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Trade Subcommittee's Chair Says de Minimis, MFN Changes Could Have Unintended Consequences

House Ways and Means Trade Subcommittee Chairman Adrian Smith, R-Neb., told an audience of trade professionals that while he appreciates the complaint that CBP cannot adequately screen packages that enter under de minimis, he thinks if de minimis is tightened, it could make enforcement even more difficult.

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Smith, who spoke at the Washington International Trade Association annual conference Feb. 13, said some want to lower the threshold, some want to end Chinese shipments' eligibility for de minimis, and some want to exclude certain products from de minimis entry.

"My first message is, OK, how can we accomplish whatever someone's setting out to accomplish?" He also criticized Canada's low de minimis threshold, calling it "so protectionist," and asserting that it hurts their own consumers.

In response to a question from International Trade Today about what CBP says could be administrable, Smith said, "I think overall, there's concern about resources and ... what they actually need moving forward. Now I couldn't give you the exact specifics of what they want, but we want them to be able to do their job.

He said CBP's task is "not easy" considering mail volume, and that it's "important" for the agency to have "agility moving forward" so that it has the "opportunity and the ability to enforce" without "some rigidity that may not be ultimately be as effective at accomplishing the objective."

A talking points sheet that CBP shared with members of the Ways and Means Committee (see 2312140046) focused on collecting data from new sources, such as e-commerce marketplaces and logistics providers, sharing data on intellectual property violations more widely, and reducing bureaucracy when throwing out detained packages, and Rep. Don Beyer, D-Va., who told ITT about that briefing, said CBP was not in favor of excluding China from de minimis.

Smith was asked about the House Select Committee on China's recommendation not only to exclude China from de minimis, but also their proposal to end most favored nation status for Chinese exports.

While Smith acknowledged that the fact that China became so central to supply chains could have created "some unintended consequences," he added, "our response, we need to be careful of unintended consequences as well. We could take some action and not even come close to achieving what was intended. The economy, the way it moves, isn't always easy to predict."

Stephanie Lester, the WITA vice president who asked Smith questions during the program, said it is unconscionable that the Generalized System of Preferences has been expired for three years, and asked Smith about the prospects of renewal.

"I think you can look at legislation coming up on GSP and MTB," he said, referring to the Miscellaneous Tariff Bill. Later, however, he said GSP has "a lot of momentum," and didn't say that MTB is progressing, though he called it "certainly still important as well."

Smith said the conversations he is having with colleagues in both parties should be able to "help us arrive at some text and move some things forward." He added: "We’re making good progress on bringing folks together on this."

Rep. Richard Neal, D-Mass., the top Democrat on the Ways and Means Committee, said in a brief hallway interview at the Capitol later that day that Democrats are "highly interested" in getting GSP renewed.

Smith said that the three-year lapse for GSP is sending a signal to stakeholders of the African Growth and Opportunity Act that makes them concerned AGOA will expire, but he said he hopes that preference program will be renewed before it expires.

Smith and Lester both complained that the U.S. is "stuck" when it comes to trade. Smith said, "It’s hard to say that trade in the last three years is even close to a priority. I don’t know what all has led to such inactivity, but it’s glaring, and this all amidst a supply chain crisis, inflation.... If there’s ever a time we really need to lean into trade, it’s now."

Smith dismissed the White House's reluctance to divide the Democratic Party by pushing trade liberalizing agreements, saying: "They fear they don’t have the votes for a trade agreement. Well, I don’t know of any trade agreement that started out with enough votes."

But later, Smith showed how much the consensus for globalization has shifted by talking about his own district, which is the nation's top agricultural producer by value. He said when he would visit coffee shops in the first two years of the Trump term, before NAFTA was updated and became USMCA, from the coffee shop conversations he heard, "even in a district like mine ... trade was getting a bad name."

But, the way the Trump administration talked about trade tilted the political discussion against those who are pro-trade, he said. Given the need for agriculture exports to maintain crop prices, Smith feels the narrative that past trade policies hurt the U.S. are inaccurate. "If we don’t have expanding markets overseas, we will just have our producers become victims of their own success," he said, as their productivity continues to increase.