E-commerce to the USA: The Value in Low Value

Many are surprised to learn the the US is the most open economy when it comes to importing of online orders.

With the passing of the Trade Facilitation and Trade Enforcement Act (H.R. 644) the low value threshold for shipments to the USA increased from $200 to $800. US Custom's systems are being updated to accommodate the new law.

What is the low value duty threshold or de minimis level?

The threshold under which duty and/or taxes are charged for imported items is referred to in different ways such as low value threshold, GST Threshold, or de minimis value.

Why is the de minimis value important for e-commerce parcels?

Millions of e-commerce parcels valued under $800 are currently imported from Asia using a simplified entry process (commonly referred to as Section 321).

Most parcel shipments to the USA valued up to $800 can access simplified processes. Jet helps e-commerce importers manage the importation of high volume parcel flows to the USA via Express Consignment (ECCF) processes.

The advantage of low value entries include:

Simplified processing for customs
No Duty
No Sales Tax
No H.S. Code required for entry processing
New Duty Free Entry Processes for e-commerce ocean

Using Section 321 type 86 entries, e-commerce merchants can clear e-commerce orders shipped via individual parcels shipped via ocean freight.

Contact our team for information on clearing ocean freight shipments via duty free section 321 processes.

Will this help US exporters?

The act specifically states that the US Trade Representative (USTR) “should encourage other countries to establish commercially meaningful de minimis values for express and postal shipments that are exempt from customs duties and taxes and from certain other entry documentation requirements.”

In addition, free trade pacts - such as the pending Trans Pacific Partnership - addresses the need for harmonized de minimis values across all countries.

In the near term, however, it is likely to remain vastly easier to import e-commerce parcels to the USA than vice versa.

Trade Facilitation AND Trade Enforcement for E-commerce to the USA

The de minimis value is actually a small part of the total bill (and only mentioned near the end in the “Miscellaneous Provisions").

The act's enforcement provisions include:

1. Strengthen Partnership programs

The bill directs U.S. Customs to strengthen the benefit to partnership programs, such CTPAT, to private sector entities who meet the program’s requirements.

Express Consignment Operators and Facilities will expect to see additional benefits to their efforts at meeting express consignment requirements. International retailers can now set up their own direct import processes to the US via ECCF Section 321 processes.

2. Import Health and Safety

An inter agencyImport Safety Working Group is to be established to better coordinate federal response to cargo entering the United States.

3. Strengthened enforcement of trademark and copyrighted material

The act strengthens the ability for customs to control the importation of goods into the United States that are in violation of U.S. trademark or copyright infringement laws.

4. Strengthened anti dumping regulations

This bill requires Customs to investigate other federal agency claims of evasion of antidumping (AD) or countervailing duties (CVD), and take specified enforcement actions. The bill specifically mentions goods from Mexico and Canada as being subjected to anti dumping sanctions.

What is Intrinsic value?

The definition of “intrinsic value” refers to the price of the goods themselves when sold for export. It excludes transport and insurance costs, unless they are inclusive in the price. If price includes shipping and insurance it must be separately indicated on the invoice. For goods of a non-commercial nature, the price which for payment for the goods themselves.

Consignment versus Goods

The the term “consignment” refers that ship together from a single consignor to a single consignee. A consignment is covered by the same transport waybill and tracking number.

jet-warehouse-section-321

What is Section 321?

US Customs allows most individual orders valued under $800 USD to be entered and cleared duty free into the USA. This entry type is known as a Section 321 Informal Entry. Using this entry type, importers can consolidate all their qualifying orders under one entry without H.S. Codes and benefit from duty free entry.

Most goods cleared via a section 321 informal entry are imported under Part 128 of the Code of Federal Regulations (CFR). As such, they are imported to facilities with port codes that define them as Express facilities or ECCF's. Many express operators are also able to clear via freight facilities (with section 321 processes) known as a Container Freight Station or CFS.

For importers who have H.S. codes, it may be best to use a Section 321 "type 86" entry. Using this entry type, goods can be imported via traditional methods using the Automated Broker Interface or ABI system.