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NCTO’s Plea to CBP: Investigate Tariff-Dodging De Minimis Imports

The National Council of Textile Organizations (NCTO) sent a letter to U.S. Customs and Border Protection (CBP) on Friday calling on the agency to conduct an immediate examination of the trade, economic, and health and safety impacts related to imports that seek de minimis waivers.

Section 321 de minimis refers to any individual shipment on a single day into the U.S. that falls under a revenue collection level that CBP determines is worth enforcing.

NCTO was reacting to a Sept. 13 Federal Register notice in which CBP said it receives 1.8 million de minimis shipments a day, but “faces significant challenges in targeting Section 321 shipments.” The notice said the agency does not “receive adequate advance information in order to effectively and efficiently assess the security risk” of those shipments each day.

“We share these fundamental concerns on what is a staggering amount of trade, about which we have virtually no information,” Kim Glas, president and CEO of NCTO, wrote in the letter.

NCTO noted that the system was originally intended for travelers bringing back goods from abroad, but is now being heavily utilized by e-commerce retailers, and, more nefariously, by counterfeiters. In 2015, Congress raised the de minimis level to $800 from $200, primarily due to the rapid expansion of e-commerce, allowing high-value goods into the U.S. duty-free, but also causing greater risk of abusing the system.

“E-commerce sales, including those through third-party platforms, have resulted in a sharp increase in the shipment of small packages into the United States,” CBP stated in its fiscal year 2018 Intellectual property report. “In FY 2018, there were 161 million express shipments and 475 million packages shipped through the international mail environment. Over 90 percent of all intellectual property seizures occur in the international mail and express environments. A majority of those fall under the de minimis threshold of $800.”

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According to NCTO, there has been “an explosion in the amount of trade in the current de minimis structure” and the organization, which represents the U.S. textile industry, said it believes it is important that CBP release a publicly available analysis outlining the underlying impacts on U.S. manufacturing and the country’s free-trade agreement partners.

NCTO said there are several problems with de minimis shipments. One is that Section 301 tariffs on Chinese imports are not applied to de minimis shipments, undermining the administration’s efforts to crackdown on unfair Chinese trade practices. In addition, the organization said while a data collection pilot is a good first step, CBP does not have the resources or tools to effectively gather data on de minimis shipments.

For example, NCTO said right now it is unknown what products are being shipped, what the revenue loss to the U.S. is and what is the impact on domestic manufacturing sectors. The group said it suspects the textile industry is directly impacted, but neither it or the government can effectively measure the scope of the problem or the harm to U.S. jobs.