DEFENDING DE MINIMIS: Motivated by the possibility of House action, business groups are honing their arguments in defense of the current $800 threshold for low-value shipments that can enter the United States without duties. China Committee Chair Mike Gallagher (R-Wis.) recently expressed optimism that the House could pass a “de minimis” reform bill this year, although it remains unclear that all the pieces will fall into place to make that happen. Both the U.S. Chamber of Commerce and the National Foreign Trade Council are eager to counter what they say is misinformation about the provision, which critics like the Coalition for a Prosperous America charge has facilitated shipments of counterfeit goods and fentanyl into the United States and helped Chinese suppliers to avoid duties on billions of dollars of trade. The business groups argue there is no evidence that counterfeit goods or fentanyl are more prevalent in the low-value shipments that enter duty-free under the de minimis provision than in larger shipments that come in through other channels. They also argue that the average duty savings on a de minimis shipment is only $2 to $4 per shipment, which is far less than what it would cost CBP to process the shipment if it were subject to tariffs. “We want to engage constructively and get the facts out,” John Pickel, senior director of international supply chain policy at the NFTC, told Morning Trade. The CBP gets information on the approximately 640 million shipments that come in under the de minimis threshold that allows it to target packages that could contain illicit products in an automated way, Pickel said. If Congress degrades current de minimis policy, and redirects those individual package shipments into larger containers it will require CBP to use more resources on enforcement and the collection of minimal duties that it could be using for its border security, immigration and airline passenger entry responsibilities, he said. The business community also sees the fight over de minimis as a distraction to some of the larger concerns in the trade environment, added John Drake, vice president for transportation, infrastructure and supply chain policy at the U.S. Chamber. The explosion of new internet companies “who were never importing before have created a challenge that is much larger than de minimis,” Drake said. “CBP can’t get accurate information from those platforms up and down the trade environment. So, if you eliminate de minimis you are not solving for illegal shipments, but simply moving these goods to other types of entries.” “We need to move to a place where we are having a serious policy conversation on how to strengthen CPB’s ability to enforce really important trade laws across all the ways that cargo comes into the country,” Pickel added. YELLEN TO MEET WITH CHINESE VICE PREMIER: U.S. Treasury chief Janet Yellen is set to meet later this week with Chinese Vice Premier He Lifeng in San Francisco, her latest effort to improve communication between the two economies. A senior Treasury official told reporters Sunday that Yellen and He would discuss the outlook for the Chinese economy, unfair trade practices, climate change, and debt distress in low-income countries, among other topics. IN NOD TO CHINA, BIDEN SLAMS ‘DEBT-TRAP DIPLOMACY’: Joe Biden spoke Friday with leaders from Latin America, the Caribbean and Canada at the White House, and pledged to deepen economic cooperation between the countries as Washington works to counter China’s influence and mitigate the economic roots of irregular migration. Already in motion: Jose W. Fernandez, the U.S. undersecretary of state for economic growth and energy, is visiting Chile, Uruguay and Paraguay this week to discuss critical minerals, clean energy, trade and investment, technology, health and the environment. Another summit deliverable? More talks: Biden announced the investment program in partnership with the Inter-American Development Bank. As reported by POLITICO ahead of its public release, leaders agreed to establish discrete tracks — foreign affairs, trade and finance — and annual gatherings. Initial focus areas are clean energy, medical supplies and semiconductors. Biden said that Washington wants to “make sure that our closest neighbors know they have a real choice between debt-trap diplomacy and high-quality transparent approaches to infrastructure and inter-development.” The comments are a veiled rebuke of Beijing's Belt and Road Initiative, which the administration has accused of saddling developing economies eager to build up infrastructure with high debts. Thin gruel? But Biden’s own framework faces criticism for a lack of concrete deliverables, and accusations that Washington’s perceived neglect of the region has enabled China to spread its influence. “A lot of countries in the region value their relationships with both Washington and Beijing, and in fact some of the countries play the two capitals off of each other,” said Ryan Berg, the director of the Americas program at CSIS. He said the region is likely to welcome closer ties with China despite the risk if it means advancing development projects more quickly. ICYMI: White House efforts to tie the partnership to migration is likely to only deepen concerns from Latin America that what was supposed to be an economic package for the region is getting hijacked by U.S. election politics. Ari has more on that here. AGOA RENEWAL ON TAP: The United States is committed to making an African trade preference program stronger and more effective, USTR Katherine Tai said over the weekend in remarks at the closing ceremony of the 20th African Growth and Opportunity Act Forum. Reminder: The AGOA program, which grants exports from qualifying countries tariff-free access to the United States is slated to expire in September 2025. The Biden administration has pledged to work with Congress to improve the flagship trade program, not just renew it as is. “We see that there is opportunity to shape a stronger, new, forward-looking vision for U.S.-Africa trade. One where more segments of our society are brought in,” Tai said, per USTR. Chaos anticipated: African governments and industry associations fear that efforts to significantly alter AGOA risk bogging down the tariff-cutting program’s renewal process amid political gridlock and complications in Congress. African Union Trade Commissioner Albert Muchanga said that an extension of the AGOA program for “10-20 years is very critical to the investment community. Anything lower than that would generate uncertainty.” He added that “if there are any enhancements to be made, those should be done after the extension.” Lawmakers agree: Foreign Affairs Chair Michael McCaul (R-Texas) and ranking Democratic Rep. Gregory Meeks (N.Y.)backed up the sentiment on Friday and said “we believe the principal consideration must be ensuring a successful and timely reauthorization.” BIDEN URGED TO REVAMP PERMIT PROCESS: Ruben Garibay, the executive chair of Puerto Verde Holdings, sent a letter last week urging the president to approve a permit to develop the Puerto Verde Global Trade Bridge, within reach of the U.S.-Mexico border. The letter claims the project could support $135 billion in GDP and 1.4 million jobs when the corridor becomes fully operational. CHINA PLEDGES MORE MARKET ACCESS: Chinese Premier Li Qiang said his nation would expand foreign nations’ access to markets and boost imports in a speech on Sunday at the China International Import Expo in Shanghai. "We will continue to promote opening up, with greater inclusiveness and benefit sharing,” Li said. “No matter how the world changes, China’s pace of opening up will never stall, and its determination to share development opportunities with the world will never change.” Keep in mind: China is working to lure more foreign investors to the country to help support the country’s economic recovery on the heels of a slowdown.
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