De Minimis Front and Center in Congressional Action This Week

By Kristi Ellis

Congressional scrutiny and action over the de minimis loophole took center stage on Capitol Hill this week, as lawmakers underscored the severe economic impacts to American manufacturing and dangers to U.S. consumers wrought by this provision in U.S. trade law, during two days of action that culminated in a markup of de minimis legislation Wednesday.

Over the two days of hearings, several other key policy issues important to the industry were discussed, including Section 301 tariffs, legislation that calls for a study and seeks to ultimately expand the Generalized System of Preferences (GSP) and, separately, the Miscellaneous Tariff Bill (MTB.)

But the debate over de minimis legislation and the exploitation and impacts of the loophole garnered the most attention. In addition, fentanyl was a key part of the discussions, in light of the meteoric rise of de minimis shipments and the rise in opioid deaths in this country.

The markup was the kickoff in what is expected to be a lengthy legislative process to shape a law intended to crack down on the abuse of the de minimis loophole by China and other countries, as well as e-commerce juggernauts such as Shein and Temu that are profiting off this provision at the expense of domestic businesses, law enforcement and consumers.

With the explosion of e-commerce, the de minimis mechanism is now being aggressively used, allowing millions of products into the U.S. market duty free that otherwise would be subject to tariffs, penalty tariffs, taxes and customs inspection. Under the mechanism, a package of goods valued at $800 or less per person is allowed to come into the country duty free everyday through e-commerce.

CBP estimated 1 billion de minimis shipments entered the U.S. market in the fiscal year alone, and the numbers have continued to increase in 2024, reaching nearly 4 million de minimis packages a day, a 30 percent increase over last year.

To provide further context to the alarming nature of this exponential growth in de minimis shipments, CBP data estimates that these shipments totaled only 150 million in fiscal 2016—the year Congress increased the de minimis threshold from $200 to $800.

The loophole acts as a gateway to a flood of millions of uninspected shipments a day, undoubtedly containing goods made with forced labor, tainted and unsafe children’s and consumer products and illicit narcotics such as fentanyl which is rapidly killing American citizens.

Its impact on the U.S. textile industry, coupled with other factors, has been devastating.

The committee’s markup Wednesday followed two congressional hearings Tuesday that shined a spotlight on de minimis as well as USTR’s statutory review of Section 301 tariffs and other critical trade issues.

Separately, the House Select Committee on the CCP released a report on Tuesday, calling for the elimination of the de minimis loophole, among many other recommendations to counter the Chinese Communist Party’s role in the deadly fentanyl epidemic that has killed hundreds of thousands of Americans.

Heated Debate over De Minimis Erupts at Ways and Means Markup

 Tensions flared on both sides of the aisle during the House Ways and Means’ markup of the de minimis legislation, a bill that NCTO and many groups argued does not go far enough to address the underlying issues with the de minimis provision.

The House Ways and Means Committee passed legislation would block de minimis eligibility for any imported Chinese products subject to a trade remedy action, such as the Section 301 tariffs and other trade remedy tariffs or AD/CVD actions.

The legislation, introduced by Rep. Greg Murphy (R-NC) and shepherded through the committee by Chairman Jason Smith (D-MO) and the Majority Republicans. It is still not clear when the bill may go to the House floor or a Senate plan of action in response.

Smith and other Committee Republicans touted the provisions in the legislation, arguing it would cover 50 percent of all Chinese imports, implement a new data requirement or the covered imports to provide a 10-digit HTS number and create new civil penalties of $5,000 or the first violation and $10,000 for subsequent violations.

See a link to a fact sheet on the bill released by Ways and Means.

Chairman Smith said in his opening remarks that the legislation would make sure China can no longer use de minimis to escape the tariffs it rightfully owes and would cut the de minimis value shipments from China in half.”

He said the “de minimis privilege is being abused by foreign companies that import products into our country without paying duties. China is a master at this exploitation.”

Over 60% of the de minimis entries into America are from China alone, something which has grown exponentially since the implementation of 301 tariffs on China, Smith said.

“This bill is an important first step to curbing the flow of de minimis shipments into the U.S. from China,” he stated.

Striking a conciliatory note, Smith later said while the legislation is an important first step “in countering China’s grip over American markets, our work doesn’t end here.”

He noted he is committed to working with members on both sides of the aisle to “ensure that we see this issue to the end and make all necessary reforms to prevent de minimis shipments that violate our law or give an unfair advantage to foreign interests.”

Ranking Member Richard Neal (D-MA) pointed to “mothers who have lost children to fentanyl ordered from China and transported by public and private domestic shipping channels right to their homes.

“How can the majority consider their de minimis legislation? It has been suggested as ready for primetime when in fact it fails to address this very issue,” Neal said. “Or what about the influx of gun silencers making their way into Americans hands from China? These are major public safety concerns, and we have the power and the obligation to do something. We are living through a pivotal moment for American workers as companies continue to notch record profits.”

See Congressman Neal’s remarks here:

NCTO and several business, labor and law enforcement groups issued statements to varying degrees of opposition to the bill, all with a singular message that it does not go far enough and will continue rewarding China.

NCTO called the markup an “initial step” but underscored the urgent need for a “comprehensive solution.”

See the statement from NCTO President and CEO Kim Glas here.

“Specifically, we do not believe the bill goes far enough in restricting China’s enormous privileges under de minimis. In addition, we strongly believe the bill, at the very least, should preclude de minimis treatment for trade-sensitive sectors, such as textiles and apparel, which according to U.S. Customs and Border Protection accounts for a full 50 percent of all de minimis entries,” Glas said.

Rep. Blumenauer Led Heated Debate Among Democrats Opposing Ways & Means Bill

Rep. Earl Blumenauer (D-OR), Ways and Means Trade Subcommittee Ranking Member, said in his opening remarks: “In January, 13 state Republican attorneys general sent a letter urging the total closure of the de minimis loophole to address the de minimis’ efforts facilitating an illegal narcotics trade, he said. “Even Customs acknowledges the immense challenge of identifying and interdicting high-risk shipments that contain narcotics in the deluge of more than three million packages per day and increasing.”

Blumenauer said that “far from “Ending China’s De Minimis Abuse,” as this legislation purports to do, this bill would redirect China’s de minimis abuse toward other shipments while Customs can’t keep up.”

“China is counting on Congress to continue to fail to act, to look the other way and facilitate their criminal activity while they undercut legitimate American businesses,” he added. “There is no reason to allow a few large shippers who profit at the expense of the American people. The Chinese have a have a quarter trillion dollar e-commerce industry that relies on our lax de minimis rules.”

See Rep. Blumenauer’s full remarks here:

Blumenauer has reintroduced the Import Security and Fairness Act, bipartisan, bicameral legislation to stop non-market economies—namely China—from exploiting the de minimis threshold and to require U.S. Customs and Border Protection (CBP) to collect more information on de minimis shipments.

His bill would cut off all eligibility of Chinese products from receiving de minimis vs. more than half of Chinese goods. He also noted that the Republican bill is only as good as the 301 tariffs remaining in place – while his bill would be a permanent ban on eligibility from China.

He was joined by Reps. Mike Thompson (D-CA) and Donald Beyer (D-VA) on Wednesday in voicing opposition to the Murphy legislation and countering arguments put forth by several Republicans that the majority of fentanyl and illicit drugs do not come in via international mail and that 99 percent of the illicit drugs come in through the Southern border.

Republican committee members defended the statistics, saying they were provided by Customs.

But the Democrats fired back that there are millions of de minimis packages a day entering the U.S. uninspected with no information, which essentially renders data on seizures meaningless. When CBP does open packages, they are finding fentanyl and precursors.

Rep. Bill Pascrell (D-NJ) highlighted the U.S. textile industry and support for Rep. Blumenauer’s bill, which  would exclude all Chinese imports from de minimis treatment, while calling the bill marked up by the Ways & Means Committee “a distraction that does not end Chinese abuse.”

See his remarks here:

Chairman Smith did provide encouraging remarks as he reiterated that he believes de minimis is a free trade agreement for China and repeatedly stressed the bill the committee passed was a first step in a process he believes will deter China, other countries and bad actors from circumventing trade laws and undermining American business and endangering citizens.

To view the full debate, see a link to the Committee’s markup here: Markup of H.R. 5179, H.R. 7981, H.R. 7979, H.R. 7983, H.R. 7980, and H.R. 7986 (

In separate action, the Committee passed a GSP trade package, including a bill introduced by Rep. Carol Miller (R-WV) that would “create an expedited process for stakeholders to petition the addition or removal of products from the GSP trade program. The International Trade Commission (ITC) would provide a report to Congress on the economic impacts of potentially adding or removing products, so Congress has a clear understanding of how to best expand the program and protect American manufacturing.”

Currently, textiles, apparel and footwear are excluded from this preferential trade program and this legislation could be highly damaging to the industry. NCTO will continue to monitor it closely and raise concerns.

Separately, an MTB package is expected to be introduced soon but the contours of that bill are still being considered.

