De Minimis in the United States

In Industries: De minimis Rules and Guidelines

§ 734.4 and Supplement No. 2 to part 734 of the EAR (as modified on 11 March 2016).

When:

Non-U.S.-made commodity ‘incorporates’ controlled U.S.-origin commodities,
Non-U.S.-made commodity is ‘bundled’ with controlled U.S.-origin software,
Non-U.S.-made software ‘incorporates’ controlled U.S.-origin software, or
Non-U.S.-made technology is commingled with or drawn from controlled U.S.-origin technology,

Then… the non-U.S.-made item is subject to the EAR if the U.S.-origin controlled content exceeds (based on destination):

It is 10%:

For non-“600 series,” non-9×515, non-‘see-through carve-out’ [1] items to Country Group E:1; and
For EAR99 items (except food and medicines) to N. Korea and Syria.

It is 25%:

For .a-.x items, in “600 series” & 9×515, or ‘see-through carve-out’ [2] items, except to
Country Group D:5;
For non-“600 series,” non-9×515, or non-‘see-through carve-out’ [3] items, except to Country Group E:1; and
For EAR99 items to Cuba and Crimea region of Ukraine (except food, medicines and certain
software).

It is Unlimited (not subject to the EAR for de minimis purposes):

For .y items, in “600 series” or 9×515, except to Country Group E:1, E:2 and China;
For items controlled for (AT) reasons only, except to Country Group E:1 and E:2; and
For EAR99 items to all locations, except where noted above.

There are some exceptions.

De Minimis in Environmental Law

The term used in environmental law to describe a small deviation from the norm or from what is required. For example, a permittee that is allowed to discharge five milligrams of sodium per liter of wastewater would describe five and a half milligrams as a de minimis violation.
Based on “Environment and the Law. A Dictionary”.

De Minimis in International Trade: in the FATCA

Although requiring a change in tariff classification is a very simple principle, it requires that all non-originating materials undergo the required change. A very low percentage of the materials may not undergo the tariff change, thus preventing the goods from originating. Therefore, the Agreement contains a de minimis provision that allows goods to qualify as originating provided such materials are not more than a certain percentage (seven percent in most cases) of the transaction value of the goods adjusted to an FOB basis or, in some cases, of the total cost of the goods.

In addition, where failure of materials to undergo a required change in tariff classification triggers a requirement for a minimum regional value content, the calculation of that content is waived if the value of all non-originating materials used in the production of the goods is not more than the specified de minimis amount.

However, if after application of the de minimis allowance the goods must still meet a regional value-content requirement in order to qualify as originating (that is, if the value of all non-originating materials exceeds the applicable de minimis allowance), the value of all non-originating materials must be taken into account in calculating the regional value content.

Textiles

For textile goods classified in Chapters 50 through 63 of the Harmonized System, the de minimis rule is applied by weight (instead of value) to the component of the good that determines its tariff classification, as determined in accordance with the General Rules of Interpretation of the Harmonized System.

Agricultural Products

The Article 405 de minimis rule does not apply to agricultural goods provided for in Chapters 1 through 27 of the Harmonized System unless the non-originating materials are classified in subheadings different from the subheadings in which the finished goods are classified.

Excluded Products

The Article 405 “de minimis” rule does not apply to the following materials:

