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envious of chinese e-commerce, us politicians urge biden to close the tax-free loophole for small packages

2024-09-12

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[text/guardian network lai jiaqi] as the us election entered a critical stage, the us congress still arranged a so-called "china week" to vote intensively on a number of bills related to china. during this "anti-china week", us politicians also frequently played the "china card".

according to reuters, some u.s. democratic congressmen once again urged president biden to use his executive power to plug the "loophole" in the tariff exemption mechanism for small packages on september 11. however, analysts pointed out that in the context of the u.s. election year and inflation, it is difficult for the u.s. government to immediately revoke this mechanism.

under u.s. law, goods valued at less than $800 that are intended for individuals can enter the u.s. duty-free without customs inspection. democratic house members led by earl blumenauer, rosa delauro and tom suozzi claimed that chinese e-commerce companies and fentanyl sellers are using this mechanism to allow "illegal goods" to enter the united states.

in a letter, they wrote, "the urgency of closing the 'loophole' in the small-value package tariff exemption mechanism cannot be overstated," which is allowing the deadly opioid fentanyl to bypass inspection and be delivered to americans' homes, "killing americans." "small-value packages, especially those imported from china," have evaded most existing trade rules and enforcement mechanisms, such as u.s. reviews of "forced labor" and the so-called 301 tariff provisions.

the national council of textile organizations, which represents domestic manufacturers, told reuters that small packages from fast fashion e-commerce companies including shein are using the small package tariff exemption mechanism to circumvent the 301 tariff clause, causing the number of small packages in the united states to continue to grow, exceeding 4 million per day. the association claims that more than 1 billion small packages entered the united states using this mechanism last year, causing 18 american factories to close down.

packages from abroad pile up at the door of a home in pennsylvania, u.s. associated press

the report claims that since 2014, the total value of goods imported using the small package tariff exemption mechanism has more than doubled, reaching $23.4 billion in 2023, becoming the 12th largest category of us global imports. during the same period, the value of such goods imported from china also more than doubled to $4.6 billion, making it the eighth largest import category.

according to a previous report by the economist, the u.s. congress established the exemption in the 1930s to reduce the trouble for american tourists to bring souvenirs home from abroad. in 2016, the u.s. congress amended section 321 of the tariff act of 1930 to increase the minimum amount of small duty-free purchases from $200 to $800. the hong kong english media south china morning post pointed out that this means that millions of small packages from all over the world can quickly pass through customs to enter the united states through duty-free channels. for u.s. customs, this reduces administrative costs, but driven by the explosive growth of e-commerce during the epidemic, the number of goods entering the united states using the small package tariff exemption mechanism has also soared.

this troubles american politicians. the report said that as usual, they blamed china. as early as may 2023, robert lighthizer, a trade protectionist official during the trump administration, complained to the house of representatives about this matter. last june, republican senator bill cassidy and democratic senator tammy baldwin introduced the de minimis reciprocity act, claiming that this "loophole" was used by chinese companies to promote illegal trade, sell drugs, and "cause the deaths of americans."

in february and march of this year, several democratic senators also wrote to biden in succession, calling on him to use executive power to abolish the "small exemption", claiming that the mechanism harmed american consumers, undermined the interests of manufacturers, workers and local communities, and allowed "illegal goods" to enter the united states.

packages valued at less than $800 shipped directly from foreign countries are exempt from duties and are rarely scrutinized by u.s. customs. associated press

the white house has been working to pass legislation to eliminate the tariff exemption mechanism for small packages. reuters reporters tried to contact a white house spokesperson for comment but received no response before press time.

the south china morning post noted in a february report that while there is bipartisan support for the bills, analysts believe election-year politics, coupled with a divided u.s. congress facing a busy agenda, make the passage of such bills "very uncertain."

not only are chinese e-commerce companies taking advantage of the small package tariff exemption mechanism, but american retailers such as amazon and walmart are also using it to import goods. sheng lu, a professor at the university of delaware who studies the global textile and apparel industry, said that american companies that benefit from the small package tariff exemption mechanism may resist the us government's desire to revoke the mechanism, and the us government also lacks sufficient data to assess the potential impact of policy changes.

"when politicians decide whether something will help them get re-elected, they have to figure out the difference between what american consumers say they want and what they actually want." andy tsay, a professor at santa clara university in the united states, said it is usually difficult to pass any laws in a u.s. election year. there may be some american consumers who want to take a tough stance on china, but they also want cheap goods, especially in the context of inflation being a big problem in the united states over the past two years.

the u.s. national foreign trade council warned reuters that "weakening the small package tariff exemption would cost consumers billions of dollars, would require more funding for customs, and would do nothing to strengthen border enforcement or improve port security."