House China Select Committee on the CCP Recommends Eliminating De Minimis Loophole

On Tuesday, the Committee released a report and held a hearing on the CCP’s role in the fentanyl crisis, attended by many family members who have lost loved ones to the fentanyl scourge.

Among findings outlined in its report, the Committee called on Congress to eliminate trade and customs loopholes like the de minimis exception that is facilitating illicit fentanyl trafficking.

Committee Chairman Mike Gallagher (R-WI) released a video highlighting the findings and recommendations.

“Both political parties have acknowledged that the ultimate source of the fentanyl crisis is the People’s Republic of China, which produces over 97% of fentanyl precursors that fuel the global illicit fentanyl trade,” Gallagher said in the video.

“While we knew where fentanyl comes from, until now, we did not know why. The Select Committee’s bipartisan investigation has uncovered the answer: It is because the Chinese Communist Party promotes the fentanyl crisis through government programs, protects fentanyl traffickers operating within its borders, and directly benefits from the fentanyl crisis.

The CCP provides government subsidies to PRC companies that manufacture fentanyl analogues, precursors, and other synthetic narcotics, so long as these companies sell them outside China.”

See the full video here:

Rep. Neal Dunn (R-FL) voiced concern about the PRC being the primary source of fentanyl and precursors shipped through the international mail system and de minimis, and touted a bill, the Import Security Fairness Act, that he has co-sponsored with Rep. Blumenauer to close this deadly loophole.

“I hope it will find the light of day across our floor soon, Dunn said.

His concerns were echoed by other Select Committee members.

Rep. Ro Khanna (D-CA) said: “One of the committee’s getting rid of this de minimis exception up to $800 is important. My understanding is that some of the fentanyl is still coming across into the United States because it comes under $800. That is not being monitored. That is something we should do.”

And Rep. Kathy Castor (D-FL) asked RAND Professor David Luckey where he ranks action on the de minimis threshold for duty-free imports as Congress prioritizes actions to tackle the flood of deadly fentanyl into the U.S. Luckey said any financial tool we can leverage against China should be used.

Weighing in on de minimis as well, Chairman Gallagher acknowledged Ways and Means was “wrestling” with a legislative solution and said it would require “given and take on both sides.”

That goes all the way back to our hearing on Uyghur genocide, that was one of our core recommendations. We’re hoping there is a productive outcome and we don’t let the perfect become the enemy of the good,” Gallagher said.

House Ways and Means Hearing On The U.S. Trade Agenda with Ambassador Katherine Tai

In opening remarks of a sometimes testy, hours-long hearing with U.S. Trade Representative Ambassador Katherine Tai, House Ways and Means Chairman Jason Smith (R-MO) remarked on the de minimis legislation his committee was planning to take up the following day.

“Tomorrow, this Committee will advance legislation to make sure that countries like China can no longer use trade tools like de minimis to escape tariffs they rightfully owe,” Smith said.

See the chairman’s exchange with U.S. Trade Representative Ambassador Katherine Tai here:

Rep. Earl Blumenauer (D-OR) noted the De Minimis bill being considered by the House Ways and Means Committee tomorrow does not go far enough to address serious underlying problems exposing consumers to dangerous imported products and illicit fentanyl, which will continue to reward China.

Hear his remarks here:

Rep. Mike Thompson (D-CA) said de minimis puts consumers at risk because, among other dangers, it facilitates the importation of unsafe bicycles, particularly electric bikes, and helmets.

Hear his exchange on de minimis legislation in the House Ways & Means Committee with Ambassador Tai here:

The timing of the completion of USTR’s statutory review of Section 301 tariffs was also a key topic of discussion during the hearing, with Ambassador Tai fielding questions from several lawmakers on when they expect to announce a decision.

NCTO has long advocated for a continuation of the penalty tariffs on billions of imported Chinese apparel and textile products, with limited exceptions for some inputs that are no longer produced in the United States.

“We started the four-year review in September of 2022 and this has been a whole-of-government effort,” Tai told Ways & Means Chair Jason Smith. “It is a tremendously consequential exercise in examining the use of tariff tools in addressing the inequities in the U.S.-China trade relationship, which are significant. So let me just say that we are making progress and it is my belief that we are very close to the conclusion of this review.”

Videos by: Rebecca Tantillo

U.S.-China Commission Hears Alarming Testimony on Rise in Unsafe Imports from China through the De Minimis Loophole

The U.S.-China Economic Security and Review Commission (USCC) heard alarming testimony from legal experts and government officials at a recent hearing, highlighting the rise in dangerous and toxic imported consumer products from China and the lack of resources and effective enforcement by the U.S. Consumer Product Safety Commission (CPSC) to monitor a surge in imports coming in through the de minimis provision in U.S. trade law.

The hearing, titled, “Consumer Products From China: Safety, Regulations and Supply Chains,” focused on consumer product imports from China and examined product safety, counterfeits and the challenges and risks associated with the e e-commerce and de minimis environment. It further examined China’s evasion of safety regulations and supply chain shifts.

Kim Glas, an appointed USCC Commissioner, who co-chaired the hearing, said in her opening remarks that China remains the largest supplier to the United States of a wide range of consumer products.

“However, ongoing and emerging trade issue are challenging the U.S.’ ability to protect the United States market and consumers from harm,” Glas noted. “The recent Section 301 duties on Chinese imports have fueled efforts by Chinese exporters to avoid or evade tariffs and continue selling to the U.S. consumer marketplace.”

Glas said their tactics range from illegal schemes such as transshipments through legitimate channels to avoiding tariffs. “In particular, the de minimis exception allows for importation of duty-free products to the U.S. market through the international mail system as long as the declared value of these items is less than $800.”

See her remarks here:

She pointed to recent reports indicating that close to 4 million de minimis shipments are being shipped to the United States every day, up 30% since last year.

“This trade is exploding. Such packages arrive to the U.S. with minimal inspection, minimal scrutiny and minimal information, challenging the United States’ capacity to monitor product safety at our borders and making it impossible to police and have the legal authority to go after predators peddling these unsafe products,” she added.

Glas also said the flood of small packages not only poses “a substantial threat” to U.S. manufacturers and workers, but it also undermines our consumer safety laws and trade laws, including Section 301.

“E-commerce has become a superhighway of the Wild West rewarding de minimis shipments with duty-free market access, facilitating unsafe products, illegal products, stealing intellectual property, harming domestic manufacturers, retailers and the American people,” she said.

The hearing highlighted dangerous Chinese imports such as children’s toys and pool filters that claim to be made to U.S. safety standards but fail to fulfill U.S. safety regulations and “all too sadly some of these stories have ended in severe tragedy,” she said.

Meanwhile, Chinese producers continue to grow market share by investing in alternative manufacturing hubs including Mexico and Vietnam, Glas said.

“While data may indicate these countries are taking market share from China, further examination notes how Chinese manufacturers are key suppliers of component parts to these countries, further solidifying China’s dominance in supply chains.

“The trade data can’t mask the influence China continues to have on the world stage directly and indirectly through other markets,” Glas said.

CPSC Faces Challenges Monitoring Surge in De Minimis Shipments from China

James Joholske, director of the Office of Import Surveillance at CPSC, testified that e-commerce has changed consumer purchasing patterns “in ways that challenge our enforcement efforts.”

Consumers continue to shift from purchasing directly from retailers to purchasing directly from manufacturers via e-commerce, he said.

The agency’s data shows more than 80 percent of shipments it examined at U.S. ports had China listed as the county of origin.

CPSC has developed and prioritized targeting high-risk shipments through its Risk Assessment Methodology (RAM) system which leverages information from U.S. Customs and Border Protection (CBP) entry data to assess risk to shipments.

However, he acknowledged that CPSC faces “numerous challenges relating to consumer product safety of imported product from chain and elsewhere.”

“First and foremost, the sheer volume of imports from China remains overwhelming and difficult to monitor, given our resource limitations,” he said. “Another challenge has to do with the rise of e-commerce,” he added, noting that 60 percent of imports to the U.S. are e-commerce shipments.

“This trend is growing every year,” Joholske said.

“CPSC has little ability to act against third-party sellers who are small manufacturers based overseas. Products including baby mattresses, lithium-ion batteries, magnets, baby loungers and more are left unrecalled because the manufacturers cannot be held responsible,” he said.

“Moreover, most online marketplaces assert that they do not fall under CPSC’s jurisdiction for some or all of their sales,” he added. “They state that for purposes of consumer safety, they are not retailers, manufacturers, distributors or importers.”

Many of these goods shipped directly to consumers are packaged and sent under the de minimis threshold of $800. “Shipments of products from China and elsewhere fall under this value and enter our country with minimal requirements and duty free,” Joholske said.

“Without the same data we receive for higher value shipments, CPSC cannot utilize its RAM system to know what is to be targeted or inspected,” he noted.

He also said de minimis shipments often enter the U.S. through express courier and international mail facilities, locations where CPSC has “very limited coverage.”

