The Biden and Harris administrations today took new steps to enforce the law and protect American consumers, workers, and businesses by addressing the significant increase in abuse of the de minimis exemption, particularly by China-based e-commerce platforms, and stepping up efforts to target and block shipments that violate U.S. laws.
Over the past decade, the number of shipments entering the United States claiming the de minimis exception has increased significantly, from approximately 140 million per year to more than one billion per year. This exponential increase in de minimis shipments has made it difficult to enforce U.S. trade laws, health and safety requirements, intellectual property rights, consumer protection rules, and blocking the entry into the country of illegal synthetic drugs, such as fentanyl, and the raw materials and machinery to manufacture synthetic drugs.
The majority of shipments entering the United States and claiming the de minimis exemption originate from several China-based e-commerce platforms, putting U.S. consumers at risk, undercutting U.S. workers and businesses, and leading to the importation of vast quantities of low-value products, such as textiles and apparel, into the U.S. market duty-free. A shipment is eligible for a de minimis duty exemption if the total real retail value of the imported products is $800 or less. De minimis shipments enter the United States with less information than other imports and are not subject to duties and taxes.
With the increasing volume of de minimis shipments, it is becoming increasingly difficult to target and block illegal or dangerous shipments. The foreign corporate giants that use the de minimis exemption do so for a variety of reasons. Some companies use the de minimis exemption to conceal shipments of illegal or unsafe products and avoid compliance with U.S. health and safety and consumer protection laws. Other foreign entities use it to circumvent U.S. trade enforcement measures designed to level the playing field for U.S. workers, retailers, and manufacturers.
With today's announcement, the Administration is using its enforcement authority to stop the abuse of the de minimis exemption. The Administration is also urging Congress to enact legislation this year to comprehensively reform the de minimis exemption and further protect American consumers, workers, and businesses.
Administrative measures aimed at reducing de minimis imports
New legislation to reduce de minimis and strengthen trade enforcement: The Administration intends to issue a notice of proposed rulemaking that would exclude from the de minimis exemption all shipments containing products subject to duties imposed under sections 201 or 301 of the Trade Act of 1974 or section 232 of the Trade Expansion Act of 1962.
Section 301 duties currently apply to approximately 40 % of U.S. imports, including 70 % of imports of textiles and apparel from China. Some e-commerce platforms and other foreign sellers circumvent these duties by shipping goods from China to the United States under a de minimis exemption. If this exemption were finalized, these goods would no longer be covered by the de minimis exemption.
It would also ensure that eligibility for the de minimis exemption for products subject to trade enforcement measures is consistent across U.S. trade laws. Products subject to antidumping or countervailing duty orders are already excluded from the de minimis exception.
Administration actions to protect American consumers, workers, and businesses
New rules to improve accountability and enforcement for de minimis shipments: The Administration intends to issue a notice of proposed rulemaking on the entry of low-value shipments proposing to strengthen information collection requirements to promote greater oversight of de minimis shipments.
This regulatory action proposes to require specific additional information on de minimis shipments-including the 10-digit tariff classification number and the person claiming the de minimis exemption-that will improve targeting of de minimis shipments and facilitate expedited processing of lawful de minimis shipments.
The proposed rule changes will also clarify who is eligible for an administrative exemption and require applicants to identify the person on whose behalf the exemption is being claimed.
These new requirements would help U.S. Customs and Border Protection (CBP) protect consumers from goods that do not meet health and safety regulatory standards and protect U.S. businesses from unfair competition from imported goods that would otherwise be subject to tariffs or restricted entry.
Final rule to prevent de minimis shipments from circumventing security standards: the Consumer Product Safety Commission (CPSC) staff intends to propose a final rule that will require importers of consumer products to submit electronic certificates of conformity (CoCs) to CBP and CPSC at the time of entry, even for de minimis shipments.
This regulation would strengthen the ability of CBP and CPSC to target and prevent unsafe products from entering the U.S. market and help prevent foreign companies from using the de minimis exemption to circumvent consumer protection testing and certification requirements.
Comprehensive legislative reform of the de minimis regime is needed to protect American consumers, workers and businesses
The Administration is seeking to take significant regulatory action to address the de minimis surge in imports that threatens American consumers, workers, retailers, and manufacturers. However, further comprehensive de minimis reforms are needed, and these reforms require congressional action. The Administration stands ready to work with Congress to enact comprehensive de minimis reform by the end of the year. Key reforms that Congress should enact include:
Exclusion of import-sensitive products from de minimis eligibility. Congress should act to exclude import-sensitive products, including textile and apparel products, from de minimis eligibility.
Exclusion of shipments containing products subject to trade enforcement actions under section 301, section 201, or section 232 from the de minimis exemption. The Administration intends to issue a Notice of Proposed Rulemaking that would exclude shipments containing products subject to trade remedy actions under section 301, section 201, or section 232, but Congressional legislative action implementing this statutory change would help achieve this important reform more quickly.
Adoption of previously proposed de minimis reforms in the Detect and Defeat Counter-Fentanyl proposal. These reforms would, among other things, increase transparency and accountability under the de minimis program by requiring more data from shippers, including the product's tariff classification number, and provide border officials with the tools they need to more effectively track and target the millions of shipments arriving with a claim to the de minimis exemption. The Detect and Defeat Counter-Fentanyl proposal incorporates many of the bipartisan ideas put forward by members of Congress and would enhance CBP's ability to detect and seize illegal drugs and the raw materials used to manufacture them and hold drug traffickers accountable.
Administration action to protect U.S. textile and apparel manufacturers.
U.S. textile and apparel manufacturers play a key role in the U.S. defense industrial base and support hundreds of thousands of direct and indirect jobs in the United States. U.S. textile and apparel manufacturers face unfair competition from several China-based e-commerce giants as these companies take advantage of de minimis exemptions to supply huge volumes of textile and apparel products to U.S. consumers. In addition to the above de minimis reforms, the Administration is exploring other decisive measures to support U.S. textile and apparel manufacturers and their workers.
Executive Action to Expand Procurement of Certain Textile and Apparel Products: The Administration will explore ways to increase procurement of certain textile and apparel products across agencies to ensure that U.S. taxpayer dollars support textile and apparel jobs.
Enhancing textile and garment enforcement: The Administration continues to prioritize enforcement efforts on illicit textile and garment imports through increased targeting of small shipments, joint special trade operations, increased customs audits and foreign verifications, and expansion of the list of entities under the Uyghur Forced Labour Prevention Act (UFLPA).
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