Trade Hearing Focuses on CBP Data Collection, de Minimis

Senators and witnesses focused on de minimis and CBP's data collecting authorities -- both sides agreeing that data collection, particularly from partner government agencies, needs to be refined, and that de minimis is a useful trade facilitation tool.

Sens. Tom Carper, D-Del., and John Cornyn, R-Texas, on May 21 hosted a hearing on trade enforcement and merchandise entry at ports in the Subcommittee on International Trade, Customs, and Global Competitiveness under the Senate Finance Committee.

In their written submissions, John Drake, vice president for supply chain policy at the U.S. Chamber of Commerce, and John Pickel, senior director of international supply chain policy for the National Foreign Trade Council, both argued that de minimis has been unfairly scapegoated.

In written testimony, Pickel said compliance rates in the de minimis environment are as good as or better than in other avenues.

Sen. Chuck Grassley, R-Iowa, told the witnesses that he considers himself a free trader, and said that while he supported the increase in the de minimis threshold to $800, he said he thinks "continuous abuses of this threshold should be addressed," and he asked what would be more effective.

Drake said the $800 limit is very successful. "That said ... there are concerns out there that CBP is not collecting certain types of data that would help it further refine trade enforcement. We would argue that’s true in formal entry, too. We have been supportive of CBP being able to collect from new parties. We do think that efforts to single out de minimis are inappropriate. We would say that a comprehensive review of data collected at all levels is better."

In his written testimony, he said that while the 21st Century Customs Framework, now in the interagency process, was a good start, the Chamber needs Congress to develop "a truly comprehensive customs modernization legislative proposal" that advances facilitation and enforcement. He also shared the Chamber's and other trade groups' wish lists for customs modernization (see 2306060057).

In their written testimony, both Drake and Pickel said CBP needs to issue its notice of proposed rulemaking for de minimis entries, based on what it learned from the Type 86 and 321 data pilots. Pickel wrote, "Congress should require CBP to issue findings and seek feedback on next steps related to the Entry Type 86 and 321 Data that have been a test and pilot, respectively, since 2019." Drake said the proposed rule must lay out the findings of the pilots -- which cover about 80% of informal entries -- and that the notice should include an adequate period for public comment, and should include a phased-in implementation period that would not start for at least 270 days.

In Pickel's written testimony, he argued that entries that are not subject to duties, because they fall below the de minimis threshold, should not include HTS codes, if they provide detailed descriptions of the products. "Correctly classifying products adds considerable transaction costs to the entry process and is only operative when determining the amount of duties owed. There has been discussion over the years about the enforcement value of HTS codes but, in my view, they do not increase capabilities beyond duty assessment," he wrote.

Other senators focused on delays in trade processing or feedback for foreign trade zones, which they blamed both on understaffing and the fact that CBP repeatedly has been overwhelmed by irregular migration across the Mexican border.

Ranking member Cornyn said CBP has a thankless job, and said that it isn't staffed to deal with $5 trillion worth of imports and exports annually.

He complained that the Eagle Pass rail closure harmed businesses, and that responding to the immigration crisis makes it harder for CBP to keep up with counterfeits, fentanyl smuggling and goods made with forced labor.

Cornyn mentioned a bill he introduced last year that would require Homeland Security to run a pilot program to assess the value of adding third-party logistics providers to the Customs-Trade Partnership Against Terrorism (CTPAT), which he hopes could increase compliance while easing the burden on legitimate trade.

Sen. Catherine Cortez Masto, D-Nev., told witnesses that foreign-trade zone operators in Las Vegas complain they don't get timely responses from CBP. She said she also hears complaints about duplicative data requirements.

Pickel noted that there are 47 partner government agencies that regulate the entry of products, and each has a different approach. He said there should be decision-making to deconflict requirements, and cut down on duplication, and that there should be better information-sharing between CBP and PGAs.

Cortez Masto asked if that's why the NFTC wants the Border Interagency Executive Council, or BIEC, written into statute. Pickel said yes.

At the end of the hearing, Carper asked the witness to address issues that senators hadn't asked about, and Pickel said Carper's bill, the Medical Supply Chain Resiliency Act he and Sen. Thom Tillis, R-N.C., introduced last year, is an example of Congress remembering that in order to solve supply chain vulnerabilities, we are going to need to trade with allies -- and make that trade more attractive to industry players.

The bill (see 2307050030) encourages the administration to negotiate with countries to lower or eliminate tariffs on pharmaceuticals and medical devices, and to offer those countries the same tariffs here.

He said that move would capitalize “on systemic strengths in the global trading system.”