The roughly 485 million packages that come into the U.S. duty free via the de minimis loophole is “overwhelming” and that volume “makes it harder for us to police products for consumer safety,” James Joholske, director of the office of import surveillance at the U.S. Consumer Product and Safety Commission (CPSC) told the U.S. China Economic and Security Review Commission on March 1. [Testimony]
Commissioner Kim Glas called de minimis “the Wild West of commerce” at the day-long hearing.
“More than 80% of shipments we examined at the ports had China listed as a country of origin,” Joholske said about the deluge caused by the emerging e-commerce direct-from-China model. “We face considerable challenges. The sheer volume remains overwhelming. The rise of e- commerce is a challenge for us with almost 60% of these small package shipments coming via e-commerce sales. We have little ability to act on small manufacturers overseas and that makes it harder for us to police consumer safety,” he said.
Many of these goods sent to the U.S. are coming under the de minimis provision and they enter with minimal requirements. Without the same data we get from formal entry, we cannot know what we should target for inspection. De minimis also enters through express couriers and international mail and it is in those areas where we at CPSC have limited to no coverage to review what is in those packages. De minimis represents a significant challenge for us. It makes it that much more difficult to intercept products that are in violation of consumer safety laws.
Joholske said CPSC needed “more resources” – a call that has become both obvious, and a standard response from any government agency.
Commissioner Glas wondered if more resources for CPSC would meaningfully change things.
“When shipments come in to us from formal entry…and if you find a product that is faulty, what do you do? Because I want to compare that process to de minimis,” Glas told him. “I cannot imagine that even if your budget was tripled overnight that you or Customs would be able to police all of these packages in the way you do it when it comes in off a boat or cargo plane.”
Commissioner Leland Miller, best known among Wall Street investors as the CEO of the China Beige Book, asked Hoholske if “things were getting worse because of de minimis, or is the problem just getting bigger?”
Joholske said it was both.
“The problem is getting larger because there are new companies entering the (e-commerce) market,” he said. “When de minimis went from $200 to $800 it changed the landscape significantly. I’m not advocating to roll it back or get rid of it, but it is critically important that there needs to be data of what is in those packages in order for us to be able to risk assess,” he said, adding that the entities that are involved in these transactions need to be held accountable for contraband and faulty products running the gambit from children toys with lead in them, or vitamins and pharmaceuticals that are ineffectively and falsely advertised, and may even be dangerous.
CPSC was established in 1972 and is the federal regulatory body charged with protecting the public from unreasonable risk of injuries or death associated with consumer products.
Joholske separated the China exporters in three separate categories, without naming companies: he said some were very sophisticated and knew the product safety requirements and laws restricting certain products. He said others wanted to understand the laws and regulations better so they could be seen as a proper business Americans can trust. And lastly, there were a bunch of smaller and mid sized entrants who were new to this market and trying to make fast money, often going from one product line to the next – the equivalent of the snake oil salesman.
“Innocent Americans are the ones who may suffer,” he said. “It is this last category of firms for which enforcement is so difficult. Not only are they not interested or able to follow U.S. safety rules, but as foreign firms, we do not have adequate tools to stop them.”
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CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Consumer Safety Official: De Minimis is ‘Overwhelming’
The roughly 485 million packages that come into the U.S. duty free via the de minimis loophole is “overwhelming” and that volume “makes it harder for us to police products for consumer safety,” James Joholske, director of the office of import surveillance at the U.S. Consumer Product and Safety Commission (CPSC) told the U.S. China Economic and Security Review Commission on March 1. [Testimony]
Commissioner Kim Glas called de minimis “the Wild West of commerce” at the day-long hearing.
“More than 80% of shipments we examined at the ports had China listed as a country of origin,” Joholske said about the deluge caused by the emerging e-commerce direct-from-China model. “We face considerable challenges. The sheer volume remains overwhelming. The rise of e- commerce is a challenge for us with almost 60% of these small package shipments coming via e-commerce sales. We have little ability to act on small manufacturers overseas and that makes it harder for us to police consumer safety,” he said.
Joholske said CPSC needed “more resources” – a call that has become both obvious, and a standard response from any government agency.
Commissioner Glas wondered if more resources for CPSC would meaningfully change things.
“When shipments come in to us from formal entry…and if you find a product that is faulty, what do you do? Because I want to compare that process to de minimis,” Glas told him. “I cannot imagine that even if your budget was tripled overnight that you or Customs would be able to police all of these packages in the way you do it when it comes in off a boat or cargo plane.”
Commissioner Leland Miller, best known among Wall Street investors as the CEO of the China Beige Book, asked Hoholske if “things were getting worse because of de minimis, or is the problem just getting bigger?”
Joholske said it was both.
“The problem is getting larger because there are new companies entering the (e-commerce) market,” he said. “When de minimis went from $200 to $800 it changed the landscape significantly. I’m not advocating to roll it back or get rid of it, but it is critically important that there needs to be data of what is in those packages in order for us to be able to risk assess,” he said, adding that the entities that are involved in these transactions need to be held accountable for contraband and faulty products running the gambit from children toys with lead in them, or vitamins and pharmaceuticals that are ineffectively and falsely advertised, and may even be dangerous.
CPSC was established in 1972 and is the federal regulatory body charged with protecting the public from unreasonable risk of injuries or death associated with consumer products.
Joholske separated the China exporters in three separate categories, without naming companies: he said some were very sophisticated and knew the product safety requirements and laws restricting certain products. He said others wanted to understand the laws and regulations better so they could be seen as a proper business Americans can trust. And lastly, there were a bunch of smaller and mid sized entrants who were new to this market and trying to make fast money, often going from one product line to the next – the equivalent of the snake oil salesman.
“Innocent Americans are the ones who may suffer,” he said. “It is this last category of firms for which enforcement is so difficult. Not only are they not interested or able to follow U.S. safety rules, but as foreign firms, we do not have adequate tools to stop them.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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