail penalties) were supposed to be filed by participants with the CEEs; but the April 4, 2013 notice says that participants may choose to file prior disclosures either at the ports of entry or at the CEEs. The April 4, 2013 notice warns that CBP can penalize participants for misconduct under the program. Misconduct could include, for example, failure to abide by the program s terms or conditions or to exercise reasonable care in the execution of participant obligations. The greatest advantage of CEE participation is uniformity of treatment. Importers have long complained that different CBP ports often treat the same transactions differently or that CBP ports often raise issues or ask questions that have already been resolved or answered at other ports. CBP claims that CEE s will make CBP more efficient and will give CBP better understanding of the relevant industries and their products. Enforcement actions, involving penalties, seizures and liquidated damages claims against the importer s bond, will continue to be administered by local ports. Originally, prior disclosures (under which participants 3

But many importers already have close, productive relationships with local ports and may be reluctant to transfer their customs business to a CEE, like San Francisco, hundreds or even thousands of

It is also unclear how CBP will shift human resources to San Francisco from principal textile and apparel ports (such as New York, Long Beach and Miami) where CBP personnel presently have

4 But many importers already have close, productive relationships with local ports and may be reluctant to transfer their customs business to a CEE, like San Francisco, hundreds or even thousands of miles away. It is also unclear how CBP will shift human resources to San Francisco from principal textile and apparel ports (such as New York, Long Beach and Miami) where CBP personnel presently have considerable experience and expertise. This is particularly troubling for importers who rely heavily on CAFTA and NAFTA, for example, because San Francisco CBP personnel have limited experience and expertise relating to these programs. CBP has indicated, however, that persons with expertise from other ports might be virtually linked to the CEE to participate in CEE activities. It remains to be seen whether CBP s initial enthusiasm lasts for the length of the three-year test program, whether a sufficient number of significant importers will volunteer to make the test results meaningful and whether the program becomes mandatory in substantially its present form. Interested importers are encouraged carefully to consider participation and to monitor the evolution of the test so they will be prepared for the change to CEEs, if necessary, after the test is complete. 4

Alamac American Knits, LLC 1885 Alamac Road P.O. Box 1347 Lumberton, NC 28359 Phone: (910) 618-2200 Fax: (910) 618-2292 www.alamacknits.

5 Alamac American Knits, LLC 1885 Alamac Road P.O. Box 1347 Lumberton, NC Phone: (910) Fax: (910) Contact name/number: Mark Cabral, President Office: (910) Cell: (910) Don Pugatch VP Sales Office: (770) Cell: (678) Ron Giacone VP Sales Office: (516) Cell: (516) List of Senior Management: Mark Cabral, President Henry Griffin, VP Manufacturing Doris Sampson, VP Planning Robert Hester, Chief Financial Officer History of Company: The history of Alamac American Knits dates back to the mid 1940s when its co-founders, Alan Kaplan and Mac Thal started a small circular knitting operation in Indian Orchard, Massachusetts. The company was relocated to Lumberton, NC in 1962 and was subsequently purchased by WestPoint Pepperell in Today, Alamac is privately owned and is managed by an experienced group of managers, some of which are secondgeneration employees of Alamac. The entire management team at Alamac has a vast knowledge of all aspects of apparel manufacturing. Alamac has a 415,000 square foot facility situated on 192 acres in Lumberton, NC. We are logistically located on the I-95 / Highway 74 corridors, which is situated between two major seaports located at Wilmington, NC and Charleston. Our production capacity is in the range of 500,000 yards of finished fabric per week. We are a vertical, made to order circular knit, dye, and finish manufacturer. We also offer commission dyeing and finishing services for both knits and woven fabrics. Alamac services a wide variety of end use markets including the industrial rental uniform, career workwear, protective wear, US military, and private label markets. We are known for our extensive product capabilities in piece dye and yarn dye knit constructions, product integrity, and exceptional customer service. Research and development is a primary focus to continually innovate and expand our product offerings. We produce fabric made from a wide range of traditional fibers including 100% polyester performance fibers, 100% cotton, and poly/cotton blends. We also manufacture many specialty items such as 100% wool, wool blends, natural fiber blends, and a wide variety of Flame Resistant fibers for the protective wear markets. At Alamac, customer service means total satisfaction for our customers, our employees, and our suppliers. Machine Availability Includes: Single knit 4 track raceway machines: gauges Automatic striper machines: gauge Double knits machines: gauge 8-lock interlock machines: 18 and 24 gauge Fleece machines: 2-end and 3-end Terry machines: gauge Rib machines: 14 and 18 gauge Fleece machines: 2-end and 3-end Fashion collars and welts Jemco bleach range Gaston County pressure jet dye machines Sclavos Overflow dye machines Then Air Flow pressure jet dye machines Open width pin tenter finishing frames Relax belt dryers Tubular suction drum dryers Tubular and open width compactors Napping / sheering Products: Alamac s single knit product capabilities include: Singe knit jersey, novelty and texture stitches, meshes, feed stripes, automatic engineered stripes and jacquards, french terry, fleece and terry. Our double knit capabilities include: interlock, jacquards, ponti-de-roma, cable knits, regular and flat back ribs, meshes, thermals, collars and welts. End Uses: Industrial rental uniforms, career apparel, protective apparel, performance apparel, base layer, golf, sportswear, childrenswear, school uniform, collegiate and sport apparel, military, and private label. 5

