[House Report 118-948]
[From the U.S. Government Publishing Office]
118th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 118-948
======================================================================
END CHINA'S DE MINIMIS ABUSE ACT
_______
December 24, 2024.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Smith of Missouri, from the Committee on Ways and Means, submitted
the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 7979]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 7979) to amend section 321 of the Tariff Act of 1930
to modify the administrative exemptions under that Act, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND........................................... 2
A. Purpose and Summary................................. 2
B. Background and Need for Legislation................. 2
C. Legislative History................................. 3
D. Designated Hearing.................................. 3
II. EXPLANATION OF THE BILL.......................................... 3
A. Extending Limits of U.S. Customs Waters Act.........
III. VOTE OF THE COMMITTEE............................................ 4
IV. BUDGET EFFECTS OF THE BILL....................................... 5
A. Committee Estimate of Budgetary Effects............. 5
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 5
V. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET OFFICE........ 5
VI. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE...... 10
A. Committee Oversight Findings and Recommendations.... 10
B. Statement of General Performance Goals and
Objectives......................................... 10
C. Information Relating to Unfunded Mandates........... 10
D. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 10
E. Duplication of Federal Programs..................... 11
VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED........... 11
VIII.DISSENTING VIEWS................................................ 14
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``End China's De Minimis Abuse Act''.
SEC. 2. MODIFICATION OF ADMINISTRATIVE EXEMPTIONS UNDER THE TARIFF ACT
OF 1930.
(a) In General.--Section 321 of the Tariff Act of 1930 (19 U.S.C.
1321) is amended--
(1) in subsection (a)(2)--
(A) in the matter preceding subparagraph (A), by
striking ``admit articles'' and inserting ``subject to
subsection (b)(1), admit articles'';
(B) in subparagraph (C)--
(i) by striking ``$800'' and inserting
``subject to subsection (b)(2), $800''; and
(ii) by striking the period at the end and
inserting ``; and'';
(C) in the matter following subparagraph (C), by
striking ``The privilege'' and all that follows through
``; and'';
(2) by redesignating subsection (b) as subsection (d); and
(3) by inserting after subsection (a) the following:
``(b)(1) The privilege of subparagraph (A), (B), or (C) of subsection
(a)(2) shall not be granted in any case in which merchandise covered by
a single order or contract is forwarded in separate lots to secure the
benefit of such subsection.
``(2) The privilege of subparagraph (C) of subsection (a)(2) shall
not be granted with respect to any article that is subject to duties or
other import restrictions under any of the following provisions of law:
``(A) Subtitle A or B of title VII of this Act.
``(B) Section 201 of the Trade Act of 1974 (19 U.S.C. 2251).
``(C) Section 301 of the Trade Act of 1974 (19 U.S.C. 2411).
``(D) Section 232 of the Trade Expansion Act of 1962 (19
U.S.C. 1862).
``(3)(A) No covered article may receive the privilege of subparagraph
(C) of subsection (a)(2) unless the 10-digit classification of the
article under the Harmonized Tariff Schedule of the United States is
provided to U.S. Customs and Border Protection, pursuant to an
authorized electronic data interchange system, as part of the entry
filing in accordance with section 498 of this Act, in addition to any
other information required by law.
``(B) In this paragraph, the term `covered article' means an article
the origin of which is a country with any goods subject to duties or
other import restrictions under section 301 of the Trade Act of 1974
(19 U.S.C. 2411).
``(c) Any person who enters, introduces, or attempts to introduce an
article in violation of this section is liable for a civil penalty of
$5,000 for the first violation; and $10,000 for each subsequent
violation. A penalty imposed under this subsection is in addition to
any other penalty authorized by law.''.
(b) Effective Date.--The amendments made by this section shall apply
with respect to articles entered, or withdrawn from warehouse for
consumption, on or after the 30th day after the date of the enactment
of this Act.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
H.R. 7979, the End China's De Minimis Abuse Act, as ordered
reported by the Committee on Ways and Means on April 17, 2024,
amends section 321 of the Tariff Act of 1930 to modify the
administrative exemptions under that Act.
