An alliance of unions, manufacturers and trade associations is urging congressional leaders to use a research and competition bill to end China-based companies’ ability to sell duty-free goods directly to U.S. consumers.
“As every day goes by and another two million shipments enter our country without scrutiny, or paying applicable taxes or tariffs, our economic and national security are further hollowed out,” the groups said in a letter to congressional leaders. The 3,000-page House bill includes a provision that would end the access for Chinese companies, and a lawmaker withdrew an amendment that would remove that provision.
The Rules Committee is scheduled to review the bill Tuesday. House Ways and Means Trade Subcommittee Chair Earl Blumenauer, D-Ore., offered the provision focusing on mailed or express courier shipments into the U.S. of goods valued at $800 or less and not subject to U.S. tariffs or documentation. The value threshold is known as the de minimis level.
The Rules Committee may skip discussion of the provision after Rep. Kurt Schrader, D-Ore., withdrew an amendment to remove the section.
But supporters want to make sure they underscore what they see as necessary language that is not part of the Senate’s China competition bill. The House and Senate are expected to negotiate a compromise bill from the two measures.
Blumenauer doesn’t name China in his legislation, but it’s the only country that meets the two requirements spelled out for ending access to de minimis shipping: nonmarket economies and on the Office of the U.S. Trade Representative’s annual priority watchlist of countries that provide inadequate protection of U.S. companies’ copyrights, trademarks and trade secrets.
The legislation would direct the U.S. Customs and Border Protection to collect more information on de minimis shipments and prohibit importers that have had de minimis privileges suspended or ended.
Blumenauer said Chinese goods are highly likely to result from intellectual property theft or forced labor, given the country’s history as a major center of counterfeit goods and record of human rights violations.
The U.S. currently designates 10 other countries as nonmarket economies, and three of them — Vietnam, Turkmenistan and Uzbekistan — are on a separate, more general USTR watchlist for intellectual property violations.
“De minimis treatment was never meant to be a major avenue of international commerce. It is an administrative provision to ensure customs officers do not waste government resources performing tariff assessments on items of trivial value,” the manufacturing groups and unions say in a letter sent Friday night to Speaker Nancy Pelosi, House Minority Leader Kevin McCarthy, Senate Majority Leader Charles E. Schumer and Senate Minority Leader Mitch McConnell.
“This provision of the bill will crack down on China’s aggressive exploitation of so-called ‘de minimis’ procedures in our customs law,” the alliance said.
The co-signers include the AFL-CIO, Alliance for American Manufacturing, Coalition for a Prosperous America, International Brotherhood of Teamsters, Narrow Fabrics Institute, National Council of Textile Organizations, Service Employees International Union, United States Footwear Manufacturers Association, U.S. Industrial Fabrics Institute, United Steelworkers and Workers United.
The groups cite comments by U.S. Customs and Border Protection in 2019 that attributed rapid growth in de minimis shipments to e-commerce and congressional legislation that increased the U.S. de minimis level from $200 to $800. The de minimis threshold in China is less than $10.
In its fiscal 2020 report, Customs and Border Protection said the total volume of shipments via air cargo and truck transport valued at $800 or less increased by 219 percent and 123 percent, respectively.
The agency wrote in its report that “adversaries seek to exploit this volume, presenting CBP with economic risks in the form of intellectual property rights (IPR) infringement as well as safety risks from poor quality and untested consumer products.”
Ways and Means Republicans consider the overall trade section in the House China competition bill to be a mixed bag.
A committee staffer said during a background briefing on Jan. 27 that the issue is complex and probably would be better addressed as Customs and Border Protection develops its 21st-century enforcement framework. However, the staffer said that process could take several years.
There’s not enough data or analysis at this point for Ways and Means Republicans to be comfortable with the proposal.