Importers Face New Costs With Customs’ Anti-Terror Program
Dilligence: Rules require importers to know who is involved every step of the way.
By DEBORAH BELGUM
Staff Reporter
Every year, Los Angeles apparel company Karen Kane Inc. imports 40 to 50 percent of its women’s clothing line from Asia to offset the cost of manufacturing in the United States.
But the cost of doing business overseas is likely to go up for Karen Kane and other smaller businesses under an anti-terrorism program recently proposed by the U.S. Customs Service.
“We will attempt to comply with it,” said Jocelyn Caruso, vice president of operations for Karen Kane. “It looks like it will add a lot of work at the beginning and then it will be a little bit of work to maintain it.”
Under the program, called the Customs-Trade Partnership Against Terrorism, importers are required to shore up the security in their entire supply chain, from knowing who works at their foreign manufacturer to knowing what goods are packed and shipped from a secure facility. “It is somewhat challenging,” admitted Patrick Jones, a U.S. Customs spokesman.
For clothing importers, that means knowing who made the buttons on a shirt, or the zipper on a skirt or the lace on a blouse, said Ilse Metchek, executive director of the California Fashion Association.
“So many people are taking a wait and see attitude,” said Metchek, who has been trying to educate local garment companies about the program. “If your competitors participate, this could mean your goods are stuck in customs and there is less of a chance of getting them delivered on time.”
Speeding up process
Federal officials first presented the program in mid-April to speed up U.S. Custom inspections of airplanes, trucks and ships carrying imports without jeopardizing security. It came after tightened border-security measures led to massive delays of shipments, especially at U.S.-Canadian border crossings where many motor vehicles are imported from Canada.
Sixty large companies, including General Motors Corp., Ford Motor Co., DaimlerChrysler AG, BP America, Sara Lee Corp., and Target Corp., immediately signed up.
But now it’s up to smaller companies to join the program, which requires manufacturers to make sure their products are handled safely, that shippers keep goods in safe areas, that employees have background checks and the source of all cargo is properly documented. In return, shipments get streamlined through customs, with no time-consuming inspections.
“Of course it is a burden,” said Moshe Tsabag, owner of Los Angeles-based junior apparel manufacturer Hot Kiss Inc. “But I would rather have a little burden and have our goods released as soon as possible from customs instead of sitting there while our competitors’ goods go through.”
Tsabag said he isn’t sure how much extra time and money will be involved. “Customs is requiring everything documented, from the name and point of origin of the ship and when it left, its anticipated time of arrival, what is in the containers, how much they weigh and their point of sale,” Tsabag said.
Documenting every piece
Another local industry that will be heavily affected are toy manufacturers that import goods from Asia. These companies will have to know the origin of every tiny plastic piece that makes up an imported toy.
“What does this have to do with terrorism?” asked Charles Woo, chief executive of MegaToys, a major toy importer. “I haven’t started to participate yet. I need to study it. But do I really have a choice in participating? I don’t think so.”
Several consulting companies are helping importers figure out what is required. One of them is Los Angeles-based Cal Safety Compliance Corp., which for the last few months has been meeting with company executives and setting up seminars to disseminate information.
“This affects every importer, from computers to cars to anything you name,” said Carol Pender, president of CSCC. “And our port in Los Angeles is a major player in this.”
The Port of Long Beach was closed on June 28 when a suspicious device was found inside a sports utility vehicle being shipped in a container. It turned out to be a fake alarm system to deter thieves. “Customs did a random check and believed there was a bomb,” Pender noted. “We cannot have the ports suspend operations because of incorrect documentation of non-certified cargo. It injures everybody.”
New free trade agreements plus an increase in offshore manufacturing in Asia and the Middle East where wages are lower have increased the number of imports coming in through the Ports of Los Angeles and Long Beach as well as Los Angeles International Airports.
In the past, U.S. Customs tried to move goods faster by modernizing the way customs documents were handled. Most shipping manifests are filed electronically and processed by computers.
Some predict that the increased regulation for imports will make it more convenient and financially feasible to manufacture locally, which is good news for L.A. apparel contractors.
