WASHINGTON (BRAIN) — The Biden administration Friday said it will propose new trade rules under executive authority to stop the abuse of the de minimis threshold that can allow imports — including e-bikes and lithium-ion batteries — to circumvent safety standards.
The proposal of new rules includes allowing the Consumer Product Safety Commission to propose requiring importers of consumer products to file Certificates of Compliance electronically with the commission and U.S. Customs and Border Protection at the time of entry, including for de minimis shipments.
The $800 import threshold allows direct-to-consumer retailers, particularly from China, to sell e-bikes and lithium-ion batteries without Certificates of Compliance. They can be sold well below market cost because no duties, federal, state, or local taxes are paid. Those products also can enter the U.S. market bypassing CPSC regulations because off-shore retailers are out of reach of the U.S. government and legal system. Further, de minimis shipments enter the U.S. with less information than other imports and are not subject to duties and taxes.
Targeting unsafe products
"This regulation would strengthen CBP's and CPSC's ability to target and block unsafe products from entering the U.S. market and would help prevent foreign companies from using the de minimis exemption to circumvent consumer protection testing and certification requirements," the administration said in a statement.
To reduce the de minimis import volumes, the administration intends to propose new rulemaking that would exclude all shipments containing products covered by tariffs imposed under Sections 301 or 201 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962.
Chinese-made e-bikes, carbon frames, and juvenile bikes fall under Section 301. In May, the Biden administration ended what some called a "tariff holiday" for importers of those products, which had been subject to a 25% Section 301 tariff imposed by the Trump administration but were excluded from the program.
Section 301 tariffs currently cover about 40% of U.S. imports.
"Some e-commerce platforms and other foreign sellers circumvent these tariffs by shipping items from China to the United States claiming the de minimis exemption," the administration said in its statement. "If finalized, these goods would no longer be eligible for the de minimis exemption."
New rulemaking also would enhance enforcement in de minimis shipments that "will propose to strengthen information collection requirements to promote greater visibility into de minimis shipments."
Those new requirements would in part include aiding border protection to protect consumers from goods that don't meet regulatory health and safety standards and guard against U.S. businesses from unfair competition against imported goods that would otherwise be charged duties or restricted from entry.
"With today's announcement, the administration is using executive authority to stop the abuse of the de minimis exemption. The administration also calls on Congress to pass legislation this year to reform the de minimis exemption comprehensively to further protect American consumers, workers, and businesses."
More needs to be done
Last year, Rep. Earl Blumenauer (D-Ore.) reintroduced the Import Security and Fairness Act, a bipartisan legislation to halt non-market economies from exploiting the de minimis threshold and require border protection to gather more information on those shipments.
On Friday, he and Rosa DeLauro (D-Conn.) issued a joint statement about the Biden administration's actions.
"While we welcome today's announcement from President Biden on the dangers of the de minimis loophole, this is only the first step and does not negate the need for Congress to act on a comprehensive solution. Just this week, a majority of the Democratic Caucus urged the president to use the full scope of his authority to close the loophole once and for all. At the same time, we continue to work toward a bipartisan, bicameral solution that strengthens American competitiveness, protects consumers, and halts the flow of fentanyl and fentanyl precursors into our communities."
Notices of Proposed Rulemaking typically are published in the Federal Register and made available for the public in print and online for review and comments. After the comment period closes, the decision is made whether to proceed, alter the proposal, or withdraw it.
