Biden Administration's Last-Minute Rule to Curb Low-Value Shipments

The Biden administration has taken a significant step to address the growing issue of low-value shipments, particularly those claiming the de minimis exemption, by introducing a last-minute rule aimed at curbing their volume and strengthening enforcement. This move comes as a response to the exponential increase in de minimis shipments, which has made it more challenging to enforce U.S. trade laws, health and safety requirements, intellectual property rights, consumer protection rules, and to block illicit synthetic drugs such as fentanyl and synthetic drug raw materials and machinery from entering the country.

The new rulemaking, announced by the Biden-Harris Administration, includes several key measures to address the abuse of the de minimis exemption, particularly by China-founded e-commerce platforms. These measures aim to reduce the volume of de minimis importations, improve accountability and enforcement, and prevent the circumvention of safety standards.

One of the primary objectives of the new rule is to exclude certain products from the de minimis exemption. The Administration intends to issue a Notice of Proposed Rulemaking (NPRM) that would exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962. This would ensure that goods covered by these trade enforcement actions are no longer eligible for the de minimis exemption. Currently, approximately 40% of U.S. imports, including 70% of textile and apparel imports from China, are covered by Section 301 tariffs.

Another crucial aspect of the new rule is the strengthening of information collection requirements for de minimis shipments. The Administration plans to issue an NPRM regarding the entry of low-value shipments to propose stronger information collection requirements. This would include requiring specific, additional data for de minimis shipments, such as the 10-digit tariff classification number and the person claiming the de minimis exemption. This would improve targeting of de minimis shipments and facilitate expedited clearance of lawful de minimis shipments, helping to protect consumers from goods that do not meet regulatory health and safety standards and protect U.S. businesses from unfair competition.

The proposed regulatory changes would also clarify who is eligible for the administrative exemption and require filers to identify the person on whose behalf the exemption is being claimed. This would help U.S. Customs and Border Protection (CBP) protect consumers from goods that do not meet regulatory health and safety standards and protect U.S. businesses from unfair competition against imported goods that would otherwise be charged duties or restricted from entry.

The Consumer Product Safety Commission (CPSC) staff intends to propose a final rule requiring importers of consumer products to file Certificates of Compliance (CoC) electronically with CBP and CPSC at the time of entry, including for de minimis shipments. This would help prevent de minimis shipments from circumventing safety standards, ensuring that all imported products meet the necessary safety requirements.

While the new rulemaking aims to address the significant abuse of the de minimis exemption, particularly by foreign e-commerce platforms, it is essential to consider the potential economic consequences of reducing de minimis import volumes. Increased costs for consumers and businesses, disruption to supply chains, and potential job losses are some of the short-term challenges that may arise. However, the long-term benefits of strengthening trade enforcement and leveling the playing field for American workers and businesses could outweigh these initial impacts.

In conclusion, the Biden administration's last-minute rule to curb low-value shipments is a significant step in addressing the growing issue of de minimis shipments and their impact on U.S. trade and enforcement. By excluding certain products from the de minimis exemption, strengthening information collection requirements, and preventing the circumvention of safety standards, the new rule aims to reduce the volume of de minimis importations, improve accountability and enforcement, and better protect American consumers, workers, and businesses. As the economic consequences of these changes unfold, it will be crucial for policymakers to engage with stakeholders and mitigate any negative effects while pursuing the intended benefits of the proposed reforms.