American Denimatrix Plant: 1926 FM 54 Littlefield, TX 79339 Telephone: +1 806 385-6401 Fax: +1 806 385-5155 www.pcca.

6 American Denimatrix Plant: 1926 FM 54 Littlefield, TX Telephone: Fax: Denim sales/marketing: 980 Avenue of the Americas 2nd Floor New York, NY Telephone: Fax: Contact name/number: Mr. Jack Mathews Vice President of Sales and Marketing Telephone: Fax: List of Senior Management: Mr. Wally L. Darneille, PCCA President & CEO Mr. Bryan Gregory, Vice President of Textile Manufacturing Mr. Jack Mathews, Vice President of Sales and Marketing History of Company: American Denimatrix represents the textile and apparel division of Plains Cotton Cooperative Association, a farmer owned Cotton Cooperative founded in 1953, in Lubbock Texas. American Cotton Growers or "ACG"). In 2009 we created Denimatrix, a full package garment facility located in Guatemala City. Deminatrix is dedicated to developing innovative, fashion driven jeans for leading brands and retailers. Our unique business model allows us to tailor solutions that address each customers needs. Whether it's selling fabric or developing an entire floor ready garment collection, we have the knowledge, resources and technology that enable us to exceed customer s expectations. Products: Fabric Our offering includes a complete line of bottom weight indigo dyed denim fabric in 100% cotton and cotton and spandex blends. We produce a variety of yarn types including open end, amsler open end, ring spun, amsler ring spun and core spun for stretch denim. This enables us to serve a broad range of customers and market segments. Garments- Denimatrix produces fashion jeans, skirts and related apparel for the male and female Jeanswear markets. We specialize in developing innovative market right finishes at a competitive price. Our financial strength has enabled us to make significant investments in "Eco finish capability such as lasers and ozone washing machines. In addition we also have garment dye capability. End Products Supplied: Denim fabrics for jeans, shorts, skirts, and jackets We operate the only fully vertically integrated supply chain for denim fabric and apparel in the western hemisphere. The process begins with cotton grown by our farmer members, which we manufacture into denim fabric at our facility in Littlefield Texas (formerly known as 6

Buhler Quality Yarns Corp. 1881 Athens Hwy. Jefferson, GA 30594 Telephone: +1 706 367-9834 Fax: +1 706 367-9837 E-Mail: sales@buhleryarns.com www.buhleryarns.com Contact Name / Number: Mr.

