Lawmakers Probe Loophole Allowing Chinese Companies to Avoid US Inspections

Rep. Michael Gallagher (R-Wis.) speaks during an event commemorating the 1989 Tiananmen Square Massacre in Congress on June 5, 2023. Madalina Vasiliu/The Epoch Times

House Republicans are asking the U.S. Postal Service for details about potentially illegal mail coming from China, according to a June 28 letter.

Rep. Mike Gallagher (R-Wis.) and Rep. James Comer (R-Ky.) are looking into Chinese companies that use a loophole to avoid having American inspections of goods intended for U.S. markets.

Gallagher, chairman of the House China Select Committee, and Comer, chairman of the House Oversight Committee, sent their letter to U.S. Postmaster General Lous DeJoy requesting documents, information, and data compiled by USPS regarding incoming mail from China.

They are doing this as part of an investigation into whether or not Chinese companies can get around U.S. rules and avoid American taxes, fees, and other laws.

“Most shipments valued at less than $800 fall under the so-called de minimis rule and enter the United States exempt from duties, taxes, and scrutiny,” they wrote.

“Chinese companies can take advantage of the de minimis rule and ship products via commercial shipping companies, as well as the USPS, directly to U.S. consumers without paying duties and fees, or subjecting their products to investigation by authorities.”

Continuing Investigation

The letter is a continuation of the Select Committee on the Chinese Communist Party’s investigation into companies who rely on the de minimis provision, which they believe allows them to avoid compliance with the Uyghur Forced Labor Prevention Act (UFLPA).

“It has been reported that Chinese companies routinely break large shipments into numerous smaller ones in order to take advantage of the de minimis threshold and avoid customs duties and tariffs.”

The House China Select Committee is currently looking into allegations of forced labor at the Chinese “fast fashion” labels Shein and Temu, which prompted this request.

According to the results of the probe, the business models of such corporations “heavily” rely on the de minimis rule that permits them to transport items straight to the American customer without bearing any responsibility for compliance with bans on forced labor.

Legislators claim that information on shipments from China that may employ the de minimis entrance has been made public by federal authorities including U.S. Customs and Border Protection.

“Such practices abuse the intent of the threshold and provide unfair advantages to Chinese importers to the detriment of the U.S. economy and national security,” they wrote.

Due to the fact that a “significant proportion of small parcel shipments come through the USPS channel and are not publicly broken down by country.”

Gallagher and Comer emphasized that USPS is “uniquely positioned” to give the information.

“Such information will provide the committees with important insight into the volume and value of shipments from the PRC [People’s Republic of China],” they wrote.

The lawmakers reiterated their need for the information saying, “The information provided by CBP does not include data from the USPS. These data are insufficient without properly accounting from the USPS channel, which includes information regarding the specific volume of shipments from the PRC into the United States.”

Specifically, Gallagher and Comer want to know the total U.S. dollar value of dues and inward rates currently assessed to China, as well as the full terminal dues schedule for every country in the world. They also want to see any records pertaining to de minimus shipments from China.

Concern About Uyghur Forced Labor

Last month, the China Committee released an interim report on its bipartisan investigation into the fashion brands, which found that the companies have “no system to ensure compliance with the Uyghur Forced Labor Prevention Act [UFLPA],” which lawmakers say virtually guarantees that shipments made with Uyghur forced labor are entering American homes.

The committee has discovered that Temu and Shein alone are “likely responsible for more than 30 percent of all packages shipped to the United States daily under the de minimis provision, and likely nearly half of all de minimis shipments to the United States from China.”

They also found that Temu conducts “no audits and reports no compliance system to affirmatively examine and ensure compliance with the UFLPA.”

Temu reported that the only measure it takes to ensure that it does not ship commodities to the United States that were manufactured using forced labor in violation of U.S. law is to require its suppliers to adhere to standard terms and conditions that prohibit the use of forced labor.

The committee’s report also states that Temu admitted that it “does not expressly prohibit third-party sellers from selling products based on their origin in the Xinjiang Autonomous Region.”

The lawmakers ended their report by stating that “These initial and interim findings—which reveal Temu’s failure to maintain even the façade of a meaningful compliance program and the true scale of both Shein and Temu’s use of the de minimis provision—raise serious concerns about the continued presence of products made with forced labor contaminating American imports.

“American consumers should know that there is an extremely high risk that Temu’s supply chains are contaminated with forced labor.

“And all companies operating in the United States have an obligation to clean up their supply chain and ensure that they are not contributing to the CCP’s genocide of the Uyghur people by facilitating the sale of goods made with forced labor.”

Shein and Temu did not immediately respond to The Epoch Times’ request for comment.