CBP Released False Government Statistics

Last week, U.S. Customs and Border Protection’s (CBP) Office of Trade released false government statistics. CBP’s Office of Trade stated that the total value of de minimis shipments fell from $67,039,140,875 in CBP’s FY 2020, down to $39,876,651,152 in FY 2021. These numbers are not accurate, and in fact are certainly a gross, material undervaluation, which happens to be a serious offense in customs law.

“De Minimis” shipments refers to shipments that are imported into the United States via Section 321 of the Tariff Act of 1930. Section 321 is available to any vendor worldwide if they claim that their shipment’s value is under $800. If they make this claim, then their shipment can be sent to the United States free of any tax or tariff, without having to report basic data, and with almost no chance of being scrutinized by CBP.

The Coalition for a Prosperous America has a guide, available on our Trade & Tariffs Issue page, explaining the corruption of Section 321, and how it was manipulated into a gateway for every fly-by-night foreign vendor to bypass virtually all of our laws.

CBP Doesn’t Actually Know the Total Value of De Minimis Shipments

CBP’s new report (CBP Publication No. 2036-1022) was the first time CBP has ever reported an official value for de minimis imports. The reason the agency has never reported a value is because CBP does not know the true value for any period of time. They do not know because the majority of de minimis shipments arrive via international mail, and most international mail shipments do not contain electronic data. Thus for CBP to know the total value of de minimis shipments, it would need to be manually logging the value of the hundreds of millions of shipments entered without electronic manifests in 2021 alone.

For this reason, the Coalition for a Prosperous America (CPA) was surprised to see specific dollar amounts listed as the “Total of de minimis value” for each of CBP’s Fiscal Years 2018 through 2021.

Even more surprising, the report stated that the value of de minimis shipments declined by over $27 billion from 2020 to 2021, while the volume of shipments increased from 636 million to over 771 million during the same time. The Wall Street Journal described de minimis shipments as the tariff loophole “undermining U.S. trade policy” in a front page feature earlier this year. Foreign logistics providers actively market Section 321 as a “loophole” to be exploited for shipping to the United States.

This is how CBP’s Office of Trade presented its data on the total value of de minimis shipments:

Fake Government Statistics

CPA reached out to a trusted source at CBP to ask how CBP’s Office of Trade had managed to put a precise number on the value of de minimis shipments. The CBP source replied that the amounts were only the totals of de minimis shipments entered with electronic bills of lading, and did not include the value of de minimis shipments where this information was not available, which includes most international mail shipments.

This was a shocking admission. Imagine driving down from Toronto to the Buffalo Port of Entry with a truck full of liquor and cigarettes. You know the value of the liquor, but not the cigarettes. So you tell the CBP agent the value of the liquor you’re importing, omit any mention of the cigarettes, and assert this as the “total” value of your shipment. Makes your life easier, right? You’ve just committed a serious offense under CBP’s own regulations (19 C.F.R. § 148.19, False or fraudulent statement). Your cargo will be seized. You may go to jail.

Following a complaint by CPA, CBP’s Office of Trade has stated that this reporting was an “accident”, and that the document will be updated.

Even if CBP had the total declared value, it would still be a massive under declaration

Sources at CBP report that millions of de minimis shipments, including ones that weigh over 500lbs, have a declared value of “$1”, which is impossible. Nonetheless, they’re admitted, because CBP does not have – and will never have – the resources to inspect millions of shipments per day.

CPA believes the value of de minimis shipments is likely well north of $128 billion

Earlier this year, CPA released an estimate, considered conservative, that the value of de minimis shipments in 2021 was $128 billion. CPA chief economist Jeff Ferry said he stands by this estimate and pointed out that the number one source of de minimis imports, Amazon, has reported higher North American revenue this year compared to 2021. This is in line with reports that the number of de minimis shipments is approaching a 1 billion annualized rate.

An official 40% drop in the value of de minimis shipments would have been convenient for transnational advocacy groups

At a panel on de minimis hosted by the Washington International Trade Association in June, a representative of the National Foreign Trade Council had also made the bold claim that the value of de minimis shipments was going down. This was in furtherance of advocacy by that group and others hoping to fend off Congressional reform of Section 321. In April of this year, the U.S. House passed a bill that would close the worst exploitation of de minimis by nations that are both non-market economies and on USTR’s ‘Priority Watch List’, meaning they are one of the worst offenders in terms of intellectual property abuse.

CBP's John Leonard gets laughs and applause from professionals who import goods with this joke: China has a free trade deal with the U.S.: it's called de minimis. @repblumenauer

— Mara Lee (@MaraRhymesSarah) September 19, 2022

CPA urges CBP to publicly disavow false data

As of the date of this posting, the false statistics have not been updated. CPA has urged CBP to, at a minimum, ensure that a corrected publication receive a new publication number, and the former retracted. This cannot be a ‘stealth’ update. False government statistics were published, and distributed via industry press. Advocacy groups who want to minimize concern about the egregious damage stemming from Section 321 can use the false data that was published in their meetings with policy makers, failing to disclose the bad data. They may claim they were unaware the report’s representations were retracted.

Fake statistics come just as secretive CBP industry group pushes to make it impossible to collect reliable data on de minimis shipments, and even repress data disclosure for regular shipments that has been public for decades

CBP’s Office of Trade works closely with a so-called advisory group of multinational enterprises known as the Commercial Customs Operations Advisory Committee (COAC). Members of the COAC represent large multinational enterprises, and the U.S. Chamber of Commerce has a representative. There are serious concerns about regulatory capture between the COAC and CBP’s commercial functions.

An official COAC Recommendation published on September 14, 2022, stated that “COAC recommends that CBP share with [its] E-commerce Task Force the initial HTSUS waiver proposal draft, compliance process, and/or additional data waiver prior to its finalization, and prior to any notice or release to the public.” (Emphasis added). HTSUS stands for “Harmonized Tariff System (HTS) of the United States”, and the HTS system is the global taxonomy for categorizing goods as they pass through ports.

Waiving HTSUS numbers is a complete abdication of trade enforcement, and even the integrity of our border. At the WITA Panel in June, CBP’s recently retired Executive Assistant Commissioner for Trade, Brenda Smith, said that “cargo descriptions are lousy” and that CBP’s targeting systems are built for HTS numbers. She was clear: “CBP still needs that HTS number”. She went further too, saying “Neither the government nor consumers right now has visibility into third party shipments to make good decisions about risks. We don’t know who is exporting those goods or where they are coming from in many cases.”

Also last week, CBP’s COAC came under fire by forty human rights groups for seeking to suppress data about traditional shipments which has been public for decades. The Associated Press, in its article “US Businesses Propose Hiding Trade Data Used To Trade Abuse“, attempted to get comment from COAC Members including Wal-Mart and General Motors, but they declined.