NCTO Asks OMB to Move Forward on Proposal to End de Minimis for Section 301 Goods

The Office of Management and Budget should restart consideration of a proposal to end the de minimis exemption for goods subject to Section 301 tariffs, the National Council of Textile Organizations said in an April 14 letter to acting OMB Director Robert Fairweather. The review of the proposal began at OMB last year (see 2009040026) but was removed as part of a broad regulatory freeze after President Joe Biden took office (see 2101210039). OMB should reopen the review and “grant approval to this much needed change in CBP regulations,” NCTO said.

The Section 321 exemption for goods under $800 “is now being coupled with e-commerce to allow mass distributors, foreign manufacturers, and importers to avoid payment of U.S. customs duties,” it said. “The negative ramifications of the sizable duty avoidance on these transactions for U.S. manufacturers and workers are substantial.”

The exemption from the Section 301 tariffs for low-value goods “undermines the purpose and value of the existing Section 301 determination against China,” the association said. Also, “a decision to not approve the CBP ruling to deny Section 321 benefits to goods covered by the 301 determination will continue to allow lucrative tariff benefits to merchandise manufactured under the abhorrent human rights abuses occurring in China’s major textile and apparel production region of Xinjiang province,” it said.

The Biden administration should “undertake an exhaustive review of this problem to develop the policy changes needed to mitigate the damaging impact of Section 321 waivers on U.S. workers and manufacturers,” the NCTO said. “In the interim, it is critical that the OMB and CBP take reasonable steps, such as denying Section 321 benefits to goods covered under the existing China 301 determination. Doing so would be a valuable first step toward limiting the dangerous and growing exploitation of this tariff waiver mechanism.”