Republicans warn China using this loophole to skirt forced labor laws

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EXCLUSIVE: House Republicans are demanding the U.S. Postal Service provide information related to inbound mail from China as they investigate the ability of Chinese companies to skirt U.S. regulations and avoid U.S. duties, taxes and scrutiny.

House China Select Committee Chairman Mike Gallagher, R-Wis., and House Oversight Committee Chairman James Comer, R-Ky., are conducting a joint investigation into Chinese companies that take advantage of a loophole that allows them to avoid U.S. inspection of imports destined for U.S. markets.

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Gallagher and Comer penned a letter to U.S. Post Master General Lous DeJoy Wednesday requesting documents, information and data collected by USPS relating to inbound mail from China. Fox News Digital exclusively obtained the letter.

Miami, USA - January 18, 2013: United States Post Office mail truck (USPS) speeding in Miami, Florida - motion blur panning. (iStock)

"Most shipments valued at less than $800 fall under the so-called de minimus rule and enter the United States exempt from duties, taxes, and scrutiny," they wrote. "Chinese companies can take advantage of the de minimus rule and ship products via commercial shipping companies, as well as the USPS, directly to U.S. consumers without paying duties and fees or subjecting their products to investigation by authorities." 

Gallagher and Comer pointed out that Chinese companies "routinely break large shipments into numerous smaller ones in order to take advantage of the de minimus threshold and avoid customs duties and tariffs." 

China's national flag is seen in front of cranes on a construction site at a commercial district in Beijing, China, January 26, 2016. REUTERS/Kim Kyung-Hoon - RTX240F5 (REUTERS/Kim Kyung-Hoon - RTX240F5)

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

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The request comes amid the House China Select Committee’s investigation into forced labor concerns with Chinese "fast fashion" brand Shein and Temu. That investigation has found those companies’ business models rely "heavily" on the de minimus provision that allows them to ship packages directly to the American consumer, avoiding responsibility for compliance with prohibitions on forced labor.

Chairman Rep. Mike Gallagher, R-Wis., listens during a hearing of a special House committee dedicated to countering China, on Capitol Hill, Tuesday, Feb. 28, 2023, in Washington.  (AP Photo/Alex Brandon)

Federal agencies, like U.S. Customs and Border Protection, have made certain data available related to China-based origin shipments that may use the de minimus entry, according to the lawmakers.

"The information provided by CBP does not include data from the USPS," they wrote. "These data are insufficient without properly accounting from the USPS channel, which includes information regarding the specific volume of shipments from the PRC into the United States." 

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Gallagher and Comer stressed that USPS is "uniquely positioned" to provide the information because a "significant proportion of small parcel shipments come through the USPS channel and are not publicly broken down by country."

"Such information will provide the committees with important insight into the volume and value of shipments from the PRC," they wrote.

House Oversight and Accountability Committee Chair James Comer, R-Ky. (AP Photo/Mariam Zuhaib)

Gallagher and Comer are requesting information, documents and data on all available inbound mail records from China; records pertaining to de minimus shipments from China; the total U.S. dollar value of dues and inward rates currently assessed to China; and the full terminal dues schedule for every country around the globe.

The China Committee released an interim report on its bipartisan investigation into the fast fashion brands last month, which revealed that the companies have "no system to ensure compliance with the Uyghur Forced Labor Prevention Act," which lawmakers say all but guarantee that shipments made by Uyghur forced labor are entering American homes.

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

It also found that Temu conducts "no audits and reports no compliance system to affirmatively examine and ensure compliance with the UFLPA."  The only measure Temu reported that it takes to ensure that it is not shipping goods to Americans that are produced with forced labor in violation of U.S. law was that its suppliers agree to boilerplate terms and conditions that prohibit the use of forced labor.

A laptop keyboard and Temu on App Store displayed on a phone screen (Jakub Porzycki/NurPhoto via Getty Images)

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

"SHEIN has provided detailed information to the Select Committee and will continue to engage transparently with Members to answer their questions," a Shein spokesperson told Fox News Digital. "We have zero tolerance for forced labor and have implemented a robust system to support UFLPA compliance, which includes a code of conduct, independent audits, robust tracing technology and third-party testing. We have no contract manufacturers in the Xinjiang region. If any cotton from an unapproved region is detected, we take immediate action such as suspending production, halting shipments to the United States and removing product listings."

"As a global company, our policy is to comply with the customs and import laws of the countries in which we operate. SHEIN continues to make import compliance a priority, including the reporting requirements under U.S. law with respect to de minimis entries," the spokesperson said. 

The committee’s investigation is ongoing, and lawmakers hope the USPS data will inform the rest of the probe.