“The bottom line is that we have many goods coming from China about which CPSC receives limited data,” he added. “That coupled with the volume of imports and limited staff at major entry points presents significant challenges to CPSC and our ability to stop dangerous products before entering our stream of commerce.”

 Lack of Penalties and Inspections Sends Message to the Chinese—”We are not Looking”

Glas said later during the hearing it is “horrifying to read what penalties have been assessed when somebody has lost their lives because a product has failed.”

She pointed to one claim involving BJ Wholesale Club, which sold faulty air conditioning that resulted in a fatality. The civil settlement in the case was $9 million and in other cases up to $16 million.

“If I’m a parent that buys a defective toy that ends up killing my child, or compromising their health, I want someone to go to jail,” Glas said.

“Right now, this panel is confirming for me…that we do not have any defective deterrents. We are sending a signal to China which is in desperate times as their economy is slowing down, that we’re really not going to do much about this that is effective.”

“We’re also sending a message to importers who are facilitating some of these products, ‘we’re not going to hold you fully accountable.’”

The fact that the government has not provided enough resources to CPSC or CBP to allow them to do their jobs signals to the Chinese and the rest of the world: “We’re not really looking,” Glas said.

“What all of you are saying—there are costs on intellectual property; there are costs on human life; it’s fueling Chinese bad behavior; there is no way to hold those manufacturers accountable—it’s horrifying,” Glas said.

“In the de minimis environment, do we only seize and destroy one package? Are we saying to the Chinese: ‘send your products this way to the U.S. because no one is really looking and there is not a lot that may be destroyed in this?’”

She posited that the de minimis makes the environment even more challenging because it’s “sending a signal to the Chinese that if you want to send a product to the U.S. that does not meet U.S. standards, this is a pretty good channel to do it.”

 The Decline in Product Safety in Chinese Products Continues to Worsen

 The problem is only getting worse, according to Dan Harris, a partner at Harris-Sliwoski, LLP. “Since around 2017, I’ve observed a decline in Chinese product quality and safety,” he said. “I base this assertion mostly on the number of companies that have sought help from my law firm after having received such products, and on the number of plaintiffs lawyers who have sought our law firm’s help in pursuing Chinese manufacturers on behalf of their injured clients.”

See his remarks here:

Harris said prior to 2017, Chinese product quality and safety was improving, but several factors arose in 2017 and beyond that have led to a “downshift” in product safety.

“Chinese companies are in financial trouble due to reverberations from Covid lockdowns and the decline of the country’s economy, which has led to reduced demand for Chinese products,” he said. “In an effort to reduce costs, these suppliers are cutting corners by using lower quality components that increases the likelihood of dangerous or defective products.”

“The second cause for the decline in product safety is that Chinese manufacturers see less value in maintaining long-term relationships with the American companies that buy their products,” Harris added. “And this is because they believe these companies are looking to leave China, and they’re probably right. I’ve had Chinese manufacturers tell me that with China’s economy declining and American companies seeking China alternatives we should expect the problem of unsafe Chinese products to worsen.”

According to Harris, U.S. firms that refuse to pay for defective goods are barred from purchasing from any China-based supplier on credit, effectively cutting off access to the country’s supply chain. Meanwhile, the manufacturer in question is usually made whole by insurance schemes.

“Why should a Chinese company worry about product safety, if it can get paid in full no matter how bad its products are, especially when it is at little to no risk of getting sued?” Harris said.

 Administration Has Existing Authority to Close De Minimis

Elizabeth Drake, a partner at Schagrin Associates, LLP, told the Commission that the current statute on the books authorizes Customs to afford de minimis treatment but does not require the agency to do so.

“The statute also explicitly says that Customs can grant any exception from de minimis in order to protect the revenue or ensure the effective enforcement of import regulations—dealing with all the health and safety regulations, Uyghur Forced Labor Prevention Act, fentanyl and all imports that may be violating those regulations,” Drake said.

“There is no new legislation needed. The way I read the regulation, there’s also no new regulation needed. Customs already says in its regulations the same thing that is in the statute—it has the discretion to deny de minimis treatment, in order to protect the revenue or ensure effective enforcement of import admissibility standards,” she added.

See her remarks here:

Drake also noted that “in 2023, for the first time in over 20 years, China fell to our third largest source of imports behind Mexico and Canada, rather than our first largest source, since Section 301 duties were imposed on China in 2018.”

At the same time imports from other countries such as Mexico have risen considerably but Drake warned this “may represent a “cause for concern.”

She said these shifts in trade followed the implementation of Section 301 tariffs and “may indicate that the duties are being circumvented or evaded,” for example, through the growing use of de minimis.

“They may also suggest that unfair Chinese trade practices are continuing to distort the U.S. market through investments in exports from third countries,” Drake said.

Finally, she said it is “vital” that the U.S. ensure that any shifts in trade resulting from the Section 301 duties aren’t actually undermining American supply chain resiliency.

Chinese subsidies and investment are likely funding the growth of other sourcing markets across the globe, introducing new means for Chinese-made goods, or products made with Xinjiang cotton, to enter the U.S. market.

Other witnesses also examined the Chinese trade shifts through countries like Vietnam and Mexico through transshipment and investment.

Videos created by: Rebecca Tantillo

UFLPA Hearing Update

U.S. Textile Industry Figures Prominently in Congressional Hearing Exploring the Implications of the Lack of Enforcement of UFLPA

A bipartisan congressional panel questioned three administration officials Thursday over concerns related to their enforcement efforts to staunch the massive flow of products made with forced labor, which has adversely impacted the U.S. textile industry and other key sectors of the U.S. economy.

The House Homeland Security Subcommittee on Oversight, Investigations and Accountability held the hearing to evaluate the Department of Homeland Security’s (DHS) efforts to counter China’s predatory practices and abuse of the Uyghur people, particularly through forced labor.

At the hearing, titled “Exploitation and Enforcement: Part II Evaluating the Department of Homeland Security’s Efforts to Counter Uyghur Forced Labor,” several committee members discussed the U.S. textile industry and the implications of the lack of enforcement of forced labor goods, our free trade agreement origin rules, and millions of imports coming in through the de minimis loophole.

Lawmakers raised serious questions and concerns about DHS and U.S. Customs and Border Protection (CBP) activities to enforce the Uyghur Forced Labor Prevention Act (UFLPA), which effectively bans any products—including apparel containing forced labor cotton from Xinjiang, China—from entering the United States.

Notably, administration officials acknowledged the severe challenges their agencies face and identified areas where significant improvement is needed, including: the need for more isotopic testing of products suspected of being produced with forced labor; better data collection technologies related to de minimis shipments; and an expansion of the UFLPA Entities list, which bars companies and subsidiaries barred from exporting goods to the U.S. market due to use of forced labor.

They also outlined efforts they have undertaken to confront the massive influx of imports coming in through the de minimis loophole and targeting imports suspected of being produced with forced labor.

In his opening statement, Chairman Dan Bishop (R-NC), focused a large portion of his remarks on the threat China’s predatory trade practices and a lack of customs enforcement have on vital economic sectors.

“Unfortunately, China’s use of forced labor in global supply chains continues to pose a significant enforcement challenge across a wide range of economic sectors including textiles, minerals and seafood,” Bishop said. “For example, the overwhelming majority of cotton used in Chinese textile products is grown in Xinjiang province, which the ULFPA specifically singles out as a focal point of China’s state-sponsored forced labor regime.”

See Rep. Bishop’s remarks here:

“Any cotton grown in the province is presumptively linked to forced labor under the UFLPA, yet CBP’s isotopic testing of clothing samples still found items shipped to the U.S., made with cotton from Xinjiang. CBP detained $46 million worth of textile and clothing imports for suspected UFLPA violations since June 2022. Yet, CBP’s detention rate is just a sliver of the billions of dollars of textile products the U.S. imports annually from China, emphasizing the continuing challenge in effectively enforcing the UFLPA,” Bishop said.

“Furthermore, those who seek to profit off goods tainted with forced labor use a wide range of tactics to obscure forced labor in the supply chain, such as shipping products through other countries to disguise country of origin, mixing inputs produced with forced labor with clean inputs and misrepresenting the origin of products in question,” he added.

Bishop stressed the importance of isotopic testing, noting such testing can help identify inputs traced to a geographic area, such as cotton grown in Xinjiang. He said it is “not clear how widely or routinely such forensic testing technologies are being used.”

Ranking Member Glenn Ivey (D-MD) said in his opening remarks the task force charged with adding companies and other entities to the UFLPA Entity List of companies and subsidiaries barred from exporting goods to the U.S., should be reviewed, noting bureaucratic red tape may be slowing the process down because there are “too many cooks in the kitchen.”

Ivey also expressed concerns that customs seizures of goods suspected of being made with forced labor are being released back to the importer who then is able to sell them in other foreign markets and make a profit.

“I’m concerned about how that actually punishes entities. I call it a snafu. We don’t want to allow them to continue profiting” from forced labor products, he said. “I don’t think that is the right way to go.”

Administration officials later addressed questions from lawmakers around isotopic testing.

