What is Section 321?
Section 321(a)(2)(C) of the Tariff Act of 1930, as amended, authorizes CBP to provide an administrative exemption to admit free from duty and tax shipments of merchandise (other than bona fide gifts and certain personal and household goods) imported by one person on one day having an aggregate fair retail value in the country of shipment of not more than $800.
This exemption is known as a de minimis entry.
CBP has created Section 321 programs to enable the agency to monitor and protect against illegitimate trade while providing the public the benefits of duty free shipments for qualified imports.
View the Section 321 De Minimis Shipments Fiscal Year 2018 to 2021 Statistics HERE
This exemption from tariff and formal entry requirements that has helped fuel the boom in e-commerce would be subject to significant new limitations under a bill introduced in the House of Representatives.
19 USC 1321, commonly referred to as Section 321, enables CBP to admit qualifying goods duty- and tax-free (and with fewer information requirements) provided they are imported by one person on one day and have a total fair market value of $800 or less. Currently this so-called de minimis exemption applies to not only base MFN duties but also Section 301 tariffs, including those in place against hundreds of billions of dollars’ worth of imports from China.
The explosion in e-commerce in recent years has meant more imports entering the U.S. under Section 321. According to a fact sheet from House Ways and Means Trade Subcommittee Chair Earl Blumenauer, D-Ore., this trend has resulted in an “influx of imports that do not pay duties, taxes, and fees and provide less data to the U.S. government,” raising concerns that such shipments are being used to avoid Section 301 tariffs, reduce the ability to verify compliance with U.S. import laws, and give imports a “significant competitive advantage” over U.S. goods.
In response, Blumenauer has introduced the Import Security and Fairness Act (H.R. 6412), which would prohibit use of the de minimis exemption for the following, effective 15 days after the bill’s enactment.
– goods from countries that are both non-market economies and on the U.S. Trade Representative’s intellectual property rights Priority Watch List (currently only China meets both criteria)
– goods subject to Section 301 or Section 232 enforcement actions
– goods covered by a single order or contract that are forwarded through a distribution or processing facility (i.e., one used primarily for the storage of articles intended for subsequent shipment) in a foreign country
– importers that have been suspended or debarred
The bill would also allow U.S. Customs and Border Protection to issue regulations requiring the submission of documentation necessary for it to determine the eligibility of goods to use the de minimis exemption.
Such documents could include those regarding the offer for sale or purchase, or the subsequent sale, purchase, transportation, importation, or warehousing, of such goods, including via a commercial or marketing platform (e.g., ecommerce websites).
CBP would then be able to use this information for any lawful purpose. Civil penalties of $5,000 for the first violation and $10,000 for each subsequent violation could be imposed.