B. Background and Need for Legislation
H.R. 7979 modifies the administrative exemption under the
Tariff Act of 1930 to deny the de minimis privilege for any
product subject to duties or other import restrictions under
the following trade enforcement laws: Section 201 of the Trade
Act of 1974 (19 U.S.C. 2251); Section 301 of the Trade Act of
1974 (19 U.S.C. 2411) (``Section 301''); and Section 232 of the
Trade Expansion Act of 1962 (19 U.S.C. 1862). Additionally, the
legislation confirms the existing prohibition against using the
privilege for imports subject to antidumping or countervailing
duty orders under Subtitle A or B of title VII of the Tariff
Act of 1930 (19 U.S.C. 1671).
The de minimis privilege has allowed various firms to avoid
paying trade enforcement tariffs imposed by President Trump on
imports from China since 2018. This bill will end the de
minimis privilege for all products subject to such tariffs and
also add a new requirement to provide the correct 10-digit
Harmonized Tariff System classification for any future de
minimis entries from countries subject to Section 301 tariffs.
This will aid law enforcement efforts to address other unfair
and illegal trade practices, like the importation of fentanyl
precursors and items made in whole or in part using forced
labor. Additionally, for any person who violates U.S. de
minimis law, this bill imposes new civil penalties of $5,000
for the first violation and $10,000 for each subsequent
offense. Under current law, generally, the penalty for abusing
de minimis is mere forfeiture of the shipment (often valued at
$55 or less), providing inadequate deterrence to bad actors.
C. Legislative History
Background
H.R. 7979 was introduced on April 15, 2024, by
Representative Gregory Murphy and was referred to the Committee
on Ways and Means.
Committee Hearing
On May 9, 2023, the Committee held a hearing entitled
``Trade in America: Securing Supply Chains and Protecting the
American Worker--Staten Island.''
Committee Action
The Committee on Ways and Means marked up H.R. 7979, the
``End China's De Minimis Abuse Act,'' on April 17, 2024, and
ordered the bill, as amended, favorably reported (with a quorum
being present).
D. Designated Hearing
Pursuant to clause 3(c)(6) of rule XIII, the following
hearings were used to develop and consider H.R. 7979:
On May 9, 2023, the Committee held a hearing entitled
``Trade in America: Securing Supply Chains and Protecting the
American Worker--Staten Island.''
II. EXPLANATION OF THE BILL
PRESENT LAW
Section 321 of the Tariff Act of 1930 generally allows
shipments bound for American businesses and consumers valued
under $800 to enter the U.S. free of duties and taxes.
REASON FOR CHANGE
The original purpose of the de minimis privilege is to
avoid expense disproportionate to the amount of duty that would
otherwise be collected from the import. However, as a result of
the explosion of global e-commerce, de minimis trade has surged
to become a major source of imports to the United States and
has become a major focus of the business model used by certain
companies.
However, Members supporting this legislation do not believe
importers should continue to be able to use the de minimis
privilege to evade trade enforcement tariffs. Moreover, this
change aligns with current practice for other trade enforcement
tariffs--importers already cannot use the de minimis privilege
to evade antidumping and countervailing duty tariffs.
EXPLANATION OF PROVISIONS
Section 1. Short Title
The short title of this Act is the ``End China's De Minimis
Abuse Act.''
Section 2. Modification of Administrative Exemptions under the Tariff
Act of 1930
This section amends Section 321 of the Tariff Act of 1930
(19 U.S.C. 1321) to deny the de minimis privilege for any
product subject to duties or other import restrictions under
the following trade enforcement laws:
Global safeguards under Section 201 of the
Trade Act of 1974 (19 U.S.C. 2251);
Enforcement tariffs to address unfair or
unreasonable actions by trading partners under Section
301 of the Trade Act of 1974 (19 U.S.C. 2411); and
National security actions under Section 232
of the Trade Expansion Act of 1962 (19 U.S.C. 1862).
