RODE & QUALEY one in telex form, which reached the public only indirectly. Despite their farreaching changes affecting billions of dollars worth of textiles and apparel imported into the United States annually, the changes were implemented within 60 days of the issuance of the original directive. The final directive indicates that its purpose was "to establish revised entry procedures for commercial shipments of textiles and textile products" and was purportedly issued to cover alleged "abuses and circumventions of visa requirements by improper use of 'exempt certifications' for textile shipments valued under $250. . . ." As a result of the directive's attempt to correct a perceived abuse on a relatively minor portion of the value and volume of shipments into the United States, those under $250 in value, the entire entry system for all textile and apparel shipments was turned upside down. Had the original directive been promulgated as proposed, it is generally acknowledged that there would have been a total breakdown in the clearance of textile and apparel and indeed all merchandise imported into the United States. We believe that the issuance of the directive and its widespread applicability was a gross case of overkill on the part of the Customs Service to correct a problem that, if it truly existed on a widespread basis, could have been cured in a far less draconian fashion. Most importantly, the issuance of the directive without notice and opportunity for public comment was completely contrary to the dictates of Executive Order 12291 and its implementing legislation, the Regulatory Flexibility Act. Executive Order 12291 of February 17, 1981, 46 F.R. 13913 [reprinted in 5 USCS 601 note], which was promulgated pursuant to the Regulatory Flexibility Act, P.L. 96-354 [5 USCS 601 et. seq.], has been blatantly ignored by the Customs Service in issuing recent directives such as 3500-6 and 3500-7 which have had enormous impact upon the importing community. The Executive Order requires an agency to conduct an analysis of any regulation or rule it proposes to issue in order to determine whether or not that action is, in fact, a "major rule" within the meaning of the Executive Order. A major rule is defined as follows: RODE & QUALEY Any regulation that is likely to result in: (1) an annual effect The Customs Directive changing the way in which entries of textile merchandise are processed, for example, meets all of this definition's requirements as a "major rule"; nevertheless, Customs never analyzed the directive in terms of the Executive Order. Moreover, Customs has not prepared any "regulatory impact analyses" concerning its actions for transmittal to the Director of the Office of Management and Budget. Without these analyses, there has been no examination of the potential benefits to be derived from the proposed Customs actions as weighed against the potential costs and adverse effects of the actions. There also has been no examination of alternative approaches to those proposed which might achieve the same regulatory goals at a substantially lower cost. Section 4 of the Executive Order also requires that before approving any major rule, an agency must make a determination that the regulation is clearly within the authority delegated by law and consistent with Congressional intent. It must include in the Federal Register at the time of promulgation a memorandum of law supporting that determination. These requirements have also been ignored by the Customs administrators, resulting in actions which do not take the intent of Congress into consideration, which do not provide an adequate record upon which to base the agency determinations and which do not allow for public comments on the proposed action, particularly by persons most directly affected by the Customs actions. Customs has been acting without consideration of the additional costs placed upon the importing community. Particularly, they have been acting without taking into consideration the effect of their directives upon the competitiveness of United States-based enterprises with foreign-based RODE & QUALEY enterprises. Most importantly, Customs has been acting with absolutely no analysis of alternative methods of achieving the common goal of proper enforcement of the Customs laws which would be more effective and more efficient than those it has proposed. The fact of the matter is that this directive cost importers of textile and apparel hundreds of millions of dollars in attempting, on short notice, to comply with its radical changes as to the types of shipments which would now require formal, rather than informal entry. In addition, the increased workload for Import Specialists is staggering. Once again, Import Specialists in private will acknowledge that the increased workload caused by the need to fully examine relatively unimportant sample shipments has greatly impeded their ability to examine important major shipments where hundreds of thousands of dollars in value may be involved. The same amount of time is necessary to examine a shipment of five samples, now imported on a formal entry and worth perhaps $50, that is required to examine a shipment of five styles of the actual production of those samples which might well be valued at $200,000. Likewise, the I&C function is now bogged down in intensive examination of minor shipments valued at less than even $50 in order to ensure compliance with the new directive. In one truly absurd situation that was called to our attention, a $5 sample was pulled by a Customs inspector and washed to see if the indelible marking required by the new directive washed out. This is a bizarre waste of manpower and Customs resources and, unfortunately, it is all too indicative of current practices required by this directive. Most importantly, these assaults on the importing community are not likely to lead to the real implementation of valid policy objectives in legitimate enforcement areas. Rather, these requirements detract from those efforts and only add to the cost and delay of shipments by legitimate importers. RODE & QUALEY In summary of this point, any authorization for the United States Customs Service should require the agency to take those steps, detailed in Executive Order 12291, in order to assure that changes in Customs procedure which directly affect the importing community will be done in the most effective and efficient method possible. resources. 3. Need for effective and meaningful allocation of limited Customs The current emphasis on intense enforcement without adequate funding has created one of the most difficult and hostile environments in memory for importers of textiles and apparel. It is not our purpose to minimize the need for legitimate enforcement efforts by Customs. Rather, we question both the method in which the current enforcement program in the area of textiles and apparel is being administered and its effectiveness. To be sure, every effort has been made to seek headlines and dramatize sensational cases of so-called "textile fraud." However, any program primarily devoted and funded to overload the enforcement aspects of quantitative or duty restrictions is ultimately doomed to failure. The history of this country with respect to revenue and duty collection has always relied most heavily on voluntary compliance and cooperation. By creating the hostile environment in which importers must now operate, Customs is turning the system into one of confrontation rather than one of cooperation and compliance. The members of NATA and the vast majority of all importers are run by honest and decent businessmen and women anxious to fully fulfill their obligations and responsibilities to Customs and the Government. They ask, however, that there be recognition of the fact that it is businesses that they are trying to run in an orderly and organized fashion. The cutbacks and types of programs being implemented by Customs most recently are, unfortunately, disruptive and undertaken without consideration of the legitimate needs of the importing public or Customs' own manpower limitations. In the long run, adequate funding and management of RODE & QUALEY the I&C and C&V functions of Customs are far more likely to lead to the realization of stated Customs objectives and at the same time ensure the orderly and efficient entry and clearance of merchandise into the United States. We hope that this Committee will consider most carefully the issues which we have raised herein and tie any Customs authorizations to implementation of programs that will guarantee that sufficient resources are allocated to I&C and C&V functions which are of paramount importance to the efficient operation of the Customs Service. On behalf of NATA, we express our appreciation to the Subcommittee for the opportunity to appear at these hearings. NORTHWEST APPAREL AND Rode & Qualey Patrick D. Gill, |