[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5619 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 5619

 To require the Secretary of the Treasury to take certain actions with 
  respect to the prevention of illegal transshipments, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 10, 2002

  Mr. Hayes introduced the following bill; which was referred to the 
 Committee on Ways and Means, and in addition to the Committee on the 
 Judiciary, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To require the Secretary of the Treasury to take certain actions with 
  respect to the prevention of illegal transshipments, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Illegal Transshipments Enforcement 
Act of 2002''.

SEC. 2. FINDINGS; PURPOSE.

    (a) Findings.--Congress finds the following:
            (1) The United States textile and apparel sector, which 
        employs approximately 1,000,000 workers, is being seriously 
        hurt by smuggling and transshipment of textile and apparel 
        products.
            (2) Tens of thousands of United States textile workers have 
        lost their jobs because of these illegal activities.
            (3) According to industry and government estimates, illegal 
        textile and apparel smuggling and transshipment totals billions 
        of dollars per year.
            (4) China and other major Asian exporting countries have a 
        decades-long history of illegally shipping textile and apparel 
        goods to the United States.
            (5) A new avenue of illegal trade which involves the 
        evasion of duties using countries that have free trade 
        agreements with the United States has developed and is 
        particularly harmful to the United States textile and apparel 
        industry.
            (6) This new avenue of trade takes advantage of lax 
        regulatory and enforcement administration of the in-transit or 
        in bond programs administered by the Customs Service.
            (7) The 1999 Report of the Interagency Commission on Crime 
        and Security in U.S. Seaports found that--
                    (A) these goods ``pose the largest risk'' and that 
                ``federal officials do not receive sufficient 
                information to make admissibility decisions on this 
                cargo'';
                    (B) ``in-bond procedures of the United States 
                Customs Service deny the federal government detailed 
                information on cargo that is transiting the United 
                States'';
                    (C) ``existing statutes, regulations and sentencing 
                guidelines do not provide sufficient cause to deter 
                criminal or civil violations related to the import and 
                export of goods and contraband'';
                    (D) ``existing criminal sanctions (for illegal 
                fraud schemes) provide no deterrent value'' and that 
                ``violators view the sentences as minor roadblocks and 
                a cost of doing business'';
                    (E) ``criminals can bypass the federal clearance 
                and inspection process through underreporting, mis-
                reporting, or not reporting at all'';
                    (F) ``the number of inspectors and criminal 
                investigations has simply not kept pace with the trade 
                volume'';
                    (G) ``the lack of effective cargo control . . . has 
                significant negative economic consequences, ranging 
                from lost duty and tax revenues to the United States, 
                to failure to enforce international trade agreements 
                and restrictions on import or export cargo''; and
                    (H) ``due to short staffing and limited technology, 
                inspectors look at only about one percent of 
                containers.''
    (b) Purpose.--The purpose of this Act, and the amendments made by 
this Act, is to establish new administrative and regulatory guidelines 
which will enable the Customs Service to effectively deter commercial 
fraud in the United States, particularly concerning textile and apparel 
products.

SEC. 3. CUSTOMS ENFORCEMENT FOR IN-TRANSIT GOODS AND CARGO THEFT.