7 Buhler Quality Yarns Corp Athens Hwy. Jefferson, GA Telephone: Fax: Contact Name / Number: Mr. David Sasso, VP of International Sales Telephone: Fax: dsasso@buhleryarns.com Mr. Victor Almeida, Technical Support Telephone: Fax: valmeida@buhleryarns.com List of senior management: Mr. Russell Mims, Operations Manager Ms. Kelly Ouellette, Sales & Customer Service Mr. David Sasso, Vice-president International Sales Mr. Victor Almeida, Textile Engineer & Technical Support History of company Additional yarns include fashion slub yarns in Supima and Supima Micro Modal; all offer comfort, durability, and strength. Bring your product to market backed by decades of experience, dependable industry relationships and unsurpassed technical support. Our yarns are spun in the USA and comply with all USA trade agreements. For more information, visit Products: Applications: Weaving (warp and Filling) Knitting (Circular, Seamless, Warp) Cotton sewing thread 100% Supima cotton combed Ring Spun Micro Modal MicroModal from Ring Spun, MicroModal Supima Ring Spun, MicroTencel Ring Spun The Industry Leader: Buhler Quality Yarns Corp. ensures the highest quality products backed by environmental sensitivity and around-the-clock support throughout your supply chain. Our distinctive portfolio offers Supima, MicroTencel, Micro Modal and various blends fabricated to exceed expectations. 7

Carolina Cotton Works, Inc. - CCW 14 Commerce Drive Meadow Creek Industrial Park Gaffney, SC 29340 Phone: (864) 488-2824 Fax: (864) 488-0488 www.carolinacotton.com Contact name/number: Mr.

8 Carolina Cotton Works, Inc. - CCW 14 Commerce Drive Meadow Creek Industrial Park Gaffney, SC Phone: (864) Fax: (864) Contact name/number: Mr. Bryan Ashby, Vice President, Sales & Marketing Phone: (864) Fax: (864) bryan@carolinacotton.com Mr. Stacey Bridges, Sales Manager Phone: (864) ext.108 Fax: (864) sbridges@carolinacotton.com List of senior management: Mr. Page Ashby, President Mr. Bryan Ashby, Vice President, Sales & Marketing Mr. Hunter Ashby, Operations Manager Mr. Stacey Bridges, Sales Manager History of company: Carolina Cotton Works, Inc. (CCW) opened for business in March of Starting out in a new building and all new equipment, we soon earned a reputation of having one of the finest dyehouses in the United States. With continued success each year since, CCW has reinvested in new equipment and systems to allow us to stand alone as the most efficient dyehouse in the country. Although we continue to offer commission bleaching and dyeing services, the growth of our business has proven to be in the finished fabric package business. Most recently, CCW is pleased to be recognized as a bluesign system partner. Experience - Quality - Dependability - Three necessary components of strong customer/vendor relationships have been the key building blocks of Carolina Cotton Works. With the experience of company president Page Ashby, comes knowledge of yarn spinning through cutting. We have built solid relationships with several major yarn spinners and knitters in the United States. We have the resources and technical abilities to become the premier U.S. fabric supplier for apparel producers both domestic and international. Using the state of the art equipment in our 120,000 square foot building, Carolina Cotton Works can produce up to 450,000 pounds per week of bleaching and piece dyeing. Equipment listing: JEMCO III 2000 CBR; (7) 1000 lb. Scholl Rapidstar Jets; (1) 80 lb. Scholl Sample Jet; (5) Fong Horizontal Dye Jets; (2) Santex Relaxed Belt Dryers; (3) Tubetex Pak-Nit II Compactors; RFG Napper; Mario Crosta Brushing Machine; Texima Natural Gas Tenter Frame; Strahm Open Width Compactor; (2) Tubetex 4-Roll Pads; Santex Shrinking Calendar. Products All types of cotton and poly cotton knits and wovens, both body sizes and open width. Many synthetics including circular knits and wrap knits, Interlock, French Terry, Thermal Performance Fabrics, and ANSI Fabrics. Other fiber types dyed include nylon and modacrylic. End Products Supplied Customers use CCW's fabric to manufacture outerwear products such as t-shirts, rib tops, golf shirts, sweatshirts and sweatpants. Underwear products include briefs, t-shirts and thermal underwear. We also process synthetic fabrics used for moisture transport performance apparel and team sports uniform apparel. 8

2013 U.S. Crop Outlook Prepared by: Economic Services - National Cotton Council The U.S. Department of Agriculture (USDA) released their first U.S. crop outlook for the upcoming season.

