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U.S. Textile Industry Urges CBP to Examine Impact of Low-Value Shipments

The National Council of Textile Organizations is urging U.S. Customs and Border Protection to immediately examine the trade, economic, and health and safety impacts of low-value imports (also known as de minimis or Section 321 imports) into the United States. This U.S. textile industry association argues that a publicly available analysis of the underlying impacts of these types of shipments is important “given the substantial and growing level of trade under the current de minimis structure.”

Section 321 of the Tariff Act of 1930 provides for an administrative exemption from duty and taxes for shipments of goods (other than bona-fide gifts and certain personal and household goods) imported by one person on one day having an aggregate fair retail value in the country of shipment of not more than US$800. Although it appears that this option is not available to avoid the additional tariffs imposed under Section 232 of the Trade Expansion Act of 1962, CBP has confirmed that it does apply for the additional tariffs imposed on mainland Chinese products under Section 301 of the Trade Act of 1974.

CBP recently indicated that it receives 1.8 million de minimis shipments per day but “faces significant challenges in targeting” such shipments “while still maintaining the clearance speeds the private sector has come to expect.” This is because CBP does not receive adequate advance information to enable the agency to assess the security risk of these shipments in an effective and efficient fashion. In an effort to address this problem, CBP is currently conducting a test to allow de minimis shipments, including those subject to partner government agency data requirements, to be entered via a new informal entry type 86 in the Automated Commercial Environment.

NCTO is concerned that textile and apparel products are “uniquely positioned to enter as de minimis shipments” because they “routinely sell for under $800 and represent over 40 percent of CBP’s duty collections.” The industry association further claims that (i) mainland China “is almost certainly the single largely beneficiary of this loophole”; (ii) Section 321 imports are displacing finished textile and apparel imports from numerous U.S. free trade agreement and trade preference partner countries that are key export destinations for U.S.-made fibres, yarns and fabrics; and (iii) Section 321 is being used to import adulterated products that may pose a health risk to consumers as well as “a vehicle for duty circumvention that provides easy access for products that are undervalued, misclassified, and/or transshiped.”

Moreover, NCTO strongly opposes the fact that Section 301 tariffs are not being applied on mainland Chinese textiles and apparel entered as de minimis shipments, which “further compounds the problem and undermines the administration’s efforts to crack down on unfair Chinese trade practices.” Accordingly, the association is calling on the administration to reverse course and apply any such additional tariffs on low-value shipments.

According to NCTO, the administration should prepare a detailed analysis of the underlying impacts of de minimis shipments with the following information:

  • a listing of products that CBP believes are most impacted by or most vulnerable to Section 321 tariff waivers;
  • a listing of countries that are the biggest beneficiaries of Section 321 tariff waivers:
  • data as to how much de minimis shipments have grown over the past five to ten years;
  • projections on the trajectory of e-commerce Section 321 waiver applications over the next five to ten years;
  • data on mainland Chinese products imported under the de minimis exception that would otherwise be subject to Section 301 tariffs;
  • estimates as to how current de minimis shipments are affecting U.S. tariff collections, domestic manufacturers, and U.S. FTA and trade preference partners;
  • an examination of procedures on de minimis shipments to determine the health and safety of these products;
  • an analysis of the statutes and regulatory rulings that form the basis for coupling Section 321 waivers to e-commerce transactions; and
  • recommended regulatory and/or statutory changes to create a more reasonable Section 321 structure, especially in relation to e-commerce.
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