Additionally, this section confirms the existing
prohibition against using the de minimis privilege for imports
subject to antidumping or countervailing duty orders under
Subtitle A or B of title VII of the Tariff Act of 1930 (19
U.S.C. 1671 and following).
This section requires all de minimis entries from countries
subject to Section 301 tariffs to include the correct 10-digit
Harmonized Tariff System (HTS) classification code. As
previously stated, this section precludes the de minimis
privileges for products subject to Section 301 tariffs.
Therefore, this HTS requirement applies only to products that
are not subject to Section 301 tariffs.
This section also imposes a civil penalty for any person
who violates U.S. de minimis law of $5,000 for the first
violation and $10,000 for each subsequent violation.
EFFECTIVE DATE
The provision is effective on or after the 30th day after
the date of enactment of this Act.
III. VOTE OF THE COMMITTEE
In compliance with the Rules of the House of
Representatives, the following statement is made concerning the
vote of the Committee on Ways and Means during the markup
consideration of H.R. 7979, ``End China's De Minimis Abuse
Act,'' on April 17, 2024.
H.R. 7979 was ordered favorably reported to the House of
Representatives as amended by a roll call vote of 24 yeas to 18
nays (with a quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO)..................... X ...... ......... Mr. Neal............. ...... X .........
Mr. Buchanan....................... X ...... ......... Mr. Doggett.......... ...... X .........
Mr. Smith (NE)..................... X ...... ......... Mr. Thompson......... ...... X .........
Mr. Kelly.......................... X ...... ......... Mr. Larson........... ...... X .........
Mr. Schweikert..................... X ...... ......... Mr. Blumenauer....... ...... X .........
Mr. LaHood......................... X ...... ......... Mr. Pascrell......... ...... X .........
Dr. Wenstrup....................... X ...... ......... Mr. Davis............ ...... X .........
Mr. Arrington...................... X ...... ......... Ms. Sanchez.......... ...... X .........
Dr. Ferguson....................... X ...... ......... Ms. Sewell........... ...... X .........
Mr. Estes.......................... X ...... ......... Ms. DelBene.......... ...... X .........
Mr. Smucker........................ X ...... ......... Ms. Chu.............. ...... X .........
Mr. Hern........................... X ...... ......... Ms. Moore............ ...... X .........
Ms. Miller......................... X ...... ......... Mr. Kildee........... ...... X .........
Dr. Murphy......................... X ...... ......... Mr. Beyer............ ...... X .........
Mr. Kustoff........................ ...... ...... ......... Mr. Evans............ ...... X .........
Mr. Fitzpatrick.................... X ...... ......... Mr. Schneider........ ...... X .........
Mr. Steube......................... X ...... ......... Mr. Panetta.......... ...... X .........
Ms. Tenney......................... X ...... ......... Mr. Gomez............ ...... X .........
Mrs. Fischbach..................... X ...... .........
Mr. Moore.......................... X ...... .........
Mrs. Steel......................... X ...... .........
Ms. Van Duyne...................... X ...... .........
Mr. Feenstra....................... X ...... .........
Ms. Malliotakis.................... X ...... .........
Mr. Carey.......................... X ...... .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 7979, as
reported. The estimate prepared by the Congressional Budget
Office (CBO) is included below.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee states further that the bill involves no new or
increased tax expenditures.
V. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET OFFICE
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The bill would:
Revoke de minimis eligibility--the option to
import certain goods worth less than $800 without
paying customs duties
Require importers to report the 10-digit
Harmonized Tariff Schedule code for any goods imported
from China
Create new civil penalties for using the de
minimis exception to import goods that would be
ineligible under the bill
Impose private-sector mandates on importers
Estimated budgetary effects would mainly stem from:
Additional collections of customs revenues
and customs user fees
Administrative costs for Customs and Border
Protection
Areas of significant uncertainty include:
Projecting the volume of goods that would be
subject to customs duties and customs user fees under
the bill
Bill summary: H.R. 7979 would revoke de minimis
eligibility; that is, the ability to import certain goods worth
less than $800 without paying customs duties. Specifically, any
imports of goods that are subject to tariffs under section 201,
section 232, or section 301 of the Trade Act of 1974 would no
longer be eligible. Currently, goods subject to those tariffs
include certain products from China, solar panels, and steel
and aluminum products, with some exceptions for specific
countries and goods. In addition, the bill would codify current
practice by revoking de minimis eligibility for goods that are
subject to antidumping and countervailing duties and would
revoke eligibility for importers who split a single order into
multiple shipments to avoid the $800 threshold.