Bishop also noted that the first hearing in October featured several witnesses who “pointed to the rapid increase in de minimis shipments as an avenue for prohibited goods to enter the U.S.”

De minimis shipments have more than doubled over the last five years, due to the explosion of e-commerce, with more than 1 billion de minimis shipments entering the U.S. in FY 2023.

“As you would expect, an increase in shipments, increases the chance of contraband getting through,” Bishop said, noting the majority of de minimis shipments originate in China.

Exploring the Role the De Minimis Loophole Plays in Undermining Enforcement of UFLPA

 Bishop asked Acting Assistant Secretary of Homeland Security for Trade and Economic Security Policy Christa Brzozowski to comment on whether e-commerce platforms are a driver of “this massive expansion of the exploitation o the de minimis exemptions?

“Some suspect that it is a huge source of evasion of the interdiction of forced labor produced goods,” Bishop said.

Brzozowski acknowledged the challenging environment or agents targeting an exponential rise in de minimis shipments over the few years.

“We are enforcing our forced labor laws in this particular channel, but it is more challenging because of the limited amount of data we get, which drives our targeting capabilities and decision making,” she said.

See the exchange here:

Rep. Dale Strong (R-AL) also posed questions about the explosive growth of de minimis shipments and their impact on UFLPA enforcement.

Strong pointed to testimony  at the committee’s pervious hearing on UFLPA enforcement, which included testimony from NCTO President and CEO Kim Glas, at which some witnesses said increased de minimis shipments from China undermined the ability of CBP to detect forced labor products or contraband.

“How concerned are you that Chinese company can take advantage of de minimis shipments to ship goods potentially made with forced labor to the Unites States?” Strong asked the witnesses.

Brzozowski said she shared the congressman’s concern and acknowledged the challenge associated with data collection.

 “As my CBP colleagues mentioned, there is a difference in the data we get from these types of shipment and that can complicate enforcement,” she said. “Also given the volume of these shipments, it’s a complex environment. I do want to make clear that targeting and laws do apply in this environment. We do our best with the information that we do have.”

In the short term CBP is looking into enhancing the targeting of de minimis shipments “to do better,” using software and other technologies, she said.

See the full exchange here:

In another exchange with a witness, Strong asked Eric Choy, executive director of trade remedy law enforcement at CBP’s Office of Trade, how much visibility “we have regarding the scale of potential ULPA violations related to de minimis shipments.”

Choy acknowledged the challenges the agency faces due to the “lack of information we gather as compared to traditional shipments that come through the ports of entry.” He said the agency is facing a “record level” of de minimis shipments.

Choy cited two data-related pilot programs the agency launched to access more data that would allow it to review de minimis shipments more closely.

“We’ve come to the culmination of both of those data pilots and we’re working together with the department in a regulatory effort to introduce different ways to file entries for de minimis shipments and then also what data elements we would require for de minimis shipments,” he said. “We feel that with that kind of expanded information and data for each of the shipments that comes in would give us greater flexibility and greater access for our targeting systems to be able to identify risk factors and be able to stop specific shipments coming into our ports of entry.”

Expanding the ULPA Entity List

 Under UFLPA, Congress directed DHS to chair a task force to establish an “entity list” of companies and subsidiaries barred from exporting goods to the U.S. market due to the use of forced labor.

Lawmakers and industry groups, including NCTO, have called on the administration to robustly expand that list to help easily identify entities and block their goods from entering the U.S.

Concerns were raised about the list at the hearing.

“China is a massive economic actor, and a big market and I hear that 85% of cotton is sourced in Xinjiang. Why were so few people even on the initial entity list? Why wasn’t it hundreds or thousands of entities?” he asked.

Brzozowski agreed with lawmakers that the entity list should be expanded.

“The team has done very impressive work since a relatively short time of enactment of the law, setting up not only framework but robust methodology that is going to stand not only the test of time but legal scrutiny,” she said, adding that the task force will continue to leverage its resources to ultimately add more bad actors to the list.

Isotopic Testing

CBP’s implementation of isotopic testing was also a key issue addressed at the hearing.

At the previous hearing, NCTO’s Kim Glas pushed for more robust isotopic testing which the industry believes will help CBP better identify goods made with tainted Xinjiang cotton and slow the influx of de minimis packages arriving from China.

Choy said the agency has opened a lab testing facility in Savannah, GA, and has plans to open up two more, in New York and Los Angeles, in six to eight months. “That will increase our capacity and we anticipate that we’ll be doing more isotopic testing and we’ll leverage that isotopic testing to investigate where we see allegations of risk or use of forced labor,” he said.

Rep. Ivey noted he had met with representatives of the U.S. textile industry, who were pushing for an expansion of isotopic testing and said he was open to looking into it.

Bishop later asked Choy to quantify the testing these labs will do.

See their exchange here:

Forced Labor Leaking into Third-Country Imports and FTA Partner Countries

Strong said a significant percentage of U.S. textile and apparel imports come from Central and South American countries, with which the U.S. has free trade agreements. “I can think back just a matter of years ago and Alabama was home to Russell Athletic and Champion Apparel. We were known in one area of Alabama as the ‘sock capital of the world’ but that has gone away,” Strong said.

“These agreements require firms to show that the goods they are shipping to the U.S. were produced in the region to qualify for duty-free status. What actions has DHS and CBP taken to determine whether this system is being abused to allow goods made with Uyghur forced labor to enter the U.S.?” Strong asked.

Choy noted that textiles is a priority trade area mandated by statute that requires CBP to focus its resources in this area, including targeting candidates, audits, verification visits and inspections and cargo inspections at the port of entry and post-release.

Strong followed up, asking what action CBP takes if it detects specific products made with forced labor being diverted to third party countries.

“If there are illegal transshipments through third countries, that is something we would stop, detain shipments, then issue duty requirements to make the government whole or if there is recidivism, issue penalties,” he said.

To view the full hearing, please visit the link here.

De Minimis Reform in the Spotlight on Capitol Hill

House Ways & Means Democrats elevated congressional concerns over the Section 321 de minimis loophole—which has become a black market for illicit goods—at a roundtable Wednesday that highlighted the devastating implications of this gaping loophole for a diverse group of stakeholders spanning the domestic manufacturing supply chain, law enforcement, labor, and human rights organizations.

Rep. Earl Blumenauer (D-OR), Ways and Means Trade Subcommittee Ranking Member, led Democratic members in a roundtable, titled “Examining the Pernicious Impact of the De Minimis Loophole,” at which Democrats on the full committee voiced serious concerns about this legal loophole in U.S. trade law that is a gateway facilitating nearly 3 million imported shipments a day that may contain goods made with forced labor, counterfeits, toxic products, and illicit narcotics such as fentanyl.

“What was once intended to improve efficiency has morphed into a dangerous loophole that threatens American competitiveness, consumer safety, exploits forced labor, and contributes to the fentanyl crisis in our communities. My legislation is narrowly tailored to stop areas of abuse. It is past time for Congress to act,” Blumenauer said in his opening remarks.

Blumenauer has reintroduced the Import Security and Fairness Act, bipartisan, bicameral legislation to stop non-market economies—namely China—from exploiting the de minimis threshold and to require U.S. Customs and Border Protection (CBP) to collect more information on de minimis shipments.

Blumenauer was joined by Reps. Don Beyer (D-VA), Jimmy Panetta (D-CA), Judy Chu (D-CA), Brian Higgins (D-NY), and Suzan DelBene (D-Wash.)

The legislation previously passed in the House of Representatives in the 117th Congress as part of the America COMPETES Act but subsequently stalled.

With the explosion of e-commerce, the de minimis mechanism is now being aggressively used, allowing millions of products into the U.S. market duty free that otherwise would be subject to tariffs, penalty tariffs, taxes and customs inspection. Under the mechanism, a package of goods valued at $800 or less per person is allowed to come into the country duty free everyday through e-commerce.

CBP estimated 1 billion de minimis shipments entered the U.S. market in the fiscal year alone, which equates to approximately 2.7 million shipments a day. This is estimated to be the highest spike in de minimis imports—up from 2 million shipments per day in fiscal year 2021. To provide further context to the alarming nature of this exponential growth in de minimis shipments, CBP data estimates that these shipments totaled only 150 million in fiscal 2016—the year Congress increased the de minimis threshold from $200 to $800.

The impact of the loophole on the U.S. textile industry, coupled with other factors, has been devastating.

Andy Warlick, Chairman and CEO of Parkdale Mills, testified at the roundtable and painted an alarming picture of the state of the industry and the implications of U.S. trade policies that allow foreign suppliers to circumvent and undermine the domestic manufacturing base.

“I am here today because this issue is important to our company, our employees, our industry, and all U.S. manufacturers,” Warlick told the lawmakers. “Currently, our company is running at 60% capacity and we have shut down four factories and laid off 1,000 employees in 2023. Most companies in the textile industry are experiencing the same devastating demand destruction partly fueled by the explosion of 1 billion de minimis shipments—half of which CBP estimates to be textile and apparel goods.”

Warlick thanked Blumenauer and other members who support closing the de minimis loophole and mitigating its impact on domestic manufacturers.

