Even as U.S. lawmakers call for action to close loopholes in the “small value exemption” rule, more packages are entering the United States under this trade rule. E-commerce giants Temu and Shein often take advantage of the rule, which allows goods to enter the U.S. duty-free and with little scrutiny.
The so-called “small exemption” provision allows packages worth less than $800 to enter the United States through streamlined procedures. Critics believe this is a loophole that can help companies evade tariffs and ignore import bans on products involving forced labor.
In fiscal 2024, according to data provided to The Wall Street Journal by Rep. Mike Gallagher, R-Wis., chairman of the House Select Committee on the Chinese Communist Party, At least 485 million packages have entered the United States under this rule to date.
The number of such packages for all of fiscal 2022 was 685 million, according to US Customs and Border Protection. A Customs representative said the 2024 figure given by Gallagher was accurate.
Gallagher said in a statement to Risk & Compliance Journal: “Exploiting the small exemption loophole is accelerating the flight of U.S. jobs and giving Chinese companies using Uyghur forced labor a clear pass. “We cannot expect American companies to compete with foreign companies that do not pay taxes.”
Most Americans bring souvenirs back from abroad without paying taxes due to small exemptions. But companies such as Temu and Xiyin use the program to bypass customs scrutiny of bulk shipments by shipping goods directly to U.S. consumers.
The House Select Committee on China estimates that Temu and Xiyin alone account for one-third of all small-value exempt shipments. The two companies have also been accused of selling products that may have been produced using forced labor.
Temu has said accusations that the company sells goods produced using forced labor are “baseless” and that it does not rely on small exemptions for growth.
Xiyin has previously stated that the company has a zero-tolerance approach to forced labor and that small exemptions are not important to its success.
A growing number of lawmakers from both parties are calling for action to rein in the program. Gallagher and Rep. Raja Krishnamoorthi (D-Ill.), the ranking member of the Select Committee on China, pushed for a possible rule change in January to prevent clothing and some other goods from being exploited. Small exemptions provide for entry into the United States.
Democratic U.S. Sens. Sherrod Brown of Ohio and Republican Sen. Rick Scott of Florida called for the rule change in a letter to the White House, saying small exemptions harmed U.S. manufacturers. “I am pushing President Biden to take immediate executive action to close this huge loophole,” Brown said on Wednesday.
A U.S. Customs representative said Customs Administrator Troy Miller supports modernizing trade laws. “While these packages are of low value, they present potential health, safety and economic security risks no different than larger, more traditional container shipments,” she said.
Law enforcement agencies have also cited these shipments as a pathway for smuggling fentanyl and other contraband into the United States. The United States has banned the import of goods accused of using forced labor in China’s Xinjiang region. Xinjiang is home to China’s Uighurs and other ethnic minorities.
U.S. businesses are broadly divided over the rule. Homeland Security Secretary Alejandro Mayorkas met with members of the National Council of Textile Organizations in January to hear their concerns that the exemption was being unfairly exploited. dissatisfaction.
Others argue that the small exemptions allow businesses of all sizes to get goods into the hands of American consumers without being hampered by red tape that can increase costs and exacerbate delays.
John Pickel, senior director of international supply chain policy at the National Foreign Trade Council, said: “The small exemption provision is not a loophole; it has been recognized in regulations many times, and to a large extent, according to government data. are compliant and promote the economic competitiveness of American businesses.”
2024-03-04 01:55:00
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