The bill also would require importers to report the 10-
digit Harmonized Tariff Schedule code for any products imported
from China, regardless of their de minimis eligibility.
Finally, the bill would establish a new civil penalty for any
person who uses or attempts to use the de minimis exception for
a product that would no longer be eligible under this bill.
Estimated Federal cost: The estimated budgetary effect of
H.R. 7979 is shown in Table 1. The costs of the legislation
fall within budget function 750 (administration of justice).
TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 7979
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
----------------------------------------------------------------------------------------------------------------------------------
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2024- 2029 2024- 2034
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
DECREASES IN DIRECT SPENDING
Estimated Budget Authority................................... 0 -5 -8 -11 -12 -12 -12 -12 0 0 0 -48 -72
Estimated Outlays............................................ 0 -5 -8 -11 -12 -12 -12 -12 0 0 0 -48 -72
INCREASES IN REVENUES
Estimated Revenues........................................... 0 1,028 1,763 2,248 2,459 2,515 2,577 2,639 2,701 2,767 2,829 10,013 23,526
NET DECREASE IN THE DEFICITPFROM CHANGES IN DIRECT SPENDING AND REVENUES
Effect on the Deficit........................................ 0 -1,033 -1,771 -2,259 -2,471 -2,527 -2,589 -2,651 -2,701 -2,767 -2,829 -10,061 -23,598
INCREASES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization...................................... 0 5 2 2 3 3 n.e. n.e. n.e. n.e. n.e. 15 n.e.
Estimated Outlays............................................ 0 5 2 2 3 3 n.e. n.e. n.e. n.e. n.e. 15 n.e.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
n.e.= not estimated.
Basis of estimate: CBO's estimate assumes that the bill
will be enacted late in fiscal year 2024 and that the estimated
amounts will be available each year.
The estimate is based on CBO's projection of the volume of
imports entering the country and the value of those goods, as
well as CBO's expectation of how firms and importers will
respond to the bill's changes to the de minimis exception.
Revenues: Using data from Customs and Border Patrol (CBP),
CBO estimates that approximately $27 billion worth of goods
that would otherwise be subject to the tariffs were imported
under the de minimis exception in 2023. On that basis, we
estimate that enacting the bill would increase revenues from
customs duties by about $24 billion over the 2024-2034 period.
Additionally, the government might collect civil penalties
from importers that use or attempt to use the de minimis
exception for an ineligible product. Those penalties are
recorded in the budget as revenues. CBO estimates that enacting
H.R. 7979 would increase civil penalty collections by less than
$500,000 over the 2024-2034 period.
Direct spending: Under current law, goods that enter the
country under the de minimis exception are not subject to
customs user fees. By eliminating that exception for certain
imports, H.R. 7979 would increase collections of those fees.
Customs user fees are collected by CBP to cover some of the
costs of inspecting people and cargo entering the country. The
fees are recorded in the budget as mandatory offsetting
collections--that is, as reductions in direct spending. Under
current law, customs user fees are set to expire at the end of
fiscal year 2031. CBO estimates that H.R. 7979 would reduce
direct spending by $72 million over the 2024-2034 period.
Spending subject to appropriation: CBO expects that CBP
would need to make improvements to its automated system for
collecting and processing import data in order to accommodate
the additional volume of data under the bill. Based on the
costs of similar projects, CBO estimates that CBP would incur a
onetime cost of $3 million to make those improvements and would
need about $2 million annually for data storage and system
maintenance. In total, CBO estimates, implementing H.R. 7979
would cost $15 million over the 2024-2029 period. Any related
spending would be subject to the availability of appropriated
funds.