“De minimis has become blatantly unfair, unjust, and a threat to our country’s economy and citizens,” he said. “American businesses and American workers pay taxes that build the roads and cities of our nation, and we are now fighting against those who don’t. We pay a price to be an American and we are being replaced by those who are astonishingly rewarded by U.S. government trade policies that are putting us out of business.”

“Our de minimis program has become the world’s largest, lawless Silk Road Black Market that has only benefited a few at the expense of many. The shippers and transporters of these packages have been gifted a windfall. However, this gift is actually a Trojan horse for our nation. If left unabated, it will hollow out our industrial and retail base, destroy jobs and the tax base, and endanger our citizens.”

Not only is the de minimis program undermining the U.S. Trade Representative by handing countries like China an unnegotiated free trade deal without reciprocity for the U.S., but it is also being aggressively used by Chinese e-commerce retailers who have built their empires around de minimis.

Countering the arguments by opponents of reforming de minimis, Warlick said ending de minimis for e-commerce shipments “will not spark inflation.”

“These are the same arguments made prior to the implementation of the China 301 penalty tariffs,” he added. “The U.S. International Trade Commission studied the effect of 301 tariffs on import prices of apparel and other consumer products and found either no or minimal increases for importers, adding that Section 301 boosted domestic manufacturing ‘without substantially increasing prices for final consumers.’”

He told the lawmakers the only real solution to fixing the de minimis problem is to decouple e-commerce shipments from this dangerous loophole.

“When our nation needed our industry to bail the country out of critical shortages of PPE during the pandemic, we answered that call by delivering millions of face masks, protective gowns and testing swabs,” Warlick said. “We now need Congress to answer our call and close this loophole right now because it’s a crisis. We need the Administration to review and exhaust all its authorities to address this superhighway of economic destruction.”

Michael Stumo, CEO of the Coalition for a Prosperous America, reiterated in his opening statement that de minimis should “ultimately be decoupled from e-commerce.”

“The fact that a few Chinese companies like Shein and Temu and a few U.S. companies have built businesses, or part of their businesses on the exploitation of this Amazon loophole is not in the national interest,” Stumo said. “The de minimis goods volume hit 1 billion packages this year. In future years, it will be 2 billion and 3 billion. This will not go away; it will be worse.”

“We have laws against the importation of narcotics, of forced labor goods, dangerous toys, exploding batteries. They are all a joke with de minimis. We might as well repeal them. U.S. companies that follow the law, pay taxes here, employ workers here, are suffering as national policy provides powerful de facto preference for duty avoidance and lawless goods from other countries,” Stumo said.

Andrea Edmiston, Director of Governmental Affairs at the National Association of Police Organizations, outlined the role de minimis shipments is playing in thwarting law enforcement efforts to crack down on fentanyl, which led to 83,000 deaths last year alone, and other illicit drugs.

Edmiston stressed that fentanyl traffickers are using these loopholes and the international mail system to “avoid detection by CBP.”

In FY 2023, CBP seized 27,000 pounds of fentanyl. “The de minimis provision has exploded in popularity, creating a supercharged black market for counterfeit products, goods produced with slave labor, hazardous materials and illicit drugs such as fentanyl,” Edmiston said.

“Law enforcement is battling the trafficking of illicit narcotics on multiple fronts, from our southern border to Asian supply chains selling via ecommerce and shipping drugs like fentanyl in small packages by air cargo and the international mail system,” she said. “Fentanyl traffickers seek to mimic normal e-commerce shipments to avoid detection by CBP [Customs and Border Protection], and they often declare these international shipments as relatively low-value consumer goods.”

“The de minimis loophole is severely exacerbating the opioid crisis by allowing fentanyl and the illicit drugs to enter our market duty free and largely uninspected,” Edmiston said. “The administration has the authority to close this loophole and we have written a letter and asked the administration to do so immediately. And Congress also has the authority to close the loophole. We stand ready to work with you all to remove all e-commerce shipments from de minimis treatment to help protect the health and safety of the American people.”

Roy Houseman, Legislative Director at the United Steelworkers, said de minimis has tipped the scale in favor of China in the U.S. trade relationship with the country.

“Our nation’s trade laws let billions of goods in from China into the U.S. market duty free… but American workers and businesses face significant market hurdles to nearly 900 million consumers in China,” he said. “We strongly believe that Congress should start with a view of de minimis with a simple eye toward reciprocity,” he added, noting that the U.S. has one of the highest de minimis thresholds of any country, at $800. By contrast, China’s de minimis threshold is much smaller, at approximately $8 a package.

“This has dangerous ramifications for American manufacturing,” he added.

Questions from the Democratic committee members ranged from whether Blumenauer’s bill aimed at fixing the problem by banning nonmarket economies like China from benefits would merely migrate it to other countries and allow them to exploit the loophole and $800 threshold, to requesting more data on the nature of de minimis shipments, to whether CBP needs more resources and tools to track fentanyl and de minimis shipments overall.

During the round of questions, Rep. Blumenauer inquired about his own legislation, saying: “There have been some concerns that if we go ahead and crack down on de minimis, the same shippers would simply go through other countries to avoid detection.

Stumo responded, “Certainly one country, China, is where most counterfeits and a lot of drugs come from. If you start there; it’s a good first step to take China out,” which is what Blumenauer’s bill would do.

Rep. Beyer followed up with a similar question: “As long as de minimis exists at the $800 level and keeps China out, what will keep it from migrating to other countries Cambodia, Vietnam?

Warlick said that has been the textile industry’s experience in terms of countries finding ways to transship products to avoid free trade deals such as USMCA and CAFTA-DR, and trade laws and duties.

“One thing we are looking at now, is this need for de minimis to be decoupled from e-commerce platforms,” he said.

Rep. Higgins was concerned about the lawlessness associated with de minimis but  also highlighted the benefits it allows through access to U.S. markets.

“Our economy is 70% consumption so it seems to me that we are going to be a magnet for trade and all of this business of getting cheap goods into the U.S., including illegal drugs as well,” he said. “Between 1990-2017, global poverty fell from 36% to 9% and a billion people came out of poverty because of trade,” he noted.

Reps. DelBene and Panetta focused their questions on data collection and tracking tools and asked what kind of tools could be developed to track fentanyl in particular and de minimis overall.

Former White House Drug Czar Testifies at Senate Committee on Aging: De Minimis is Fueling Importation of Illicit Narcotics

At a separate hearing Thursday on “Understanding A Growing Crisis: Substance Use Trends Among Older Adults, held by the Senate Committee on Aging, a former White House drug czar testified about the dangers of de minimis and fentanyl, while  and senators raised questions about de minimis facilitating the illicit importation of opioids and other narcotics, making it easy for seniors to gain access to them.

James Carroll, former Director, White House Office of National Drug Control Policy and currently a partner at Frost Brown Todd, LLP, painted a bleak picture of opioid deaths fueled by Chinese traffickers undoubtedly exploiting the international mail system and de minimis loophole.

“Overdose deaths are staggeringly high, with nearly 110,00 American lives lost driven almost entirely by synthetics, up almost 40,000 deaths from when I was in office. This equates to someone dying every five minutes. It is a major airliner going down every day. This is just not acceptable,” Carroll said in his opening remarks.

“I led a White House delegation to China to end the shipping of fentanyl through the U.S. postal system. The percentage at the point dropped to nearly zero. Sadly, bad actors have now resumed and shovel it into the U.S. by exploiting weaknesses at our border. And specifically in our import roles,” Carroll said.

He further noted de minimis has been a tool that allows 3 million packages in a day, “unchecked, unlabeled, with virtually no way to identify what is in there.”

Senator Rick Scott (R-FL) asked for an “everyday” example of how bad actors are using Section 321 to export deadly fentanyl directly to American consumers.

Carroll reiterated that a billion de minimis packages enter the U.S. every day but are largely unchecked by CBP due to lack of manpower and technologies to detect fentanyl.

“Right now the best technology we have are canines. That is a shame. There is wonderful technology to look for anomalies in packages but at 1 billion a year they are not being checked and we are not holding 60 percent of a billion incoming from China, he said.

 See the exchange here:

Asked by Scott what percentage of fentanyl is coming into the U.S. via de minimis versus the southern border, Carroll said there is no data tracking it.

We have no idea but when you look at the number of deaths that are happening, you have to believe it is because of the dramatic rise of 321. We don’t know how many drugs are coming across the southern border; all we know is what we are catching. The same is true [with de minimis]; all we know is what we are intercepting. It is less than 1 percent actually being checked.

Sen. JD Vance (R-OH) asked Carroll to state for the record why it is important to close the de minimis loophole, particularly as it relates to drug imports.

See the exchange here:

“What really concerns me on 321 [de minimis], is how it is being used and how it is being exploited, including for seniors who might not understand; they think they are buying a prescription online, but they are actually buying illegitimate pills that are being snuck into our country unchecked. They think it is a legitimate prescription and pill. They have no idea that in fact the prescription they think is being filled by an online pharmacy is [facilitated] by the loophole of 321 and they are losing their lives for it,” Carroll said.

