What’s the minimum to argue about?

In the world of international shipping and e-commerce, the term “Section 321” means a lot, especially to those who import goods into the United States. Under this provision of the Trade Facilitation and Trade Enforcement Act of 2015, goods valued at $800 or less can enter the country duty-free and without formal entry requirements. However, the process isn’t always smooth, and sometimes, goods are singled out for further inspection by Customs and Border Protection (CBP). So why has the recent debate over de minimis cargo raged so fiercely? Here’s what you need to know:

Article 321 Background:

Section 321 of the U.S. Tariff Act of 1930 provides for de minimis or low value imports. This allows goods below a certain retail value to enter the U.S. unofficially, duty free and with fast customs clearance. If you’ve been in the business for a while, you may remember that this value was once capped at $200. In 2016, U.S. Customs raised the value for these goods to $800 (the highest of any country). One thing to note about these types of goods is that de minimis is calculated based on the total fair market value of all goods a person imports per day.

In 2019, CBP launched a voluntary 86 entry process test for self-declarants and customs brokers to electronically transmit shipment data through the Automated Commercial Environment (ACE). This change was implemented to help speed up the import process and increase e-commerce sellers. The test also expanded to shipments that require additional data to partnering government agencies (PGAs) such as the FDA. To speed up processing, customs brokers must submit more data, including the 10-digit Harmonized Tariff Code.

Why is CBP targeting Section 321 (De minimis) cargo for inspections?

U.S. Customs and Border Protection (CBP) is currently conducting tests on Section 321 goods. This testing stems from a report conducted by the International Trade Commission in November 2023. The report found that Section 321 items account for a large portion of all e-commerce imports into the United States, and China is the primary source of these insignificant imports.

Historically, Section 321 has not been enforced vigorously enough due to the sheer volume of small packages received each day, making comprehensive inspections impossible. However, CBP has begun to pay more attention to these packages, citing concerns about security, intellectual property, and trade regulation compliance.

• Security Question: In an age of heightened security awareness, U.S. Customs and Border Protection is eager to prevent illegal or dangerous goods from entering the United States under the guise of legal cargo. There are many “bad actors” in the world, and taking advantage of minimal cargo is a way they attempt to smuggle illegal drugs (like fentanyl), cash, and even other illegal items that could harm the American people.
• intellectual property: Protecting intellectual property has become a priority because counterfeit goods often enter the U.S. market through small, informal shipments. These shipments range from counterfeit clothing, watches and wallets to fake sports jerseys and fake sports championship rings.
• Compliance and trade Regulation: The explosive growth of e-commerce has led to a surge in Section 321 shipments, which has increased the need for CBP to ensure compliance and security without unduly disrupting trade flows. The majority of these shipments come from China, and as forced labor enforcement increases, many Chinese companies may try to use minimum declarations to circumvent enforcement. Sometimes companies will try to use Section 321 declarations to avoid paying duties entirely and will significantly undervalue the shipment to meet the threshold. The shipments I’ve seen coming in from Mexico before were sportswear, and they were always undervalued and the exporter would list “gifts” on the invoice. Well, if you have 20 soccer jerseys coming in as “gifts,” that’s suspicious.

How is CBP targeting these shipments?

CBP uses sophisticated algorithms and risk assessment technology to place holds on shipments that may pose a risk to the U.S. Holds may be issued for reasons such as declared value inconsistencies, documentation discrepancies, or concerns about the nature of the goods being imported. If your shipment is the subject of a hold, CBP may request additional information or conduct a physical inspection before releasing it for delivery.

In addition, CBP has moved up the deadline for declaring Class 86 inbound shipments from 15 days after arrival to “on or before arrival.” If low-value shipments are not declared within this time frame, they cannot be declared as Class 86 inbound shipments.

What should you do if your cargo becomes a target?

• Provide accurate information: Make sure all information provided to CBP is accurate and matches the documentation accompanying your shipment. Inaccurate information may result in delays or even seizure of your shipment.
• Stay Informed: Track your shipment using the tracking number provided by the carrier. CBP will typically notify the carrier if more information or additional action is needed.
• Timely reply: If you are notified by CBP or a carrier that your shipment has been targeted, respond immediately and provide any requested information. This may include an invoice, proof of payment, or a description of the shipment being imported.
• Work with your broker to: If you use a customs broker to assist with your import, they can be a valuable resource for understanding CBP requirements. They can assist in preparing the necessary documentation and communicating with CBP on your behalf.
• be patient: Dealing with targeted questions from CBP can be frustrating, but patience is key. CBP processes a large volume of shipments every day, and targeted questions do not necessarily mean there is a problem with your shipment.
• Seek legal advice if necessary: If the situation is complex, or you believe your goods have been treated unfairly, it may be helpful to seek legal advice from a customs attorney or trade compliance specialist. They can provide guidance on your rights and options.

How can we prevent future problems?

• Accurate statement: Always provide accurate information on the value, quantity and nature of imported goods.
• Compliant packaging: Make sure the shipment is packaged in accordance with CBP regulations to prevent damage or discrepancies during inspection.
• Stay Updated: Check CBP guidance and regulations regularly for changes that may affect your shipments.
• Import Compliance Program: Having an import compliance program helps address the complexities of importing shipments.

in conclusion

While a CBP inspection of your Section 321 shipment can be unsettling, it’s important to be patient and proactive in dealing with it. By understanding the process, providing accurate information, and working closely with your carrier or customs broker, you can often resolve the issue quickly. Remember, CBP’s goal is to ensure compliance and facilitate legitimate trade while protecting the border. By following these steps, you can more confidently and efficiently navigate the complexities of a CBP inspection of your shipment.

Understanding CBP objectives can be a learning experience that ultimately strengthens your understanding of international shipping regulations and procedures. Stay informed, stay proactive, and ensure your shipments comply with all relevant laws to minimize disruption and maximize the efficiency of your business operations. If you need help getting started with the Import Compliance Program or any other assistance with importing shipments, schedule a free consultation today.