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House committee's report calls for import threshold reduction

Published December 12, 2023
The industry has called for de minimis reform to keep low-quality e-bikes and batteries out of the country.

WASHINGTON (BRAIN) — A House committee looking at economic and security issues with China released a bipartisan report Tuesday detailing 150 policy recommendations, including reducing the de minimis threshold for imports from foreign adversaries and strengthening Customs and Border Protection.

De minimis, also known as the $800 import threshold, has been blamed by many in the industry for allowing low-quality e-bikes and lithium-ion batteries to flood the market. The deadly fire epidemic in New York City led to the passing of a law requiring third-party certification of micromobility devices and batteries.

The high threshold allows direct-to-consumer retailers, particularly from China, to sell e-bikes and lithium-ion batteries without certificates of conformity and bypass Consumer Product Safety Commission regulations. The high threshold also is cited for allowing counterfeit products into the U.S. market.

Led by Chairman Mike Gallagher (R-Wis.) and Ranking Member Raja Krishnamoorthi (D-Ill.), committee released its findings following an investigation of "the CCP's decades-long campaign of economic and technological warfare."

It recommends to "reset the terms of our economic relationship with the People's Republic of China, stem the flow of U.S. capital and technology fueling the People's Republic of China's military modernization and human rights abuses, and invest in technological leadership and build collective economic resilience in concert with allies.

The report did not address Section 301 tariffs, affecting bike imports, nor Section 232 tariffs, affecting raw steel and aluminum imports from most countries.

Messingschlager USA CEO Patrick Cunnane spoke in Washington during a tariff hearing in 2018 to propose lowering the threshold to $50. He told BRAIN in January he would like to see it lowered to $10, in line with China's domestic rule.

Besides the e-bike safety and counterfeiting issues, reform proponents note that packages arriving under the de minimis bypass state and local sales tax and import duties, giving foreign retailers a price advantage.

In June, the Import Security and Fairness Act was introduced in the Senate to restrict non-market economies like China from using the de minimis threshold to import potentially dangerous products. The bill was originally introduced in January 2022. Rep. Earl Blumenauer (D-Ore.), one of four members of Congress to submit the bill, has been vocal in his criticism of de minimis, saying in excess of two million packages enter the U.S. daily without inspection, paying duties, taxes, or fees.

On Tuesday, Blumenauer's office announced that he will host a public roundtable Wednesday on the de minimis loophole's impact on the U.S. The roundtable can be livestreamed on YouTube.

The committee’s de minimis recommendation drew criticism from the National Foreign Trade Council, which said reducing the threshold would increase costs for consumers and small businesses, and it would not adequately address the risks of dangerous products entering the U.S.

“De minimis is not a loophole; it is a staple of U.S. customs law that Congress designed to provide access to international markets for small businesses and lower costs for consumers," the Council said. "Customs and Border Protection) has confirmed that de minimis shipments are processed the same way as higher value parcels and are subject to enforcement of U.S. laws, including the Uyghur Forced Labor Prevention Act. This recommendation would not address challenges in the important work of stifling the flow of illicit drugs and products made using forced labor from entering our borders. There are policy options that improve enforcement of U.S. laws at our borders, including increasing compliance across all ways that products come into the U.S., without doubling costs for American consumers and small businesses.”

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