See Carroll’s full written testimony here.

The Coalition For a Prosperous America joined two key associations representing law enforcement and national nonprofit and community-based organizations devoted to fighting against the fentanyl crisis, in sending a letter to congressional leaders calling for immediate action to close the de minimis loophole.

View their press releases and a link to the letter here:


Families Against Fentanyl

Coalition for a Prosperous America

U.S.-China Commission Fields Questions on Growing Chinese Fentanyl Trade and a U.S. Loophole that Facilitates Importation of Illegal Products into the U.S. Market

The U.S.-China Economic and Security Review Commission released its annual report to Congress Tuesday, covering a wide range of topics and issuing key findings, policy recommendations and executive summaries.

Several questions were raised during the briefing on pressing issues, including the surge of fentanyl shipments from China, the de minimis loophole and the Uyghur Forced Labor Prevention Act (UFLPA).

During the meeting, Commissioners fielded questions on the upcoming Asia-Pacific Economic Cooperation (APEC) summit in San Francisco where fentanyl is on the agenda.

Commission Chairman Carolyn Bartholomew stressed that enforcement mechanisms are key in tracking and stopping the flow of fentanyl and other narcotics that are being shipped directly to U.S. consumers at alarming rates.

She said fentanyl precursors are measurable and quantifiable and pledged to continue scrutinizing whether progress is being made by the Chinese to enforce the law and reduce the tsunami of fentanyl reaching the U.S. market.

Vice Chairman Alex Wong said the commission’s research, which culminated in a 2021 Issue Brief titled “Illicit Fentanyl from China: An Evolving Global Operation,” highlighted the increase in fentanyl precursor movement in recent years from China through third countries and ultimately into the U.S.

“I want to highlight that that increase occurred in the post-pandemic period. Now, you will all remember that during this period we saw a number of supply chains across commodities and finished goods out of China being very strained and experiencing a lot of delays,” Wong said. “The only supply chain that was not only not strained but seemed to increase and increase its efficiency and speed was the movement of fentanyl precursors out of China.”

Wong also said the Chinese government often says it is unable to enforce the law and track producers and shippers of fentanyl precursors.

“They would say to me, ‘We don’t have as much power as you think.’ And I would always say well you have more power than you say, particularly when we are talking about a government that strives very hard to enhance its ability to surveil and track and exert precise pressure on individuals throughout its 1.3 billion population,” Wong added. “So, they can do more on fentanyl. My hope is that discussions tomorrow and our continued pressure on the Chinese results in action. It really is a major detriment to our society health-wise and our social fabric that needs more attention.”

Commissioners Kim Glas and Mike Wessel voiced alarm about the Section 321 de minimis mechanism, which is a legal provision in U.S. trade law that has unintentionally acted as a gateway to an explosion in e-commerce shipments that come in largely uninspected and duty free, endangering American consumers and undermining U.S. manufacturers.

Commissioner Mike Wessel raised the de minimis issue as it relates to fentanyl, facilitating packages into the U.S. with little to no inspection.

“Fentanyl is being transited that way as well. De minimis is a vector not only for products emanating from the Xinjiang region, whether it’s textile or other products; there have been a number of studies across a number of supply chains—solar, aluminum, car parts, but fentanyl is also coming in through the de minimis loophole,” Wessel said. The administration has the legal power to act. There needs to be something done.”

See Wessel’s remarks here:

Commissioner Jacob Helberg said it was “laughable” that the Chinese government has said it does not have the power to crack down on the illicit trade.

“Clearly, if they want to put an end to this fentanyl trade, they could probably do it overnight,” he added.

“Last year in 2022, 110,000 Americans died from fentanyl overdoses in this country. It has ravaged and completely hollowed entire communities across this country. You are seeing it rightfully become an incredibly salient political issue in this current presidential election cycle,” he said.

Commissioner Glas voiced concern about the lack of Customs enforcement of products made with slave labor, fentanyl and other dangerous products that enter the U.S. market through the de minimis loophole, largely uninspected and duty free.

“To put it into context, last year the U.S. imported $184 billion worth of textiles and apparel and only $35 million was detained for inspection (by U.S. Customs and Border Protection).

Glas stressed that with 20 percent of the world’s cotton grown in Xinjiang, China, where the use of forced labor has been widely documented, and 80 percent of cotton products made in China containing Xinjiang cotton, a large volume of the tainted apparel is making its way into the U.S. uninspected.

“One of the things our research paper did was look at Shein and Temu and the growing influence of these Chinese e-commerce websites, and the national security risk and consumer security risks these kinds of platforms [pose],” Glas said. “The fact is that the U.S. government under its current trade policy rewards these platforms when they directly ship these products to the U.S.”

See Glas’ remarks here:

Glas noted that de minimis was created 100 years ago for tourists who were bringing back sweaters or other souvenirs and not having to pay a tariff.

But e-commerce has changed the system and the rules of the game.

“In 2015, 150 million de minimis packages came in. Now, we are on track for 1 billion packages of individually wrapped boxes. You do not have to provide information on the country origin. What is in the box? Is it safe? Does it meet Consumer Product Safety Commission regulations? Is it an illegal product? Is it a forced labor product? None of that is ever labeled. No box says ‘fentanyl.’ No box says, ‘forced labor product.’”

She said if the administration closed the de minimis loophole today, the goods would be transported by freight through normal entry process and be part of a larger Customs inspection strategy.

See her remarks here:

To view the entire Commission briefing, please see the link here.

Videos created by: Rebecca Tantillo

VA’s Inaction in Implementing the Make PPE in America Act is Hurting American Textile and Apparel Manufacturers

It has been 19 long months since legislation designed to increase federal purchases of American-made PPE was enacted, but the inaction of at least one key federal agency in purchasing more domestically-produced items is posing a threat to the very U.S. supply chain that stepped up overnight to protect our nation during the COVID pandemic.

Fortunately, at least, one congressional oversight committee is taking notice.

The overarching question on the mind of many U.S. textile and apparel executives who retooled production lines to produce millions of facemasks, hospital gowns and other critical PPE items at the height of the pandemic is whether they will ever see a demand signal and contracts from the Department of Veterans Affairs (VA).

This leading agency which procures PPE for the government seems to be mired in bureaucratic red tape when it comes to fully implementing a strategic plan to purchase more American-made PPE, as mandated by law.

The legislation at the heart of the matter—the Make PPE in America Act, which took effect in February 2022—requires that all PPE purchased by the Departments of Health and Human Services (HHS), Homeland Security (DHS) and VA be made by manufacturers in the United States using domestic components.

Last week, a House congressional oversight committee held a hearing and finally started asking the right questions of VA officials.

On Thursday, the House Committee on Veterans’ Affairs’ (HVAC) Subcommittee on Oversight & Investigations held a hearing on “VA Procurement: Made in America,” to explore the agency’s action plan on several Made in America policies, including the Make PPE in America Act.

The chairwoman of the oversight subcommittee, Rep. Jen Kiggans (R-VA), raised concerns about the VA’s inaction and lack of a strategic plan.

“Congress and both this administration and the Trump administration made it a priority to ensure the federal government is buying American-made products,” Kiggans said in her opening statement.

However, she expressed serious concerns about the VA’s approach, noting that a year and a half after the law was enacted, “there appears to be very little that has changed.”

“I understand that new legislation takes time to implement, but issues at the VA don’t normally get better with time. A recent inspector general report highlighted significant issues with VA’s compliance with decades-old Made in America laws.”

She also noted it is concerning that she has heard from industry leaders that as recently as a few months ago the VA “didn’t even seem to have a plan to implement the law.”

See her remarks here: | Video Credit: Rebecca Tantillo

“Many American companies have overhauled their production lines to meet the demand for world-class goods and supplies,” Kiggans said. “The VA must similarly change their procurement process to step up their outreach and market research to identify opportunities to work with American companies. I’m concerned many of these companies will be forced to close down their operations if the VA doesn’t immediately follow the law and take a more proactive approach to buying American.”

“Relying on foreign products in a time of crisis is a flawed strategy that unfortunately was felt directly by the VA employees and veterans,”said Rep. Frank Mrvan (D-IN) in his opening remarks. “This requires a concerted effort across VA to comply with the laws and the presidential directives in place to provide opportunities for American companies to provide personal protective equipment and other supplies.”

“Without a consistent demand for these products, we cannot ensure that American companies will be around for the next crisis,” he added.

In his written submission and opening remarks at the hearing, Michael Parrish, the VA’s Principal Executive Director of the Office of Acquisition, Logistics and Construction and Chief Acquisition Officer, stressed the agency is committed to full implementation of its statutory requirements but noted “achieving the goals espoused in these statutes, policies and executive orders takes time.”

He acknowledged that availability of 100% domestically-produced PPE “requires a clear and organized federal demand signal to support the existing and future industry investments, innovation as well as a long-term commitment. VA is committed to working with other Federal agencies to communicate to industry the importance of domestically-produced PPE.”

