The America Competes Act is divided into eleven divisions, AK, with division K being titled “Matters Related to Trade”. The Trade Matters Division is divided into seven sections: (1) Trade Adjustment Assistance, (2) Trade Remedies Law Improvements, (3) Import Security and Fairness Law, (4) Review of National Critical Capabilities, (5) Modification and Extension of the Generalized System of Preferences, (6) Reauthorization of the US Manufacturing Competitiveness Act of 2016 and Other Matters, and (7) temporary duty suspensions and reductions.
These key initiatives of the Trade Issues Division relate specifically to the import aspect. For importers, the sections relating to the Enhanced Trade Remedies Act and the Import Security and Fairness Act may have the most significant impacts. An amended version of the Import Safety and Fairness Act, which was recently introduced by House Ways and Means Subcommittee on Commerce Chairman Earl Blumenauer, has been included in the broader framework. US competition law. The Senate version of the bill, the US Innovation and Competition Act, did not include any changes to the de minimis rules.
One of the main proposals in the Trade Remedies Law Improvements section of the America Competes Act concerns the strengthening of anti-ADD/CVD laws. A few of the updates include:
• Extend the application of countervailing duty rates: Apply countervailing duty subsidies granted by the government of a country that is not the country in which the class of goods is produced, exported, or sold for import into the United States as having been granted by the government of country of goods in question and must cumulate all the countervailing duties concerned disappear on the territory of the country of goods concerned.
• Reduced processing times for order renewals: Accelerated decisions for successive investigations.
• Limit the possibilities of difficult assessments: Any decision relating to the liquidation or reliquidation of a covered goods entry pursuant to a determination under subsection (c) and a review under subsection (f), if applicable , will not be the subject of a challenge to this decision filed in accordance with article 514.
In addition to the proposed ADD/CVD changes, the Import Security and Fairness Act would impose certain restrictions on the use of the “de minimis” provision. The purpose of the Safe and Fair Import Act is to prevent non-market economies from taking advantage of current de minimis thresholds and loopholes that often provide unfair advantages to their own domestic companies.
So what does de minimis mean? Section 321, 19 USC 1321 is the statute that describes de minimis provisions. De minimis provisions allow items to be imported free of duty and any taxes imposed. However, the aggregate fair retail value in the country of shipment of items imported by one person in one day cannot exceed $800. This value was previously $200 before the passage of the Trade Facilitation and Trade Enforcement Act of 2015. The de minimis provision is often used for smaller shipments, as CBP has provided this mechanism to minimize administrative burdens in these low value shipments.
The proposed changes to the de minimis provisions are badly needed at a time when imports of small parcels are at an all-time high. According to U.S. Representative Earl Blumenauer, “[t]he number of packages we receive in the United States has skyrocketed to more than two million packages daily, a number that will only increase in the years to come. As long as foreign companies selling their goods in America split their shipments to evade tariffs and scrutiny, American companies will continue to be at a cost disadvantage. The COVID-19 pandemic is one of the reasons small package imports have grown so rapidly, as households are more likely to purchase items directly from online retailers that are often shipped from foreign countries.
If passed, the Import Security and Fairness Act:
• Prohibit imports from countries that are both (1) identified as non-market economies and (2) on the U.S. Trade Representative’s priority watch list of countries that violate intellectual property standards (i.e. i.e. China) to benefit from de minimis treatment. This will ensure that some countries do not take advantage of de minimis provisions to avoid paying duties and taxes.
• Give CBP statutory authority to collect additional information regarding all imports that receive de minimis import treatment. This should reduce the number of illicit and illegal packages entering the United States
• Prohibit suspended or banned importers from benefiting from de minimis treatment.
• Simplify CBP’s requirements for handling goods that receive de minimis import treatment.
Foreign companies that have historically been able to evade certain taxes and duties will now face greater scrutiny if this legislation comes into effect. CBP would have increased visibility into small packages from non-market economies, which in turn should lead to better compliance with US customs laws, as well as a stronger US economy’s competitiveness. For example, products that are currently imported from China under the de minimis provisions avoid paying the Section 301 duty. If this bill passes, those same shipments would be subject to the additional punitive tariff on goods. Chinese. This would create a more level playing field for the US market for these types of imports. To elaborate on this point, the de minimis level in China is around $8. This means that if US merchandise is imported into China and is worth more than $8, the associated duties and taxes must be paid. On the other hand, if the same item is valued at $750 and imported into the United States from China, no tax or duty has to be paid. This example illustrates why this type of legislation is needed as the United States attempts to strengthen its international trade marketplace while adding additional visibility and security at its borders.
Currently, the Senate and House have unveiled their respective versions of the bills (i.e. the America Competes Act and the US Innovation and Competition Act). While there are still many political issues to be resolved, it seems clear that some form of the bill will eventually pass due to overwhelming support from both parties, as well as the President. Importers should continue to monitor the development of this legislation and be aware of any potential impact its changes may have on a business in the future.