Really, a “Bipartisan Trade Consensus” that is GOOD for WORKERS!

How Labor & (Some) Businesses are joining forces to (maybe) close Amazon and China’s favorite “de minimus trade loophole”

Buried deep in U.S. customs law lies a nearly century-old provision that mega-tech companies like Amazon have resurrected as a giant loophole that they exploit to profit massively off importing cheap, and sometimes dangerous or counterfeit, Chinese goods. Formally known as the “de minimis threshold,” this provision was originally intended to save the federal government the time and effort of inspecting and assessing tariffs on small, insignificant items brought in by travelers or shipped from families overseas.

As often happens in Washington, the largest corporations and their lobbyists turned this commonsense exemption designed to protect the little guy from undue regulatory burdens into a giant loophole. Today, it is a giant loophole that allows a flood of e-commerce imports from China and other countries to avoid U.S. tariffs and any inspection by Customs and Border Protection (CBP).

In the 1930s, the de minimis threshold for avoiding tariffs and inspection was originally set at $1. But with the passage of the North American Free Trade Agreement (NAFTA), big business lobbied Congress to raise it to $200 in the 1990s. As they became addicted to profiting off of cheap Chinese imports at the expense of American workers and consumers, multinationals successfully lobbied Congress again to increase the threshold to $800 in 2016.

As a result, Amazon and other multinational importers of sub-quality — and often unsafe and unregulated — Chinese goods now exploit the de minimis loophole to create a direct, high-volume pipeline from Chinese manufacturers to U.S. consumers. While $800 may sound negligible, imagine entire cargo ships carrying up to 24,000 containers filled with $800 packages of Chinese goods.

The result is a tsunami of more than 2 million uninspected packages per day — that CBP has no information about. Many contain counterfeit items or dangerous, unsafe products made in China like surge protectors and phone charger cords that exploded or caught fire.

In 2015, Amazon began to aggressively pursue Chinese manufacturers to sell on their platform. When the de minimis threshold was coincidentally increased in 2016, Chinese sellers on Amazon exploded. Today, 45 percent of sellers on Amazon Marketplace are based in China and 75 percent of all new sellers are Chinese.

At the same time, counterfeit goods listed on the e-commerce platform and imported to the U.S. increased dramatically. The Organization for Economic Development reports that over 60 percent of the world’s counterfeit goods originate in China, and in a lawsuit Apple declared that 90 percent of its chargers sold on Amazon are fake.

As the founder and largest shareholder of Amazon stock, Jeff Bezos has profited handsomely from this loophole. Amazon’s stock price quadrupled after 2016 — the year Congress coincidentally raised the de minimis threshold.

Thankfully, members of both parties have begun shining a lot on how companies like Amazon undermine U.S. manufacturers by flooding the U.S. market with cheap Chinese imports. One Member of Congress, in particular, has led the charge to address this dangerous loophole once and for all. Congressman Earl Blumenauer (D-OR) recently introduced the Import Security and Fairness Act. Importantly, this bill would prohibit merchandise from countries that are both non-market economies and on the U.S. Trade Representative’s (USTR) Priority Watch List, which includes countries with weak intellectual property protection, from exploiting the de minimis loophole.

It is not a coincidence that China is on both of those lists.

By prohibiting goods from countries that are recognized as high-risk counterfeiters as well as non-market economies from using de minimis, Congressman Blumenauer’s bill is a perfect solution to put an end to this rampant abuse by Amazon and Chinese manufacturers. House Democrats agree, which is why they included it in their recently introduced China competition bill.

The United States runs a massive trade deficit each year with China, costing more than 3.7 million U.S. jobs over the last 20 years as factories shuttered and production was off-shored. In an effort to reverse decades of harm done to the U.S. economy and millions of American workers, the U.S. government imposed tariffs on a wide range of Chinese goods.

However, the de minimis loophole has allowed China to ship even more goods into the U.S. — all while evading U.S. tariffs and inspection by CBP. The Chinese Communist Party massively subsidizes its exports in an effort to undermine U.S. producers. The Import Security and Fairness Act would fix this problem, and help America’s manufacturers in the process.

When the dual Goliaths of Amazon and China conspire to manipulate markets and undermine American jobs and safety, leaders across the political spectrum should be very concerned. Now is the time to close this loophole once and for all, before those profiting from it are too powerful to prevent this from being fixed.