The increased flow of illicit counterfeit and potentially dangerous goods entering the U.S. through the e-commerce supply chain threatens national security and public safety, according to the Department of Homeland Security (DHS).
The department submitted its report, Combating Trafficking in Counterfeit and Pirated Goods, to President Trump on Friday, calling for immediate action to be taken by DHS agencies Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE).
In addition to the government’s recommendations, which include increased scrutiny of parcel imports valued at less than $300 de minimis and enhancement of penalties for counterfeit goods, DHS outlined 10 best practices for e-commerce platforms and other third parties that “profit” from these goods to implement.
“Foremost among these practices is the idea that e-commerce platforms, online third-party marketplaces and other third-party intermediaries such as customs brokers and express consignment carriers must take a more active role in monitoring, detecting and preventing trafficking in counterfeit and pirated goods,” the DHS report said.
On April 3, 2019, President Trump issued a memorandum stepping up the federal government’s attention and oversight of e-commerce to stop the proliferation of counterfeit goods in the U.S.
“While counterfeit and pirated goods have been sold for years on street corners, alleys and from trunks of cars, these illicit goods are now marketed to consumers in their homes through increasingly mainstream e-commerce platforms and third-party online marketplaces that convey an air of legitimacy,” the DHS report said.
The department noted the number of annual seizures by CBP and ICE of counterfeit goods increased from 6,500 to 33,810 between 2003 and 2018. In 2018, if those counterfeit goods had been legitimate, the collective suggested retail price would have been $1.4 billion.
CBP began recognizing an explosion of e-commerce shipments through the express consignment and international mail facilities shortly after Congress passed the 2016 Trade Facilitation and Trade Enforcement Act. The legislation included a provision to raise the de minimis value for goods imports that no longer require a formal customs entry from $200 to $800.
The agency estimates that more than 1.8 million e-commerce shipments valued at less than $800 arrive in the U.S. daily.
CBP has made enhanced regulatory oversight of international e-commerce goods a priority during the past two years.In July, the agency announced the Section 321 Data Pilot with the goal to determine the “feasibility” of obtaining certain data from e-commerce importers and service providers and how to more effectively use it to identify and target high-risk shipments, such as narcotics, health and safety violations and other criminal activity. The pilot, which currently consists of nine industry participants, is expected to operate through August 2021.