The Demise of De Minimis?

This was written as a response to a comment to an early post Wolfgang Lehmacher

I must confess to looking on in horror at the various discussions and actions around de minimis currently. We have some countries that have already acted against their de minimis with either the removal or reduction in threshold for either duty or tax or both, including Norway, Australia, New Zealand, South Africa, Brazil, Thailand etc. Many more are in the process of removal including the EU as part of the EU Customs reform.

Interestingly, many developing countries are moving in the opposite direction by introducing or increasing their de minimis thresholds.

Having been involved in lobbying for de minimis thresholds years ago, I find it peculiar that the very reasons we once championed for their implementation are now being cited to justify their reduction or removal.

Let’s remind ourselves of some of those reasons.

The customs de minimis threshold was created to facilitate trade and improve efficiency in customs processing by establishing a value limit below which goods can enter a country without being subject to customs duties and taxes. The primary reasons for its creation include:

1. Reduction of Administrative Burden: Processing small, low-value shipments for customs duties and taxes is often not cost-effective. The administrative cost and effort involved in processing these small items can outweigh the revenue generated from the duties. By setting a de minimis threshold, customs authorities can focus their resources on more significant shipments, thereby improving overall efficiency.

2. Facilitation of Trade: A de minimis threshold simplifies the import process for businesses and consumers, especially in the context of e-commerce, where a large number of low-value goods are traded across borders. This encourages international trade and makes it easier for consumers to buy products from other countries.

3. Cost Savings for Consumers and Businesses: By exempting low-value goods from duties and taxes, consumers and small businesses can save money. This can make goods more affordable and can help small businesses that rely on importing low-value items as part of their operations.

4. Speeding Up Delivery: Shipments below the de minimis threshold can typically pass through customs more quickly since they are not subject to detailed assessments and duty calculations. This can lead to faster delivery times, which is beneficial for both businesses and consumers.

5. Economic Stimulus: In some cases, governments set de minimis thresholds as part of broader economic policies to stimulate consumer spending and support the growth of e-commerce. Lowering barriers to international trade can help boost economic activity.

I see the gradual removal of de minimis being used more as a blunt instrument rather than a more surgical approach such as a greater focus on data completeness, accuracy and timeliness, single trade window / shared data and of course trusted trader programs.

Martyn Noble Maureen Cori David Spottiswood