Uncertainty: CBO's estimate is subject to significant
uncertainty, particularly for the future volume and value of
those goods that would be subject to customs duties and user
fees under the bill, as well as how importers respond to the
bill's requirements. If the actual volume or value differs from
CBO's estimates, the revenues could be larger or smaller than
CBO estimates.
In addition, the way in which businesses choose to import
goods that would no longer be eligible for the de minimis
exception under the bill would affect the collection of customs
user fees. Thus, CBO's estimate of those fees could be larger
or smaller than CBO's estimate, depending on how those
businesses respond.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in Table 2.
TABLE 2.--CBO'S ESTIMATE OF THE STATUTORY PAY-AS-YOU-GO EFFECTS OF H.R. 7979, THE END CHINA'S DE MINIMIS ABUSE ACT, AS ORDERED REPORTED BY THE HOUSE
COMMITTEE ON WAYS AND MEANS ON APRIL 17, 2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
-------------------------------------------------------------------------------------------------------------------------------
2024- 2024-
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2029 2034
--------------------------------------------------------------------------------------------------------------------------------------------------------
DECREASES IN DIRECT SPENDING
Pay-As-You-Go Effect.... 0 -1,033 -1,771 -2,259 -2,471 -2,527 -2,589 -2,651 -2,701 -2,767 -2,829 -10,061 -23,598
Memorandum:
Decreases in Outlays 0 -5 -8 -11 -12 -12 -12 -12 0 0 0 -48 -72
Increases in 0 1,028 1,763 2,248 2,459 2,515 2,577 2,639 2,701 2,767 2,829 10,013 23,526
Revenues...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increase in long-term net direct spending and deficits: CBO
estimates that enacting H.R. 7979 would not increase net direct
spending or deficits in any of the four consecutive 10-year
periods beginning in 2035.
Mandates: H.R. 7979 would impose a private-sector mandate
as defined in the Unfunded Mandates Reform Act (UMRA) on
importers by requiring them to remit duties on goods that
otherwise could be imported duty-free under the de minimis
exception. The cost of the mandate would be the amounts paid by
U.S. importers. As discussed above, CBO estimates the bill
would result in importers remitting more than $1 billion in
additional duties in the first two years, and more than $2
billion each year over the next eight years. As a result, CBO
estimates that the cost of the mandate would exceed the
threshold established in UMRA for private-sector mandates ($200
million in 2024, adjusted annually for inflation).
This bill contains no intergovernmental mandates as defined
in UMRA.
Estimate prepared by: Federal costs: Jeremy Crimm; Federal
revenues: Emma Uebelhor; Mandates: Grace Watson.
Estimate reviewed by: Justin Humphrey, Chief, Finance,
Housing, and Education Cost Estimates Unit; Joshua Shakin,
Chief, Revenue Projections Unit; Kathleen FitzGerald, Chief,
Public and Private Mandates Unit; H. Samuel Papenfuss, Deputy
Director of Budget Analysis; John McClelland, Director of Tax
Analysis.
Estimate approved by: Mark P. Hoeller for Phillip L.
Swagel, Director, Congressional Budget Office.
VI. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives, the Committee made findings and
recommendations that are reflected in this report.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill does not authorize funding, so no statement of general
performance goals and objectives is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
E. Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
TARIFF ACT OF 1930
* * * * * * *
TITLE III--SPECIAL PROVISIONS
* * * * * * *
Part II--United States Tariff Commission
* * * * * * *
SEC. 321. ADMINISTRATIVE EXEMPTIONS.
