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Senators express concern over USMCA de minimis footnote

Several senators on Tuesday expressed support for maintaining the United States’ current $800 de minimis level amid the U.S.-Mexico-Canada Agreement’s (USMCA) inclusion of a footnote that says parties to the agreement can institute a de minimis level reciprocal with another party’s lower de minimis level.

The U.S. has an $800 de minimis level, while USMCA sets Mexico’s level at $117 and Canada’s de minimis threshold at $150. The U.S. had sought during the USMCA negotiation for Mexico and Canada to raise their de minimis levels to the same threshold as the U.S.

To engage with Canada and Mexico on the issue, the U.S. could say, “‘You get the same [level] in the U.S. that we get there,’” U.S. Trade Representative Robert Lighthizer said during a June House Ways and Means Committee hearing.

Sen. Ben Cardin, D-Md., said during a Senate Finance Committee hearing Tuesday, “The de minimis rule in the United States, the $800 limit, is critically important … for small businesses.

“I don’t know that we’ll have an opportunity to negotiate that further, but I can tell you, the way that’s worded … could be damaging to small businesses in this country.”

Testifying during the hearing, Paula Barnett, who owns a small jewelry business in Brownsville, Ore., said de minimis exemptions are the “single greatest tool” policymakers can use to help small businesses export goods.

Barnett said she also imports supplies such as stones and processes some returns, shipments on which she believes she shouldn’t have to pay any fees.

Given the importance of de minimis thresholds, Barnett is hopeful the final USMCA implementation package “establishes certainty, not uncertainty” regarding USMCA members’ de minimis levels.

Committee ranking member Ron Wyden, D-Ore., said the committee won’t “go along with uncertainty in U.S. law and NAFTA” regarding de minimis.

Wyden and committee Chairman Chuck Grassley, R-Iowa, urged Lighthizer in a February letter to maintain the United States’ $800 de minimis level in USMCA implementing legislation.

Along with the USMCA footnote (page 7-7), existing statute (19 U.S. Code 1321(b)) allows the government to suspend de minimis entry benefits in cases found necessary to protect U.S. revenue or prevent unlawful imports.

The debate about the de minimis level vis-a-vis USMCA comes as customs brokers and others in the trade community have expressed concerns about an increase in apparent fraudulent shipments as Customs and Border Protection has grappled with an influx in low-value shipments since enactment of the Trade Facilitation and Trade Enforcement Act of 2015, which raised the U.S. de minimis level from $200 to $800.

Sen. John Thune, R-S.D., said he hopes the current U.S. de minimis level is maintained, adding that it’s important for the United States’ ability to trade with other countries and makes it easier for U.S. small businesses to compete.

Sen. Maggie Hassan, D-N.H., said she’s concerned about the USMCA footnote as well, also linking the U.S.’s higher de minimis level to benefits for small business.

Barnett said if items she exports are valued over a certain amount, customers generally “have to run down to the customs office and pay a fine or extra taxes and fees just to collect their item.” Sometimes those taxes and fees cost as much as the item itself, she said.

“As an internet-based entrepreneur, I’m hopeful the U.S. can set the standard for sensible e-commerce policy through agreements like the USMCA and that these provisions can and ultimately will be enforced to ensure the internet continues to act as a launching pad for millions of micro-business exporters like me,” Barnett said in her testimony.

Congressional process

During the hearing, Grassley said he left a meeting with House Speaker Nancy Pelosi, D-Calif., feeling encouraged that her caucus is making progress in considering the USMCA.

“I think she really wants to get to ‘yes’ on it,” Grassley said in response to an American Shipper question after the hearing. “She’s got to work with new members to get them satisfied. But that process is going through.”

Fourteen House Democrats on Friday sent a letter to Pelosi urging negotiations on USMCA between the Trump administration and House Democrats through the August congressional recess to set up a vote on USMCA before the end of this year.

“It is imperative that we reach a negotiated agreement early in the fall,” reads the letter, an effort led by Reps. Colin Allred of Texas and Scott Peters of California. “Canada and Mexico are by far our most important trading partners, and we need to restore certainty in these critical relationships that support millions of American jobs.”

Brian Bradley

Based in Washington, D.C., Brian covers international trade policy for American Shipper and FreightWaves. In the past, he covered nuclear defense, environmental cleanup, crime, sports, and trade at various industry and local publications.