Chinese T-shirt smuggling exceeds US$2 million annually, according to Cedetrabajo
The Centro de Estudios del Trabajo, Cedetrabajo, made an estimate of the possible value of smuggled Chinese T-shirts. Experts estimate that around US$16 million was smuggled in during the last 6 years. Más Colombia spoke to Miguel Ángel Rodríguez, who coordinated the investigation.
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What did you find about the T-shirts smuggling from China?
We estimate that in the last six years, from 2018 to 2023, about USD $16 million worth of T-shirt contraband came in from China. An annual average of USD $2.6 million. In 2023 that figure was USD $2.5 million. What we see is that since 2018 the figure has been between USD $2.5 million and USD $3 million. It is a stable and permanent phenomenon.
How did you get to that conclusion?
What we did was to compare the data on exports to Colombia from the official Chinese entity in charge of collecting taxes with the figure for imports from China provided by the DIAN. In all years, what was declared on arrival in Colombia was lower than what was declared on departure from China.
That difference is what we take as possible smuggling of T-shirts. Either it has entered the country without the import declaration, open smuggling, or it has had a fraudulent or misleading declaration, which is known as technical smuggling.
In Cedetrabajo we had already used this methodology, contrasting the official figure of Colombia and the official figure of its trading partner, in a joint investigation with Global Financial Integrity to detect illicit financial flows in the mining sector.
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What are the implications of T-shirt smuggling for Colombia?
On the one hand, that is money that the country stops collecting in tariffs and VAT (at a rate of 19%). For example, if the USD $2.5 million that came in through smuggled jerseys in 2023 had paid the 40% tariff, that would be USD $1 million that would reach the Colombian treasury.
On the other hand, the smuggling of Chinese T-shirts hurts domestic apparel production. Small and medium-sized producers cannot compete with these levels of contraband. In the last six years, from 2018 to 2023, for every USD $100 of t-shirts imported from China that were declared, USD $14 of t-shirts entered from that Asian country without being declared.
The apparel sector has had a trade deficit in recent years. Between 2015 and 2022 it accumulated a deficit of USD $1,073 million. In that period, imports increased at an average annual rate of 2.4%. We are talking about domestic production being replaced by foreign production.
The situation with China is particularly sensitive because from that country came 40% of the imported value in the apparel sector in 2022 and 47% in terms of quantities.
You touch on the issue of tariffs, there are those who say that the smuggling of T-shirts soared due to the increase in tariffs on clothing. What do you think about it?
Our research does not allow us to reach that conclusion. What we found is that the smuggling of T-shirts from China has been stable over the last six years. The increase of the tariff to 40% on imported clothing, the maximum allowed by the WTO, did not bring about significant changes in T-shirt smuggling in 2023.
In any case, the 2023 figure is not conclusive data to rule out that higher tariffs encourage smuggling. But, so far, the results indicate that there is not much of a link.
The tariffs helped to bring T-shirt imports from China to a ten-year low of $11.19 million in 2023, down from $11.34 million in 2020, the first year of the pandemic.
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