(a) The Secretary of the Treasury, in order to avoid expense
and inconvenience to the Government disproportionate to the
amount of revenue that would otherwise be collected, is hereby
authorized, under such regulations as he shall prescribe, to--
(1) disregard a difference of an amount specified by
the Secretary by regulation, but not less than $20,
between the total estimated duties, fees, and taxes
deposited, or the total duties fees, and taxes
tentatively assessed, with respect to any entry of
merchandise and the total amount of duties, fees,
taxes, and interest actually accruing thereon;
(2) [admit articles] subject to subsection (b)(1),
admit articles free of duty and of any tax imposed on
or by reason of importation, but the aggregate fair
retail value in the country of shipment of articles
imported by one person on one day and exempted from the
payment of duty shall not exceed an amount specified by
the Secretary by regulation, but not less than--
(A) $100 in the case of articles sent as bona
fide gifts from persons in foreign countries to
persons in the United States $200, in the case
of articles sent as bona fide gifts from
persons in the Virgin Islands, Guam, and
America Samoa), or
(B) $200 in the case of articles
accompanying, and for the personal or household
use of, persons arriving in the United States
who are not entitled to any exemption from duty
under subheading 9804.00.30, 9804.00.65, or
9804.00.70 of this Act, or
(C) [$800] subject to subsection (b)(2), $800
in any other case[.]; and
[The privilege of this subdivision (2) shall not be
granted in any case in which merchandise covered by a
single order or contract is forwarded in separate lots
to secure the benefit of this subdivision (2); and]
(3) waive the collection of duties, fees, taxes, and
interest due on entered merchandise when such duties,
fees, taxes, or interest are less than $20 or such
greater amount as may be specified by the Secretary by
regulation.
(b)(1) The privilege of subparagraph (A), (B), or (C) of
subsection (a)(2) shall not be granted in any case in which
merchandise covered by a single order or contract is forwarded
in separate lots to secure the benefit of such subsection.
(2) The privilege of subparagraph (C) of subsection (a)(2)
shall not be granted with respect to any article that is
subject to duties or other import restrictions under any of the
following provisions of law:
(A) Subtitle A or B of title VII of this Act.
(B) Section 201 of the Trade Act of 1974 (19 U.S.C.
2251).
(C) Section 301 of the Trade Act of 1974 (19 U.S.C.
2411).
(D) Section 232 of the Trade Expansion Act of 1962
(19 U.S.C. 1862).
(3)(A) No covered article may receive the privilege of
subparagraph (C) of subsection (a)(2) unless the 10-digit
classification of the article under the Harmonized Tariff
Schedule of the United States is provided to U.S. Customs and
Border Protection, pursuant to an authorized electronic data
interchange system, as part of the entry filing in accordance
with section 498 of this Act, in addition to any other
information required by law.
(B) In this paragraph, the term ``covered article'' means an
article the origin of which is a country with any goods subject
to duties or other import restrictions under section 301 of the
Trade Act of 1974 (19 U.S.C. 2411).
(c) Any person who enters, introduces, or attempts to
introduce an article in violation of this section is liable for
a civil penalty of $5,000 for the first violation; and $10,000
for each subsequent violation. A penalty imposed under this
subsection is in addition to any other penalty authorized by
law.
[(b)] (d) The Secretary of the Treasury is authorized by
regulations to prescribe exceptions to any exemption provided
for in subsection (a) whenever he finds that such action is
consistent with the purpose of subsection (a) or is necessary
for any reason to protect the revenue or to prevent unlawful
importations.
* * * * * * *
VIII. DISSENTING VIEWS
Section 321 of the Tariff Act of 1930 allows for the
informal entry of articles that have a de minimis value of $800
or less, imported by ``one person in one day,'' by individual
customers. The use of de minimis has exploded since Congress
increased the de minimis threshold from $200 to $800 through
the Trade Facilitation and Trade Enforcement Act of 2015. Over
a billion packages entered the United States under de minimis
in 2023.
U.S. Customs and Border Protection has found packages from
China coming into the United States under de minimis to include
products made with forced labor or intellectual property theft,
or illicit goods including fentanyl and fentanyl precursors. An
increasing number of packages in the de minimis environment has
tested CBP's capabilities to effectively enforce U.S. trade
laws.
Committee Democrats have advocated for changes to de
minimis since the 117th Congress, given these challenges. The
House passed H.R. 4521, the America COMPETES Act on February 4,
2022, which included new exceptions for de minimis treatment.