He claimed the VA has found in many instances that inputs of PPE are “not yet [manufactured] in the U.S. and raw materials are manufactured overseas.”

This statement will undoubtedly cause concern among NCTO member companies who have worked vigilantly to be certified over the past three years and repeatedly communicated to the VA and other agencies that there is an existing supply chain ready and able to meet their procurement needs. The root of the problem is not lack of capacity, but rather lack of planning, strategy and demand signal on the part of the VA.

Parrish said the VA has taken the following steps thus far: developing an executable acquisition strategy for each PPE item identified in the Make PPE in America Act that has been prioritized for action; developing common requirements and an acquisition strategy for all items on the consensus PPE list by the end of calendar year 2023; and reporting noteworthy accomplishments towards the development of a long-term PPE strategy under the President’s Management Agenda.

Following a multi-agency Make PPE in America Industry Day in April, at which NCTO President and CEO Kim Glas participated in a panel discussion, Parrish said the VA issued a request for information to Blanket Purchase Agreement holders participating in the VA’s MSVP program to “gauge how many are fully compliant with Made in America Act requirements.”

“To date, through vendor self-certification, VA has identified 129 items on its MSPV product list that are 100% Made in America compliant,” Parrish said in his written submission.

Among the PPE items that are not yet compliant are things like nitrile gloves, he noted.

“The journey requires support beyond the Federal health care space of VA (and DoD) to achieve the goal, maintain supply chain resiliency and reduce dependency on overseas markets for PPE requirements ranging from raw materials to finished products,” Parrish noted.

Rep. Aumua Amata Coleman Radewagen (R-AS), a non-voting delegate in the House of Representatives, asked a series of questions related specifically to the VA’s implementation efforts, noting that she has met with manufacturing associations representing American PPE producers that “feel they are being underutilized by the VA.”

Radewagen asked VA officials testifying at the hearing to explain the process for identifying domestic PPE sources, whether the VA has entered into any PPE procurement contracts since the law was enacted; and, if so, what percentage of these contracts are compliant with the Make PPE in America Act as well as how the VA ensures the PPE it purchases from its vendors is compliant with the Make PPE in America Act.

Andrew Centineo, Executive Director of Procurement and Logistics for the VA in conjunction with the U.S. Department of Veterans Affairs, said several agencies met with industry partners in April at the government-sponsored Industry Day and have since held medical surgical prime vendor industry opportunities, in addition to biweekly engagements with industry.

He said the feedback he has received from industry is that it will provide the products but it needs assurances the demand signal from the VA and other agencies is there.

See the full exchange with VA officials here: | Video Credit: Rebecca Tantillo

NCTO has been strongly advocating for full implementation of the legislation and pushing for a strong demand signal for American-made PPE.

See an op-ed by NCTO President and CEO Kim Glas here: Opinion: The Time to Act on American-Made PPE Is Now.

In addition, Glas participated in the multi-agency Make PPE in America Day in April.

See three clips from her remarks here:

This failure to date on the part of the VA and the lack of a demand signal from agencies and the private hospital sector is hurting U.S. textile and apparel manufacturers that retooled production chains overnight and are now left sitting with idled capacity and very few purchasing orders.

Three NCTO member companies outlined their concerns in a press release last week.

“The VA and all federal agencies need to fully implement this law immediately. It is critical to the viability of the domestic PPE supply chain and to our nation’s long-term health and national security,” Glas said in the statement. Without the commitment, our manufacturers will be forced to shutter operations and the PPE domestic supply chain will disappear, leaving our country overly reliant once again on unreliable imports from China and other foreign suppliers,” she added.


NCTO Chairman Norman Chapman Outlines Priority Issues for U.S. Textile Industry

NCTO Chairman Norman Chapman, who is president and CEO of Inman Mills, recently outlined a wide range of policy issues the organization is engaged in this year to maintain the domestic textile industry’s competitiveness, expand its investments and exports, and strengthen customs enforcement of illegal trade practices.

Speaking at a Southern Textile Association’s conference on Aug. 23 in Belmont, N.C., Chapman explained the important role NCTO plays in representing the industry’s voice in Washington.

“Good representation in Washington is critical for our long-term survival as an industry,” Chapman told the audience. “As I have heard [Parkdale Mills Chairman and CEO] Andy Warlick say many times, ‘If you’re not at the table, you’re on the menu.’ It’s important to not be on the menu. I’ve been in Washington quite a bit lately. I can assure you that we’re not on the menu. We’re absolutely at the table and we’re well represented on both sides of the aisle.”

Chapman said the industry “performed remarkably well during the pandemic and got a lot of people’s attention in Washington. So, we are in a position to play a little more offense, but we do spend a lot of our time defending the industry.”

Onshoring and Nearshoring Textile and Apparel Manufacturing—Maintaining Strong Textile Rules in CAFTA-DR

NCTO has engaged heavily in promoting the importance of the co-production chain with Central America and other Western Hemisphere trade partners.

Central to growth and investment in the region is maintaining strong rules of origin in the United States-Dominican Republic Central America Free Trade Agreement (CAFTA-DR), which has facilitated$15.1 billion in two-way trade and supports a co-production chain supporting more than 1 million workers in the U.S. and Central America.

As nearshoring and onshoring trends continue to gain momentum, some $2 billion of textile and apparel investment has gone into Central America and the U.S. over the past 18 months.

NCTO hosted or participated in numerous congressional and administration visits to CAFTA-DR and U.S. textile facilities over the last 18 months, and conducted over 30 joint congressional meetings in February with regional partners.

During his presentation at the STA conference, Chapman discussed the importance of this region and the strong rules of origin in free trade agreements that help facilitate trade and support U.S. and regional textile and apparel industries.

“The yarn-forward rule is at the heart of our free trade agreements and prevents non-signatory countries from being able to get a free ride,” he said.

study conducted by Werner International found that it is “reasonable and achievable to double the trade out of CAFTA-DR to the U.S. in the coming years.” It would equate to additional investments totaling $6 billion, creating 180,000 jobs in the U.S. textile industry and 2.17 million jobs in the CAFTA-DR region creating even more resilient supply chains, according to the study.

But Chapman warned that some importers have been trying to “rewrite the rules” and dismantle CAFTA-DR, calling for expansion of the short supply provision in the agreement, which would ultimately  give China a back door to a free trade deal it is not a party to and displace existing production and investment in the region and the U.S. Thanks to the work of NCTO, the administration and a significant bipartisan group of lawmakers have continued to voice support for maintaining strong textile rules.

“Fortunately, today, the Biden administration has acknowledged the value of the yarn-forward rule and indicated they do not intend to undermine the rule or change the process of short supply,” Chapman said. “And NCTO is also working on a win-win proposal exploring unique policy solutions around taxation.”

China 301 Tariffs

Chapman also outlined the importance of maintaining the Section 301 China penalty tariffs on finished apparel and textiles, outlining when they were first implemented by the Trump administration and subsequently continued by the Biden administration.

“Virtually everything from China has a 301penalty tariff on it,” Chapman noted, explaining that the tariffs are linked to intellectual property theft by the Chinese government.

NCTO’s objectives include supporting the continuance of the penalty tariffs on finished textile and apparel products, while allowing for exclusions on manufacturing inputs and machinery not available elsewhere. In addition, the organization supports letting the remaining exclusions for finished personal protective equipment (PPE) products expire, given the capacity of U.S. producers and that of our free trade agreement partners.

The U.S. Trade Representative’s office is currently undergoing a statutory 4-year review process.

Last summer, representatives of domestic industries benefitting from the trade actions requested a continuation of the tariffs, launching a next phase of review.

NCTO and the U.S. Industrial and Narrow Fabrics Institute (USINFI) filed a joint formal submission

to the U.S. Trade Representative’s office in January, outlining how the 301 tariffs on finished apparel and textiles counteract China’s unfair trade advantage and give U.S. manufacturers a chance to compete.

“Obviously, we would like to keep these tariffs in place,” Chapman said, while letting exceptions for PPE imports expire. “The textile industry made a tremendous amount of PPE during the pandemic that reverted back to China very quickly afterwards,” he added.

NCTO textile leaders also recently met with U.S. Trade Representative, Ambassador Katherine Tai, in Washington whom Chapman noted has been “very supportive of our industry.”

“She also toured some of our facilities down here and her support will be critical in our fight to keep the 301 tariffs,” Chapman said.

Enforcement of the UFLPA

Customs enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), which bans the importation of products made with forced labor in Xinjiang, China, is also a major focus area for NCTO.

China has been illegally forcing Uyghur ethnic minority population in Xinjiang to harvest cotton and produce cotton apparel in China’s Xinjiang Uygur Autonomous Region (XUAR), according to countless news reports and investigations by human rights organizations. The Chinese government, according to numerous reports and investigative news reports, have detailed nearly 1 million Uyghurs, in Xinjiang, where they have been subjected to torture, forced labor, religious restrictions and even forced sterilization.

