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| The News |
| Two bipartisan bills introduced in Congress this week aim to change a nearly 100-year-old trade rule that allows imported packages that fall under a certain price threshold to receive less oversight in the U.S. customs process. |
| The trade rule is called “de minimis,” and critics say it gives an unfair advantage to foreign e-commerce companies, including some where forced labor is an issue. Currently, companies importing packages valued under $800 are not charged duties, taxes or fees by the U.S. government. |
| A bill introduced Thursday looks to bar countries such as China and Russia, which are considered “nonmarket economies,” from being eligible to use this trade law. It also seeks to have U.S. Customs and Border Protection collect more information on all shipments under the $800 threshold. That information would include a description of the article, the article’s country of origin, and the identity of the shipper and importer. |
| That bill was introduced by Senators Marco Rubio, a Republican from Florida, and Sherrod Brown, an Ohio Democrat, and Representatives Earl Blumenauer, Democrat from Oregon, and Neal Dunn, a Florida Republican. Its sponsors argue that a change to the trade law would eliminate a loophole that allows companies to get products into the United States that may have been made with forced labor, and would level the playing field for American companies that face the fees associated with importing goods made for them in other countries. |
| “I think our legislation is targeted very narrowly in areas of abuse, and this has the potential of getting very strong bipartisan support,” Mr. Blumenauer said in an interview. |
| Why It Matters: The law affects prices for e-commerce companies. |
| In 2016, the de minimis limit was raised to $800 from $200. That move relieved burdens on the customs department. Then the pandemic hit, and online shopping boomed. |
| Some online retailers have benefited financially from the law because they ship small batches of orders directly to shoppers from overseas. That differs from the practice of many traditional retailers, which usually import large batches of apparel into the United States — paying the requisite fees — and then deliver online orders from warehouses. |
| Shein, an online clothing retailer founded in China, is one of the companies the bill would affect. Shein has become popular among U.S. shoppers for its ultralow prices and sophisticated mobile app and website. Its $11 smock dresses and $6 floral print bikinis are shipped directly to shoppers, allowing it to bypass import fees. |
| In recent months, Shein has opened U.S. distribution centers to send merchandise to American shoppers. That could lead to more fees at customs as it directs large quantities of goods to its warehouses first. |
| But Shein has faced scrutiny for some of its business practices, such as claims that it has copied designs and used cotton in its clothes from Xinjiang, a region in China where, U.S. officials say, the government has abused Uyghurs. Investors anticipate an initial public offering from Shein this year, which has only increased questions about the company. |
| The bill introduced Thursday does not mention the company by name, but “Shein is probably the most obvious example of a company that has exploited the de minimis loophole the most,” Mr. Blumenauer said. |
| “Maybe there’s a modest financial savings to consumers, but at what price?” he said about Shein’s affordable product line. “I just think that we’ve made a determination that we’re going to respect environment, human rights and product safety, even if it’s a cost of a few more pennies.” |
| Shein said in a statement that it had “zero tolerance for forced labor” and had created a system to comply with the Uyghur Forced Labor Prevention Act. The system includes a “code of conduct, independent audits, robust tracing technology and third-party testing,” a Shein spokeswoman said. “We have no manufacturers in the Xinjiang region.” |
| She added, “Since entering the U.S. market in 2012, Shein has been compliant with U.S. tax and customs laws.” |
| Background: The U.S. is becoming more critical of Chinese companies. |
| A second bill, introduced Wednesday, is the latest sign of the U.S. government seeking to assert more oversight on companies with ties to China. |
| That legislation, sponsored by Senators Bill Cassidy, a Louisiana Republican, and Tammy Baldwin, a Wisconsin Democrat, called for barring Chinese companies from using the de minimis rule and requiring more information on packages that enter the United States. |
| In March, U.S. lawmakers questioned TikTok’s chief executive for five hours about the platform’s ties to China. Other companies, like the e-commerce retailer Temu, have also faced scrutiny about their ties to the country. This month, Mr. Rubio sent a letter to other lawmakers warning them of Shein’s business practices and lobbying efforts. |
| In 2016, when the rule was last adjusted, “people were less concerned about China then than they are now,” said William Reinsch, senior adviser at Kelley, Drye & Warren and former president of the National Foreign Trade Council. |
| What’s Next: The bills are a long way from passage. |
| The two bills need to be considered separately in the House and Senate, and are likely to face a long road to passage. |
| In recent months, Shein has gone on the charm offensive, becoming more vocal about its sustainability practices and its work with independent designers — two areas where it faces lots of questions. |
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