Pro-Trade Democrat Swayed by Arguments to Restrict de Minimis

Beyer, D-Va., noted that he heard from CBP with other Ways and Means members on Dec. 12, when the agency shared the statutory changes they want to de minimis, which are focused on collecting data from new sources, such as e-commerce marketplaces and logistics providers, sharing data on intellectual property violations more widely, and reducing bureaucracy when throwing out detained packages. All of those elements are part of the Senate's recently introduced Customs Modernization Act (see 2312110048).

"And they clearly weren't in favor of Mr. Blumenauer's proposal," he said, making him feel "more ambivalent" about restricting eligibility for de minimis. "I'm less ambivalent today, because I think the testimony was really clear about its impact," he said after the Dec. 13 hearing, calling it "the best explanation I've heard of the downside of de minimis."

Rep. Jimmy Pannetta, D-Calif., also referred to the visit from CBP Acting Commissioner Troy Miller, saying Miller "really focused on insufficient data, mislabeling of products. It's not the case that de minimis is a loophole where packages aren't screened, but it is the case that a lack of information and information sharing ... affects their ability to target riskier shipments."

At that meeting, CBP also asked for the authority to deny de minimis eligibility for actors that have already been deemed irresponsible by the federal government. "Updates would clearly authorize CBP to leverage suspension and debarment laws to prevent irresponsible actors from participating in trade programs, as they may be more susceptible to engaging in deceptive tactics -- like using shell companies -- to evade duties and laws," said CBP's fact sheet shared that day.

Beyer also said he brought up changes to de minimis in a small business roundtable he held in his Northern Virginia district earlier that week, and about half wanted the status quo, half wanted restrictions.

Beyer said eliminating de minimis entirely is "probably too radical, but I'm sure there's a middle ground that makes progress, somewhere between China's $7 [threshold] and our $800" threshold. He said he thinks the work ahead is to merge CBP's requests with restrictions on de minimis eligibility or threshold to get a bill text "that could actually pass."

Beyer, Panetta and Blumenauer were joined at the hearing by Rep. Brian Higgins, D-N.Y., and Rep. Suzan DelBene, D-Wash. Beyer said that DelBene has "pushed back" on Blumenauer's ideas in his conversations with her on the issue.

Blumenauer said in an interview after the hearing that while CBP has "some great recommendations," he argues they ignore the fundamental problem, which is, in his view, that exporters have no accountability for what they're shipping when the packages enter under de minimis.

Although no Republicans attended, Blumenauer said he has been having continued conversations with Trade Committee Chairman Adrian Smith, R-Neb., and Ways and Means Committee Chairman Jason Smith, R-Mo. He says they and other Republicans have "deep concern" with how de minimis operates.

He said the purpose of the testimony was "to help build a consensus. We can get this across the finish line, I think, in the next few months."

Blumenauer is leaving Congress in December 2024.

At the hearing, called "Examining the Pernicious Impact of the de Minimis Loophole," Blumenauer said, "We know products entering under de minimis are undercutting American business."

Parkdale Mills CEO Andy Warlick said apparel entering under de minimis is partly fueling a drop in demand for his mills' cotton yarn, and that the textile industry has had more than 1,000 layoffs recently. He said CBP estimates that half of the 1 billion packages a year that come in under de minimis are apparel. Domestic yarn producers rely on buyers in Central America who take advantage of duty-free access to the U.S. market under CAFTA. With de minimis, garment manufacturers can get the same tariff breaks "without any of the hallmarks of a negotiated free trade agreement, including no rule-of-origin requirements, reciprocal market access, or labor or environmental standards," he testified.

He also argued that without consumer product safety screening of these packages, there are batteries that catch fire, helmets that fail to provide protection and toys with lead paint entering U.S. homes.

Coalition for a Prosperous America CEO Michael Stumo said: "Most packages that arrive from China do have data on them about what’s inside; that data is garbage. Someone shipping narcotics or fake Nike sneakers from anywhere in the world is not going to fill out forms telling you what’s inside, or if it is legitimate goods like consumer electronics -- how much it’s worth so they don’t go over the $800 threshold.”

He argued that only gifts sent from abroad or purchases when residents come home from outside the country should be covered by de minimis -- all commercial goods should be handled by a customs broker. He said CBP views brokers as force multipliers for enforcement. "The customs broker has to know their customer and have reasonable knowledge to represent what's in the package," he said. "And if they do it wrong, they can lose their license."

Nury Turkel, chairman of the Uyghur Human Rights Project, said it is critical to close the loopholes that make it more difficult for the government to enforce the UFLPA. He quoted a former JFK port official (see 2304170052) who noted that when CBP flagged informal entry packages for inspection, one-quarter of the time they were not presented because they had already been released, and that one-quarter of all packages covered by the Type 86 pilot had some kind of violation.

Turkel said these weaknesses in the small package environment provide "an open door for U.S. complicity with China's ongoing genocide of the Uyghur people."