US senators urge government to impose 'India-like' ban on duty-free Chinese packages

Citing unfair competition practices, the senators claim that US manufacturers struggle to compete with low-cost Chinese competitors relying on forced labor and state subsidies in key sectors.

In a bid to address concerns over the influx of duty-free packages from China, two US senators, Sherrod Brown and Rick Scott, are urging President Joe Biden to take executive action. Citing unfair competition practices, the senators claim that US manufacturers struggle to compete with low-cost Chinese competitors relying on forced labor and state subsidies in key sectors.

This move draws parallels with India's significant crackdown in 2019 on online purchases from Chinese e-commerce platforms that exploited customs duty and Goods and Services Tax (GST) exemptions. Chinese platforms like Club Factory, AliExpress, and Shein were reportedly shipping goods to Indian cities under the guise of "gifts," taking advantage of the exemption on gifts valued up to Rs 5,000.

The clampdown in India was prompted by reports of Chinese retailers exploiting the customs duties exemption on gifts, leading to a loss of revenue. The Customs Department communicated that registered couriers were outsourcing activities without proper permission, prompting the government to take action. In June 2020, the Indian government banned these Chinese shopping apps, along with around 50 others across different categories.

In the US, the issue revolves around the "de minimis" category under trade law, allowing tariff-free entry for packages valued below $800 per person, per day. This provision, similar to India's Rs 5,000 limit, primarily benefits retail products purchased online. With a surge in shipments from China, lawmakers have introduced legislation to modify how the US treats imports below $800.

Senators Brown and Scott have now written a letter to President Biden, urging the end of duty-free treatment for products falling under the de minimis category. They highlight the impact on American manufacturing and retail sectors, expressing concerns over the situation's escalation.

In their letter, the senators name Chinese companies Temu, Shein, and AliExpress as entities unfairly benefiting from duty-free treatment, alleging that the surge in shipments adversely affects US big box stores and retailers. They argue that the uncontrolled problem not only jeopardizes the safety and livelihoods of Americans but also contributes to outsourcing manufacturing and retail sectors to China, known for employing questionable labor practices.

“This out-of-control problem impacts the safety and livelihoods of Americans, outsourcing not only our manufacturing, but also our retail sectors to China, which — as you know — systematically utilizes slave labor among other unconscionable practices to undermine our economy,” the senators said.