U.S. Customs and Border Protection has issued a proposed rule that would amend its regulations on low-value (a/k/a de minimis) import shipments. Comments on this rule, the latest of several Biden administration actions announced last fall to address “the significant increased abuse” of de minimis shipments, are due no later than March 17.
For more information on this proposal and how it may affect your business, or for assistance drafting comments to CBP, please contact attorney Lenny Feldman via email or at (305) 894-1011.
Section 321 of the Tariff Act of 1930 allows for the informal entry of articles that have a retail value of $800 or less and are imported by one person in one day. These de minimis shipments are free of duty and taxes and are subject to expedited clearance processing.
CBP states that it processes an average of more than four million de minimis imports each day but receives only minimal information for them. According to a CBP press release, these two factors “inhibit CBP’s ability to identify and interdict high-risk shipments that may contain illegal drugs such as illicit fentanyl, merchandise that poses a risk to public safety, counterfeit or pirated goods, or other contraband.” Further, CBP enforcement efforts have surfaced violations associated with de minimis shipments regarding the right to make entry, mismanifesting of cargo, misclassification, misdelivery (e.g., delivery of goods prior to release from CBP custody), undervaluation, and incorrectly executed powers of attorney.
In response, the proposed rule would create a new enhanced process for entering de minimis shipments that (1) uses an electronic entry process similar to what has been tested in CBP’s entry type 86 test, and (2) require additional data elements based on the most useful data elements tested in CBP’s Section 321 data pilot.
Under the proposed enhanced process, specified data elements would have to be transmitted electronically to CBP along with the individual bill of lading or other shipping document used to file or support entry. Data elements required for all shipments would include clearance tracing identification number, country of shipment, and ten-digit HTSUS classification (though waivers for this data element may be available for filers with documented internal controls that ensure certain compliance measures), as well as at least one of several other specified data elements such as the URL for the product listing or a product picture or identifier. Where applicable, CBP would also require the name and address of the seller and purchaser, data or documents required by partner government agencies, advertised retail product description, and marketplace name and website or phone number.
Required data elements and documentation would have to be transmitted to CBP on or before the applicable deadlines for receipt of advance cargo information, which differ by mode of transportation; e.g., 24 hours before cargo is laden aboard a vessel at a foreign port or 30-60 minutes prior to truck cargo reaching the first U.S. port of arrival.
Other provisions of this proposed rule include the following.
- explaining that when the aggregate fair retail value of shipments imported by one person on one day under the de minimis exemption exceeds $800, all such shipments imported on that day by that person become ineligible for duty- and tax-free entry under the exemption
- providing that the “one person” eligible for the de minimis exemption is the owner or purchaser of the goods
- allowing entry under the enhanced process to be made using reasonable care by the owner or purchaser of the shipment, an express consignment operator or carrier in possession of the shipment, or (when appropriately designated) a customs broker
- stating that port directors may provide duty- and tax-free entry of qualifying de minimis shipments but are not required to (e.g., because there may be other applicable statutory and regulatory requirements)
- revising the definition of “shipment” to clarify that a single shipment corresponds to an individual bill of lading (also known as a house bill, individual air waybill, or simple bill)
- removing the requirement to segregate low-value shipments on advance manifests
- renaming the “release from manifest” process as the “basic entry process;” requiring additional data elements for this process for low-value shipments (specifically, the name and address of the person claiming the de minimis exemption and, if different, the name and address of the final deliver-to party) entered by the owner, purchaser or consignee, or (when appropriately designated) customs broker; and explaining that the HTSUS subheading is not required under this process
- providing that goods regulated by partner government agencies may not be entered under the basic entry process but may be entered under the proposed enhanced process (with, as indicated above, a 10-digit HTSUS number)
- stating that any goods not exempt from the payment of any applicable PGA duties, fees, or taxes are not eligible for entry under either the basic or enhanced process for low-value shipments
According to CBP, a second proposed rule is anticipated “in the coming days.” Based on previous announcements, this rule will likely propose to exclude from the de minimis exemption all shipments containing products covered by Section 301, 201, or 232 tariffs. A separate rule from the Consumer Product Safety Commission also affecting de minimis imports was published last week.
In the meantime, CBP states, the Biden administration will continue to urge Congress to advance reform of de minimis laws. The White House has previously urged lawmakers to pass legislation that (1) codifies CBP’s proposed regulatory changes and (2) excludes import-sensitive products, including textiles and apparel, from de minimis eligibility, though little progress has been made to date in that direction.
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