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Illegal textile and apparel transshipments from the Philippines targeted

WASHINGTON, DC – 08/28/06 – The US and the Philippines have signed a memorandum of understanding (MOU) to cooperate on stopping illegal transshipments of textiles and apparel through the Philippines to the US.

"This MOU will help safeguard and promote legitimate textile trade between our two countries, while stopping illegal textile transshipments,” said US Trade Representative (USTR) Susan Schwab, hailing the MOU as a demonstration of both countries’ commitment to strengthen their trading relationship.

Transshipment involves the falsification of a product's country of origin to circumvent quotas or avoid paying duties – or import taxes – on goods, according to the US Customs and Border Protection (CBP), the enforcement arm of the Department of Homeland Security.
 
Because the Philippines is a member of the World Trade Organization (WTO), textiles manufactured in that country are not subject to quota restrictions.

Duties on textile imports represent 43% of all US customs revenue collected, the CBP said in a fact sheet.

The agreement is expected to help both governments better distinguish between legitimate and suspect shipments.
 
Specifically, the MOU provides for customs cooperation, identification of the actual textile and apparel manufacturers and joint verification visits to provide both governments with the information necessary to stop transshipments of textiles and apparel.

Schwab and Philippine Secretary of Trade and Industry Peter B. Favila co-signed the MOU late last week in Kuala Lumpur, Malaysia.

The USTR was in Malaysia to attend the 38th Economic Ministers' Meeting of the Association of Southeast Asian Nations (ASEAN) August 23-26.  She also stopped in Singapore prior to traveling to Malaysia, and is scheduled to go to China after the ASEAN meeting.
 
The US previously has concluded MOUs with Hong Kong and Macau to combat textile and apparel transshipments and is negotiating MOUs with Indonesia and Taiwan.
 
In addition, the US also has a comprehensive bilateral textile agreement with China that will last until the China World Trade Organization Textile Safeguard expires in 2008.

Negotiations with Korea and Malaysia on textiles also are part of the ongoing negotiations for comprehensive bilateral Free Trade Agreements with these two countries.

The US is the Philippines' most important textile-and-apparel market, accepting 80% of that country’s textile and apparel exports.

In 2005, textile and apparel imports accounted for $2 billion of the US' $9.2 billion in merchandise imports from the Philippines, making the Philippines the 12th largest textile-and-apparel supplier to the US.

For the 12-month period ending last June, total US textile and apparel imports from the Philippines were up 8.6 percent over the previous year.

Two-way trade between the US and the Philippines currently stands at $16 billion and has been growing annually at between 7% and 8% in recent years, Schwab said.

The MOU on textiles is the latest manifestation of the bilateral US-Philippines Trade and Investment Framework Agreement (TIFA).

The TIFA, signed in 1989, provides the two countries with a forum to identify, raise and resolve matters that might otherwise hinder the development of bilateral trade and investment ties.

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