certain dairy products and preparations that are used in the production of goods provided for in Chapter 4 of the HTS;
goods provided for in Chapter 4 of the HTS and some dairy preparations that are used in the production of certain goods containing milk, milk solids or butterfat;
some fruits and juices used in the production of certain juices and juice concentrates;
coffee beans used in the production of unflavored instant coffee (note: the Annex 401 origin criterion for unflavored instant coffee allows up to 60 percent non-originating coffee, so substantial allowance is already made for non-originating inputs);
fats, lards, oils and related products provided for in Chapter 15 of the HTS that are used in the production of Chapter 15 goods (except olive, palm, and coconut oils, where the de minimis rule does apply);
Cane and beet sugar used in the production of sugars, syrups and other products provided for in HTS headings 1701-1703;
Sugar, molasses, sugar confectionery and other goods provided for in Chapter 17 of the HTS and cocoa powder provided for in HTS 18.05 that are used in the production of chocolate and other food preparations containing cocoa;
beer wine and other fermented beverages provided for in HTS headings 22.03-22.08 used in the production of alcoholic beverages and related products provided for in HTS headings 22.07 and 22.08; any non-originating material used in the production of many major appliances such as refrigerators, freezers, air conditioners, stoves, ranges, trash compactors, clothes-dryers and washing machines;
printed circuit assemblies used in the production of a good if the change in tariff classification prescribed by Annex 401 for that good places restrictions on their use.

TFTEA-Increase in the De Minimis Value Exemption

This document provides insight into the De Minimis Value Exemption element addressed in the Trade Facilitation and Trade Enforcement Act of 2015. Specifically, the Act included an amendment of Section 321 of the Tariff Act of 1930 (19 U.S.C. § 1321) to increase the de minimis value exemption from duties and taxes from $200 to $800. This document explains what changed as a result of the Act, what remains the same, includes information on relevant processes, identifies conditions and exemptions of the amendment, and finally, identifies the U.S. Customs and Border Protection (CBP)’s authority.

Trade Facilitation and Trade Enforcement Act of 2015

On February 24, 2016, President Obama signed into law the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) (Pub. L. 114–125). Prior to enactment of the Trade Facilitation and Trade Enforcement Act of 2015, section 321(a)(2)(C) of the Tariff Act of 1930 (19 U.S.C. 1321(a)(2)(C)) authorized the U.S. Customs and Border Protection to provide an administrative exemption to admit free from duty and tax shipments of merchandise (other than bona fide gifts and certain personal and household goods) imported by one person on one day having an aggregate fair retail value in the country of shipment not less than $200. Section 901(c) of the Trade Facilitation and Trade Enforcement Act of 2015 amended section 1321(a)(2)(C) by increasing the value of this administrative exemption from $200 to $800.

Pursuant to section 901(d) of Trade Facilitation and Trade Enforcement Act of 2015, the effective date of this amendment was the 15th day after the date of enactment, i.e., effective as of March 10, 2016. Section 901 did not change the administrative exemption for bona fide gifts and personal or household articles accompanying travelers under 19 U.S.C. 1321(a)(2)(A) and 1321(a)(2)(B).

U.S. Customs and Border Protection Authority

Even in the case of low value shipment, the U.S. Customs and Border Protection has the right to require a formal entry on any shipment where additional information, bonding, or protection is required. The administrative exemption may be denied if the U.S. Customs and Board Protection believes that the shipment was sent as a low value shipment for the purpose of avoiding compliance with any pertinent law or regulation.

De Minimis Notice

In relation to the European Commission and the European Antitrust law, the De minimis Notice is a Commission Notice on agreements of minor importance which do not appreciably restrict competition.

Resources

Notes

1. ‘See-through carve-out item’ – Articles described on the U.S. Munitions List (22 CFR part 121) that pursuant to a specific carve-out note are subject to the EAR when, prior to export, reexport, retransfer, or temporary import, they are integrated into and included as an integral part of an item subject to the EAR. These items are always considered controlled content for purposes of the de minimis rule.

USML Category VIII(e), (h)(2)-(5), (7), (13), (14), (17)-(19), and (21)-(26) when incorporated into a 9A610 military aircraft
USML Category XII(c) Military second and third generation image intensification tubes and military infrared focal plane arrays identified in this subparagraph are licensed by the Department of Commerce (ECCN 6A002A and 6A003A)) when part of a commercial system.
USML Category XV(c)(3) and (e) when incorporated into an item subject to the EAR.

De Minimis