WASHINGTON — June 15, 2023 — Today, U.S. Senators Sherrod Brown (D-Ohio) and Marco Rubio (R-Fla.) and U.S. Representatives Earl Blumenauer (D-Ore.-3) and Neal Dunn (R-Fla.-2) introduced the Import Security and Fairness Act, which would close a key loophole that foreign companies exploit to avoid paying duties and fees to unfairly compete with Ohio businesses.
Right now, packages under $800 in valuation are exempted from U.S. duties, taxes, and fees. The number of packages using this loophole to avoid duties has exploded in recent years, to more than two million packages per day. Competitors will often split large shipments into many small packages to cheat the rules and evade the duties they owe, gaining an unfair competitive advantage.
Brown’s bipartisan, bicameral legislation would ensure low-value shipments from non-market economies, such as China, are no longer exempt from paying any duties, taxes, or fees to the U.S. Government.
“Our trade laws can only protect Ohio workers and Ohio businesses if they aren’t riddled with loopholes. This loophole is essentially a backdoor way for competitors like China to ship goods into the U.S. without paying the tariffs and other taxes and fees they owe,” said Senator Brown. “Ohio workers should not be forced to compete with foreign competitors that cheat. Our bill would stop Chinese companies from abusing our trade laws to undermine Ohio businesses and their workers.”
“China exploits our capital markets and uses slave labor to undercut American businesses,” said Senator Rubio. “It is bad for our country to let China flood our country with duty-free packages using the de minimis exception. The Import Security and Fairness Act will close this loophole and take another critical step to stop China from cheating on trade.”
“The de minimis loophole is a threat to American competitiveness, consumer safety, and basic human rights,” said Representative Earl Blumenauer. “It is used by primarily Chinese companies to ship over two million packages a day into the United States. It puts American businesses at a competitive disadvantage while flooding American consumers with undoubtedly harmful products. There is virtually no way to tell whether packages that come in under the de minimis limit contain products made with forced labor, intellectual property theft, or are otherwise dangerous. It is time to close this loophole once and for all.”
“The de minimis $800 threshold is the highest in the world and is undermining U.S. manufacturers and U.S. workers. It is unfair, it cannot be regulated, and it’s full of fraud. Our de minimis program represents a unilateral disarmament of our customs enforcement and laws,” said Anderson Warlick, CEO of Parkdale Mills, which operates U.S. Cotton in Cleveland.
“We applaud Senator Brown’s leadership in the Senate in introducing this important bill, which would effectively prohibit China and Russia from exploiting the Section 321 de minimis mechanism in U.S. trade law,” said National Council of Textile Organizations President and CEO Kim Glas. “This gaping loophole allows more than 2 million shipments a day to enter the U.S. market duty-free and largely uninspected, which in turn severely undermines the competitiveness of U.S. textile manufacturers and workers, as well as our Western Hemisphere trade partners. It also endangers American consumers by allowing tainted products like those made with forced labor and counterfeits to land on our doorsteps. We look forward to continuing to work with Senator Brown and Senator Rubio on their legislation to address this serious problem.”
Since 1938, the de minimis provision in U.S. trade law has allowed low-value packages to enter the U.S. through simplified import processes and without paying any duties, taxes, or fees to the U.S. government. However, the government has continually raised this limit throughout the years, with the current limit being set at $800 in 2016. This has resulted in a severe increase of e-commerce packages entering the U.S. that are just under this $800 limit in order to take advantage of de minimis provisions.
Currently, over 2 million packages enter the U.S. each day under de minimis provisions. Due to looser regulations on de minimis packages, the U.S. Customs and Border Protection (CBP) and Consumer Product Safety Commission have raised concerns about these packages allowing unsafe and illicit imports into the United States, including goods made with forced labor. These imports also gain a significant competitive advantage over similar, U.S.-made products as they do not have to pay duties, taxes, and fees at the border — especially if they come from countries with markets fueled by government intervention.
Posted: June 15, 2023
Source: National Council of Textile Organizations