Chapman also noted that 20% of the world’s cotton is grown in Xinjiang while 85% of China’s cotton is grown in the region,

NCTO continues to engage with U.S. Customs and Border Protection (CBP) officials, other administration officials and key allies on Capitol Hill to press for more enforcement of this critical legislation.

Closing the De Minimis Loophole

Another major focus area for NCTO is closing a legal loophole in U.S. trade law, known as Section 321 de minimis waivers.

De minimis shipments, which have exploded in recent years with the growth of e-commerce, are undermining efforts to hold China accountable and the nation’s ability to enforce the Uyghur Forced Labor Prevention Act (UFLPA).

The de minimis trade loophole is being aggressively used by e-commerce companies and mass marketers.  It allows goods valued at $800 or less per person to arrive at our doorsteps duty-free each day through e-commerce.  U.S. officials estimate approximately 2.7 million de minimis packages enter the U.S. market each day that otherwise would be subject to tariffs, penalty tariffs, taxes and customs inspection. In addition, de minimis shipments are being utilized to facilitate Xinjiang forced labor apparel into our closets.

“All countries have different de minimis values. China’s de minimis value is $7. Unfortunately, [certain} Chinese companies have mined our trade laws and use this de minimis law to import their product from China into the U.S., completely duty free,” Chapman said.

“The unfortunate thing is we don’t know what’s in them. They completely bypass customs. They are self-declared on value and [inspected] through random sampling,” he added.

Further, over 50% of these shipments contain apparel products.

“So, this has literally become a free trade agreement for China. As I mentioned, there are 301 penalty tariffs. They don’t pay the penalty tariffs. They’re duties on textiles that come into the U.S. They don’t pay duty. This is widely recognized as a problem in Washington, but there’s a real fight on our hands,” Chapman said.

Legislative Priorities

On the legislative front, Chapman outlined several other top areas of engagement, including efforts to push Congress to reauthorize the Miscellaneous Tariff Bill (MTB), which is legislation that temporarily suspends or reduces import tariffs on manufacturing inputs that are unavailable domestically. Textile manufacturers benefit from duty breaks on inputs such as acrylic and rayon fibers and various chemicals that are not produced in the U.S. The MTB bill lapsed at the end of 2020 and Congress has thus far not advanced legislation to reauthorize it.

NCTO is also engaged in working with Congress to pass the FY 2024 National Defense Authorization Act (NDAA), which includes an economic impact assessment and language to strengthen the Berry Amendment by covering additional purchases of home furnishing items.

Equally as important is passage of a new farm bill.

The farm bill is up for a 5-year renewal this year and Congress is currently considering the legislation.

Various cotton and textile programs are contained in the farm bill that are important to NCTO as well as to the National Cotton Council (NCC).

They include renewal of: the Economic Adjustment Assistance for Textile Manufacturers program (EAATM), Pima Cotton Trust Fund and Wool Manufacturers Trust Fund.

“This is very important legislation for us to get wrapped up,” Chapman said.

NCTO and Applied DNA Sciences Featured in Wall Street Journal Video on Banned Chinese Cotton Continuing to Flow into the U.S. Market

The Wall Street Journal posed a critical question in a new video out on “Why Banned Cotton From China is So Hard to Keep Out of the U.S.”

The video, which is posted on the Wall Street Journal’s website here, features NCTO President and CEO Kim Glas and NCTO member, Applied DNA Sciences President and CEO James Hayward.

It traces the Chinese cotton supply chain, which is under fire globally for utilizing illegal forced labor, and highlights how contradictory government policies and insufficient enforcement have failed to prevent cotton apparel made with forced labor in Xinjiang, China from entering the U.S. market.

There is no doubt that the cotton apparel made with forced labor in Xinjiang, China and imported to the U.S. is severely impacting the competitiveness of the U.S. textile industry. 

In fact, the low level of enforcement by Customs and Border Protection (CBP) is extremely concerning, given that legislation known as the Uyghur Forced Labor Prevention Act (UFLPA), which bans the importation of imported products made by forced labor, was implemented 14 months ago.

At the same time, nearly 3 million shipments per day come into this country under the Section 321 de minimis mechanism, largely uninspected and duty free, which gives China another backdoor to our market and rewards their predatory trade practices.

NCTO is calling for stepped up enforcement of the UFLPA and closure of the “de minimis” loophole, which facilitates this trade and gives China duty-free backdoor access to the U.S. market.

In the video, the Wall Street Journal “unpacks the complexity of the supply chain to explain why experts believe much of the cotton is still making its way to the U.S.”

NCTO Amplifying the Policy Issues Impacting the Industry

On the communications and press front, NCTO President and CEO Kim Glas penned two important and insightful op-eds, outlining how Section 301 tariffs and the U.S.-Dominic Republic (CAFTA-DR) agreement are helping the U.S. textile industry, a key American manufacturing sector, compete.

In the first piece, Kim wrote a joint op-ed with CECATEC-RD Executive Director Patricia Figueroa that showcases perspectives from both the U.S. and Central American textile and apparel industries on the state of nearshoring in Central America and focuses on the region and our co-production chain as a strong sourcing alternative to Asia, even in a down market.

Read the op-ed here: Why Central Ameria Makes Sense–Even in a Down Market

The second opinion piece, titled “Keep China in Check: Don’t let Section 301 Tariffs Expire,” published by The Hill, outlines how the Section 301 tariffs on finished apparel and textile products has created a more level playing field against unfair trade practices, such as forced labor in China.

It is a timely opinion piece, in light of the U.S. Trade Representative Office’s pending four-year review and decision that will weigh heavily on the U.S. textile industry.

Please see a link to the op-ed on The Hill’s website here: Keep China in check: Don’t let Section 301 tariffs expire.


Wilson College of Textiles Receives $2M in USAID Funding

North Carolina State University’s Wilson College of Textile has received $2 million in funding to establish a technical textile training program in Honduras, which comes at a pivotal time of onshoring and nearshoring for the textile and apparel industry.

The United States Agency for International Development (USAID) awarded the $2 million, two-year grant to Wilson College to develop the new program in partnership with Gaston College and Catawba Valley Community College—all nationally recognized for their leadership in textiles innovation, research and education—and the Universidad Tecnológica Centroamericana (UNITEC), a leader in providing technical and engineering education in Honduras.

As outlined in press release and post from Wilson College, the program is titled Hilando Oportunidades (Spinning Opportunities) in northern Honduras and aims to  deliver training to at least 1,500 Hondurans in yarn spinning, knitting, dyeing and finishing, and apparel production. The project will be led by Melissa Sharp, associate director of Zeis Textiles Extension (ZTE) in Wilson College, who says “a key aspect of the program is the development of trackable credentials that will empower workers in Honduras’ textile industry and expand the routes to advancement.”

In addition, education technology partner Shimmy, an industrial startup, will provide training through mobile applications while credentials will be issued through Credly and maintained by NC State, providing third-party evidence of skills and training attained through Hilando Oportunidades.

The announcement of funding and the universities’ partnership followed an MOU signing in August 2022, which brought together high-level U.S. and Honduran government officials, including: Jose W. Fernandez, Under Secretary of State for Economic Growth, Energy and the Envirnonent; Jennifer Knight, Deputy Assistant Secretary for Textiles, Consumer Goods and Materials at the U.S. Department of Commerce; and Hector Zelaya, private secretary to Honduran President Xiomara Castro.

The U.S. State Department issued a statement of public support for the MOU at the time and the unique collaboration between the U.S. and Honduran institutions.

The partnership comes at a defining moment for the U.S., Honduras and Central America, which are seeing significant levels of investment in textile and apparel production as part of a co-production chain under the U.S.-Dominican Republic-Central America (CAFTA-DR) agreement.

NCTO President and CEO Kim Glas and CECATEC-RD Executive Director Patricia Figueroa recently penned a joint op-ed that showcases perspectives from both the U.S. and Central American textile and apparel industries on the state of nearshoring in Central America and focuses on the region and our co-production chain as a strong sourcing alternative to Asia, even in a down market.

In the past 18 months alone, this vibrant partnership with the region has spawned $2 billion in investments in both the U.S. and Central America, as brands and retailers continue to look for ways to diversify their supply chains.

The U.S. and this region are inextricably linked through a textile and apparel co-production chain that generated $15 billion in annual two-way trade in the sector and supports 1 million workers in the U.S. and region.

That is why this partnership and the Hilando Oportunidades training and education program in Honduras is critical, to help prepare thousands of students for the next generation textile workforce.

It is intended to create an educational pathway to economic opportunity in Honduras and the region that not only creates a skilled and resilient workforce but can also help address the root causes of irregular migration.

Current growth projections indicate a need for more than 10,000 skilled new workers in the textile industry in Honduras alone over the next five years. In order to meet these needs, educational programming is needed at all levels.

North Carolina plays a central role in this co-production chain. It is the second-largest state for textile employment nationally with over 36,000 workers, and the state’s $2.7 billion in textile-related exports leads the nation. The Northern Triangle, including Honduras, is a major export destination for U.S. yarns and fabrics that come back as finished items under the CAFTA-DR trade agreement.