9 2013 U.S. Crop Outlook Prepared by: Economic Services - National Cotton Council The U.S. Department of Agriculture (USDA) released their first U.S. crop outlook for the upcoming season. USDA placed the estimated 2013/14 U.S. cotton plantings at million acres, down 18.6% from Upland planted area is estimated to have decreased 18.7% to 9.82 million acres. Extra long staple producers planted 206,000 acres, down 13.6% from USDA will release an updated projection of propsectieve plantings in June. The National Cotton Council s planting intentions survey, released in early February, indicated US farmers intend to plant 8.81 million acres of upland cotton and 203,000 acres of ELS. 9

Prospective 2013 U.S. Cotton Plantings In 1000 acres 2012 USDA Actual 2013 USDA Estimate 2013 NCC Planting Intentions USDA Percent Change NCC Percent Change UPLAND SOUTHEAST 2,748 2,580 2,241-6.

10 Prospective 2013 U.S. Cotton Plantings In 1000 acres 2012 USDA Actual 2013 USDA Estimate 2013 NCC Planting Intentions USDA Percent Change NCC Percent Change UPLAND SOUTHEAST 2,748 2,580 2, % -18.5% Alabama % -15.7% Florida % -4.5% Georgia 1,290 1,300 1, % -15.3% North Carolina % -32.0% South Carolina % -11.4% Virginia % -28.3% MID-SOUTH 2,030 1,260 1, % -50.6% Arkansas % -62.9% Louisiana % -37.3% Mississippi % -58.1% Missouri % -31.6% Tennessee % -47.6% SOUTHWEST 6,911 5,700 5, % -24.4% Kansas % -10.4% Oklahoma % -12.3% Texas 6,550 5,500 4, % -25.0% WEST % -12.2% Arizona % -3.6% California % -21.4% New Mexico % -21.0% TOTAL UPLAND 12,077 9,820 8, % -27.0% TOTAL ELS % -15.0% Arizona % -16.0% California % -15.6% New Mexico % -26.0% Texas % 3.9% ALL COTTON 12,315 10,026 9, % -26.8% 10

12 COTTON COUNCIL INTERNATIONAL HEADQUARTERS & LATIN AMERICA 1521 New Hampshire Avenue, NW Washington, DC 20036, USA Phone: (202) Fax: (202) Vaughn Jordan, International Program Director CBI OFFICE: C.C. Plaza Colonial Oficina 1-11A, San Rafael de Escazú, San José, Costa Rica Phone: (506) / Fax: (506) Floribeth González-Schuyler Regional Manager,México, Central America & The Caribbean floribeth@cotton-cr.com ANDEAN OFFICE: Cra. 14 No. 94A-44 Office 402 Bogota, Colombia Phone: (57) Fax: (57) COTTON INCORPORATED HEAD OFFICE 6399 Weston Parkway Cary, NC 27513, USA Phone: (919) Fax: (919) LATIN AMERICA OFFICE: Av. Insurgentes Sur C Mexico, DF, Mexico Phone: (52-55) Fax: (52-55) Jaime Flores Director, Supply Chain Marketing Latin America Global Account Management Group jflores@cottoninc.com Nina Maldonado, Regional Manager, Andean Region nina@cottonusaandean.com KOREAN OFFICE: Leema Building, Suite 303, Soosong-Dong, Chongro-Ku Seoul , Korea Phone: ( ) /2 Fax: ( ) Won-Jung Choi, Program Manager wchoi@cotton.org

Nº Cotton and Textile Trade Policy. World Trade Organization (WTO) Doha Negotiations. March 2011, Year 12

Nº Cotton and Textile Trade Policy. World Trade Organization (WTO) Doha Negotiations. March 2011, Year 12 Nº 1 March 2011, Year 12 2011 Cotton and Textile Trade Policy Gary M. Adams Vice President of Economic and Policy Analysis National Cotton Council Numerous trade policy issues continue to confront the