WASHINGTON — The Coalition for a Prosperous America’s (CPA) CEO, Michael Stumo, today testified before the House Ways and Means Subcommittee on Trade in a hearing titled, “Modernizing Customs Policies to Protect American Workers and Secure Supply Chains.” Stumo’s testimony focused on de minimis, an import loophole non-market economies like China exploit to ship hundreds of millions of packages valued under $800 into the United States without inspection, information disclosure, or duty payment. According to U.S. Customs and Border Protection (CBP), imports using the de minimis loophole include “high-risk shipments that may contain narcotics, merchandise that poses a risk to public safety, counterfeits, or other contraband.”
In April, human rights organizations testified before the Congressional-Executive Commission on China that the de minimis loophole is being used to skirt the Uyghur Forced Labor Prevention Act (UFLPA). “The de minimis shipping provision is being used to circumvent UFLPA,” Anasuya Syam, Human Rights and Trade Policy Director for the Human Trafficking Legal Center, told the Commission.
De minimis, also known as the “Amazon loophole”, is a serious flaw in customs law that allows over two million packages per day to enter the U.S. without meaningful inspection, tariffs, country of origin information, or HTS codes,” Stumo testified. “Historically, it was a very minor exception. Today, shippers that use de minimis have little or no knowledge of what is in the box. The practical effect is to authorize every foreign vendor on Planet Earth — completely outside our jurisdiction — the ability to sell directly to American households without any liability.
Earlier this month, CPA’s Economics Team released a new analysis that estimates de minimis imports from China hit $188 billion last year. The uncounted imports increase the actual 2022 U.S. goods trade deficit by 16% from $1.19 trillion to $1.38 trillion, representing some 8.3 million lost U.S. jobs. Last November, CPA urged CBP to issue a public correction of de minimis shipments after it released false government statistics.
“Chairman Jason Smith rightly said de minimis is essentially a “free trade agreement with China.” Allowing China to exploit de minimis is in fact unilateral disarmament of our customs and trade laws,” Stumo continued. “It is another way that China is exploiting U.S. law to further their geopolitical and military rise, while making us weaker by sacrificing American manufacturers and workers.”
Last Congress, CPA strongly supported legislation introduced by U.S. Representative Earl Blumenauer (D-OR), the Import Security and Fairness Act, which would address the de minimis loophole. This bill was included in the trade title of the House China bill that passed last February.
“Thankfully, there is bipartisan agreement that this must be fixed. Ranking Member Blumenauer led the way with an important bill last year that effectively excludes China from exploiting the de minimis loophole,” Stumo stated. “Many organizations endorsed it, including CPA. Several Republican Senators supported it. According to a Morning Consult poll, an overwhelming majority (81%) of voters support Congress addressing the de minimis loophole. Former trade ambassador Lighthizer said last week that Congress must get rid of de minimis because it supports China and hurts us. Simply lowering it to $200 will do nothing to fix the problem.”
Earlier this month, Stumo authored an op-ed in The Washington Times that stated how a “bipartisan consensus is emerging on the need to overhaul an obscure part of U.S. customs law known as ‘de minimis.’”
According to a Morning Consult poll, an overwhelming majority (81%) of voters—including 79% of Democrats; 75% of Independents; 86% of Republicans—support the U.S. government prohibiting countries like China that pose a threat to American workers from using de minimis to export foreign-made goods to the U.S. Additionally, three times as many voters support Congress lowering the de minimis value as opposed to voters who want to increase it. Read