Rep. Blumenauer (D-OR) offered an amendment during the
markup that would have prohibited de minimis treatment for an
article from a country that is (1) a nonmarket economy country
(as such term is defined in section 771(18) of the Tariff Act)
and (2) included in USTR's Special 301 Priority Watch List (as
such term is defined in section 182(g)(3) of the Trade Act of
1974). Committee Democrats present at the markup unanimously
supported the amendment.
Committee Democrats present at the markup unanimously
opposed favorably reporting H.R. 7979, as amended, to the House
of Representatives.
Sincerely,
Richard E. Neal,
Ranking Member.
DISSENTING VIEWS
I appreciate the opportunity for us to focus and I
appreciate my friend Mr. Smith (NE) trying to inject a notion
of calm and certitude and deliberation.
But this is something that I think we can get beyond the
passion, get beyond the back and forth, because this is
something that we all acknowledge is a serious problem.
And I appreciate the notion that this is a first step. We
don't have to settle for a first step. We understand this
challenge.
The Chairman's focus on the de minimis loophole is one that
we share but I disagree this is the best we can do.
Over three million packages a day enter the United States
untaxed and uninspected under. They undercut American
businesses, including North Carolina. I've met with these
people.
They undercut provisions relating to products produced with
forced labor, with consumer product safety violations, and,
increasingly, fentanyl and fentanyl precursors.
Mr. Chairman, you and I have had constructive conversations
on the need to close the de minimis loophole. But we don't have
to settle for a quarter of a loaf, a third of a loaf--this
Committee has the opportunity to close the de minimis loophole.
I can think of no better gift for Chairman Gallagher in his
last week in Congress.
Just yesterday, the China Select Committee released an
explosive report that the Chinese government is actively
subsidizing the manufacturing and export of fentanyl and its
precursors.
We don't have to have this move forward. We don't have to
have the Chinese government actively subsidizing fentanyl and
its precursors.
The report specifically highlighted the de minimis loophole
as an increasingly important way drug smugglers in China are
exploiting our trade laws to flood our communities with
fentanyl.
But under the proposal we're considering today, the volume
of packages that will continue to come into the United States
under de minimis will be so large that Customs will continue to
be outmatched and overwhelmed.
Law enforcement knows this won't address the fentanyl
crisis.
On Monday, the National Association of Police Organizations
who represent 241,000 law enforcement officers wrote the Ways
and Means Committee to advocate for meaningful reform and
caution against ``half-measures . . . that would only exclude a
portion of imports from China.''
They went on to say ``international drug dealers flooding
communities with fentanyl are not complying with the law today
and there is no reason to think their behavior would stop
unless the de minimis loophole is fully closed.''
In January, thirteen state Republican attorneys general
sent a letter urging the total closure of the de minimis
loophole to address the de minimis' efforts facilitating an
illegal narcotics trade.
Even Customs acknowledges the immense challenge of
identifying and interdicting high-risk shipments that contain
narcotics in the deluge of more than three million packages per
day and increasing.
Far from ``Ending China's De Minimis Abuse,'' as this
legislation purports to do, it would simply redirect China's de
minimis abuse toward other shipments while Customs can't keep
up.
China is counting on Congress to continue to fail to act,
to look the other way and facilitate their criminal activity
while they undercut legitimate American business.
There is no reason to allow a few large shippers to profit
at the expense of the American people.
The Chinese have a quarter trillion dollar e-commerce
industry that relies on our lax de minimis rules.
My amendment would stop this and there's no reason that we
can't do it. It would cut off China entirely. It's something
you're all familiar with, a number of you cosponsored, and
there's no reason for us not to do it except for the opposition
of a few big shippers sending this stuff to the United States
and undercutting American business. You all have examples of
that.
I'm hopeful we can work together to completely close the de
minimis loophole, keep Chinese fentanyl shipments out of our
international stream of commerce, stop undercutting American
manufacturing, and be able to do something on a bipartisan
basis and be able to do something that is long overdue.
Earl Blumenauer,
Member of Congress.
[all]