     Notwithstanding any other provision of law, the Secretary of the 
Treasury shall require that the following actions are taken:
            (1) Not less than 1 out of every 10 containers imported 
        into the United States, including containers to be sent to 
        bonded warehouses and foreign-trade zones, shall be inspected, 
        including through the use of electronic and x-ray screening 
        equipment.
            (2) Prearrival electronic filing of documentation 
        equivalent to the current entry package not later than 72 hours 
        prior to arrival shall be required as a condition for release 
        from the custody of the Customs Service for goods that are in-
        transit or in bond.
            (3) Technology for screening of goods that are entered into 
        the United States for consumption shall be applied to all in-
        transit goods.
            (4) All information in documents filed for exportation of 
        in-transit goods, including documents from bonded warehouses 
        and foreign-trade zones, are physically verified.
            (5) The Commissioner of the Customs Service shall establish 
        procedures to physically verify that in-transit goods that are 
        declared to be exiting the United States are in fact actually 
        exported from the United States. In addition, the Commissioner 
        shall coordinate systems with other foreign Customs Services, 
        particularly those in Mexico and Canada, to assist in verifying 
        the exportation of goods referred to in the preceding sentence 
        and to assist those countries in ensuring that such goods, upon 
        importation, are not declared to be products of the United 
        States.
            (6) Random inspections of at least 1 out of every 10 
        containers carried on rail cars, barges, pipelines and trucks 
        after importation shall be required, including importation into 
        bonded warehouses and foreign-trade zones, and before 
        exportation of in-transit goods.
            (7) Security and background investigations of all employees 
        of all freight forwarders, booking handlers, and bonded 
        carriers, including bonded warehousemen and operators of 
        foreign-trade zones, involved in the import or export of in-
        transit goods shall be undertaken.
            (8) Ensure that penalties imposed for any violation of any 
        law or regulation arising from transactions involving in-
        transit and in-bond textile and clothing goods and declarations 
        regarding textile and apparel products made on vessel manifests 
        are not mitigated.
            (9) Establish that a mis-description of a textile or 
        apparel product, either regarding the quantity or the nature of 
        the product, on an entry document, a manifest or in-bond or in-
        transit documentation is considered a purposeful and 
        intentional act and constitutes fraud. The penalty, which shall 
        not be mitigated by the port director or Customs Headquarters, 
        for such an act is the domestic value of the goods in question.
            (10) Increase the total number of field agents, import 
        specialists, and inspectors dedicated to fraud and cargo 
        enforcement to equal 25 percent of total number of employees of 
        the Customs Service.
            (11) Establish cargo enforcement teams consisting of 
        agents, inspectors, and import specialists whose sole function 
        is the detection of cargo thefts, frauds, and diversions, 
        including those thefts, frauds, and diversions occurring in 
        bonded warehouses and foreign-trade zones.
            (12) Establish a cargo fraud enforcement unit in the 
        headquarters of the Customs Service that is composed of special 
        agents, inspectors, and import specialists whose sole function 
        is to manage, direct, and provide oversight of the program and 
        which includes goods destined for bonded warehouses and 
        foreign-trade zones.
            (13) Conduct all inspections at ports and eliminate 
        centralized inspection stations outside of ports. Establish 
        rail inspection facilities within proximity of the border at 
        all rail entry points. Ensure that container rail traffic is 
        inspected to the same extent as container port traffic.

SEC. 4. PUNISHMENT OF CARGO THEFT.

    (a) In General.--Section 659 of title 18, United States Code, is 
amended--
            (1) by striking ``with intent to convert to his own use'' 
        each place that term appears;
            (2) in the first undesignated paragraph--
                    (A) by inserting ``trailer,'' after 
                ``motortruck,'';
                    (B) by inserting ``air cargo container,'' after 
                ``aircraft,''; and
                    (C) by inserting ``, or from any intermodal 
                container, trailer, container freight station, 
                warehouse, or freight consolidation facility,'' after 
                ``air navigation facility'';
            (3) in the fifth undesignated paragraph, by striking ``one 
        year'' and inserting ``3 years'';
            (4) in the penultimate undesignated paragraph, by inserting 
        after the first sentence the following: ``For purposes of this 
        section, goods and chattel shall be construed to be moving as 
        an interstate or foreign shipment at all points between the 
        point of origin and the final destination (as evidenced by the 
        waybill or other shipping document of the shipment), regardless 
        of any temporary stop while awaiting transshipment or 
        otherwise.'; and
            (5) by adding at the end the following:
    ``It shall be an affirmative defense (on which the defendant bears 
the burden of persuasion by a preponderance of the evidence) to an 
offense under this section that the defendant bought, received, or 
possessed the goods, chattels, money, or baggage at issue with the sole 
intent to report the matter to an appropriate law enforcement officer 
or to the owner of the goods, chattels, money, or baggage.''.
    (b) Federal Sentencing Guidelines.--Pursuant to section 994 of 
title 28, United States Code, the United States Sentencing Commission 
shall review the Federal sentencing guidelines under section 659 of 
title 18, United States Code, as amended by this section and, upon 
completion of the review, promulgate amendments to the Federal 
Sentencing Guidelines to provide appropriate enhancement of the 
applicable guidelines.
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