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