The U.S. Senate Finance Subcommittee for International Trade, Customs, and Global Competitiveness took a one-sided view on the de minimis exemption in a hearing on Tuesday, rejecting anything but technocratic changes to the global duty-free rule for small packages priced under $800.
The Subcommittee’s only witnesses on the de minimis loophole were its two largest cheerleaders: anti-tariff groups the U.S. Chamber of Commerce and the National Foreign Trade Council (NFTC).
See CPA’s “Falsehoods & Facts” page on the de minimis falsehoods disseminated by both groups.
Both groups expressed opposition to lowering the de minimis threshold to reciprocate with other countries. Instead, they told Chairman Tom Carper (D-DE) and Ranking Member John Cornyn (R-TX) that hiring more Customs (CBP) agents and obtaining more information about the contents of de minimis shipments would suffice.
Even so, witness John Drake, Vice President at the Chamber for Supply Chain Policy, basically admitted to the chaos caused by the de minimis provision today. [Testimony] In recent years, express shippers like FedEx, UPS, and DHL, which have been the chief advocates have been losing ground to private air cargo logistics firms
“If the goods are at the port and the CBP does not have any data on the goods, the CBP is going to have a problem deciding whether a product should be allowed in or denied,” said Drake. “The huge explosion of e-commerce with all these new players who weren’t there before – warehouses, new e-commerce platforms – all those players are not the traditional express carriers like UPS that have been operating under CBP authority for decades, and those companies are not necessarily providing data to CBP on those small packages. In our view, they should be.”
Drake and NFTC witness John Pickel, Senior Director for International Supply Chain Policy [Testimony] opposed bipartisan legislation, namely the Import Security and Fairness Act, which would stop Chinese merchandise from being waived-in, duty-free, with little to no inspection via the de minimis loophole.
The other hearing witness was a longshoreman. He did not weigh in on trade policy.
Pickel said the U.S. benefits from de minimis in other countries, so we should not roll back our program or they will retaliate.
“American exports benefit from de minimis provisions in 89 countries. Those standards could be rolled back if the U.S. changes the de minimis rule,” Pickel said.
Senate Finance’s Subcommittee on Trade Takes One-Sided Approach to De Minimis Import Rule
The U.S. Senate Finance Subcommittee for International Trade, Customs, and Global Competitiveness took a one-sided view on the de minimis exemption in a hearing on Tuesday, rejecting anything but technocratic changes to the global duty-free rule for small packages priced under $800.
The Subcommittee’s only witnesses on the de minimis loophole were its two largest cheerleaders: anti-tariff groups the U.S. Chamber of Commerce and the National Foreign Trade Council (NFTC).
See CPA’s “Falsehoods & Facts” page on the de minimis falsehoods disseminated by both groups.
Both groups expressed opposition to lowering the de minimis threshold to reciprocate with other countries. Instead, they told Chairman Tom Carper (D-DE) and Ranking Member John Cornyn (R-TX) that hiring more Customs (CBP) agents and obtaining more information about the contents of de minimis shipments would suffice.
Even so, witness John Drake, Vice President at the Chamber for Supply Chain Policy, basically admitted to the chaos caused by the de minimis provision today. [Testimony] In recent years, express shippers like FedEx, UPS, and DHL, which have been the chief advocates have been losing ground to private air cargo logistics firms
“If the goods are at the port and the CBP does not have any data on the goods, the CBP is going to have a problem deciding whether a product should be allowed in or denied,” said Drake. “The huge explosion of e-commerce with all these new players who weren’t there before – warehouses, new e-commerce platforms – all those players are not the traditional express carriers like UPS that have been operating under CBP authority for decades, and those companies are not necessarily providing data to CBP on those small packages. In our view, they should be.”
Drake and NFTC witness John Pickel, Senior Director for International Supply Chain Policy [Testimony] opposed bipartisan legislation, namely the Import Security and Fairness Act, which would stop Chinese merchandise from being waived-in, duty-free, with little to no inspection via the de minimis loophole.
The other hearing witness was a longshoreman. He did not weigh in on trade policy.
Pickel said the U.S. benefits from de minimis in other countries, so we should not roll back our program or they will retaliate.
“American exports benefit from de minimis provisions in 89 countries. Those standards could be rolled back if the U.S. changes the de minimis rule,” Pickel said.
No other country has anything like the U.S. version of de minimis. In the United States, the dollar threshold is listed as $800 – already extraordinarily high — but that figure is based on claimed ‘fair’ value in a foreign country (untethered to U.S. transaction price). Even during USMCA negotiations, multinationals succeeded in imposing asymmetric burdens on the United States. Under Article 7.8 of USMCA, the United States pledged an $800 threshold, while Mexico and Canada would agree to no more than $117. De minimis is deeply unpopular in both Canada and Mexico. In a sense, the U.S. Chamber and NFTC witnesses were like the Senators hearing on fire safety from arsonists.
Sen. Charles Grassley (R-IA) asked about de minimis and the Uyghur Forced Labor Act. He was reading from some papers in front of him. “I still consider myself a free trader, but I think abuse of de minimis has to be addressed,” he said to Drake.
“We recognize that the trade environment has changed in the last 25 years. There are concerns that CBP is not collecting certain types of data to help them out, but that is true all up and down the trade environment, for formal and informal entry,” said Drake. “We have been supportive of the CBP getting better data from warehouses, etcetera, but we believe efforts to single out de minimis are inappropriate.”
Senate Finance Committee Democrats posted their briefing sheet on Tuesday about the subcommittee hearing. In it, the Democrat Committee staff repeated the big importers’ talking points that repealing de minimis would be burdensome for CBP.
“Eliminating de minimis entirely could maximize enforcement but drain CBP of resources and lead to bottlenecks and delays at U.S. ports,” they wrote.
Customs agents today are inundated with small packages sent via de minimis shipments, which itself is a growing burden to decipher what textile goods, for instance, almost all from China, are running afoul of cotton bans in the Uyghur Forced Labor law. They are also faced with spotting and destroying contraband goods from around the world, and narcotics such as fentanyl.
Tuesday’s hearing was mostly empty of Committee members. At its fullest, Carper and Cornyn were joined by four other members out of 17. At least half the hearing was Carper making small talk with witnesses about their wives and jobs and was the only member asking questions in the final half hour of what was a short hour-long hearing.
Earlier this month, the House Ways & Means Committee Republicans marked up two newly written de minimis bills that would ban Chinese companies facing sanctions and other restrictions for using de minimis. There have been at least three other pieces of legislation but either none have made it to a floor vote or failed to make it into larger bills.
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