Federal Policy Moves for Safer Batteries and E-Bikes
By: Noa Banayan, director of federal affairs
The newly reintroduced Import Security and Fairness Act would be a big win for the government, the economy, and consumers alike.
From trade to consumer product regulations, federal policymakers are taking a closer look at policy options to protect the import, sale, and ownership of quality electric bicycles in the United States. As the nation’s only trade association for the bicycle industry, PeopleForBikes is committed to advancing strong policies and regulations to protect consumers and our members across the bicycle supply chain. New proposals before Congress and the Consumer Product Safety Commission (CPSC) could lead us to a future where consumers and riders don’t have to worry about whether the helmet or electric bicycle they’re purchasing meets applicable testing standards designed to help keep them safe.
We’ve already written about the CPSC’s comment period for electric bicycles and our goals for setting federal standards for e-bikes. The other side of the coin is how potentially unsafe products that don’t meet these standards are able to get through our ports and entry systems and into the hands of American consumers. Keeping the public safe from such products is, or should be, the most basic function of our national trade policy.
Thanks to bicycling’s biggest advocate in Congress, Bike Caucus Founder and Co-chair Congressman Earl Blumenauer (D-OR-04) — as well as his colleagues Rep. Neal Dunn (R-FL-17) and Senators Sherrod Brown (D-OH) and Marco Rubio (R-FL) — the newly reintroduced Import Security and Fairness Act (H.R. 4148/S. 2004) would end “de minimis” treatment for goods imported from China and Russia.
Before diving into what that means for bikes, it’s important to understand what de minimis means: most countries set a de minimis threshold to allow small dollar imports to bypass duties. In order to reduce the administrative burden of collecting tariffs for small shipments, almost every country specifies a de minimis amount for which tariffs and duties are not collected. Specifically, the U.S. defines the de minimis threshold as follows:
- De minimis provides admission of articles free of duty and of any tax imposed on or by reason of importation, but the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from the payment of duty shall not exceed $800 (Section 321, 19 USC 1321).
In 2016, President Obama signed the Trade Facilitation and Trade Enforcement Act of 2015. This law significantly raised the value of a shipment of merchandise that may be imported free of duty from $200 to $800. While this change may have made sense for the international traveler returning with some items from a trip abroad, it failed to consider the impact on direct online sales to U.S. consumers from foreign sellers. This law has had the unintended consequence of rapidly shifting purchases formerly made from American retailers to foreign online sellers, making those purchases duty-free and thus allowing them to avoid the formal customs entry process whereby incoming goods are monitored and inspected by various government agencies, including the CPSC.
Most countries set these de minimis amounts at much lower levels than the current U.S. amount. Subject to fluctuations in exchange rates, Canada sets the level at $15, Mexico at $100, Japan at $90, South Korea at $150, and the European Union at $170. The de minimis duty-free import level for China is less than $10. While our prior level of $200 was comparable to these trading partners, the increase to $800 vastly exceeds these global norms.
The increase in the de minimis threshold provides a clear competitive advantage for foreign retailers of consumer goods. Customers can shop online from internationally based retailers or manufacturers, which openly advertise the fact that tariffs are not collected on shipments below $800, and buy products duty-free. In essence, the law enables foreign businesses to set artificially low prices by avoiding tariffs on goods that would be collected if imported by U.S. businesses and sold domestically. This is especially true of bicycles, many e-bikes, and other bicycle products, the vast majority of which are valued at less than $800.
PeopleForBikes has been advocating for a lower domestic de minimis threshold since it was increased in 2016 and outlined the issue as a priority in our 2021 Trade Agenda. The sponsors of the newly proposed Import Security and Fairness Act introduced the bill to limit the import of products made with forced labor, intellectual property theft, and otherwise dangerous goods.
So, how does this trade loophole connect back to electric bicycle safety?
Many powered micromobility products and replacement lithium ion batteries involved in the fires that have damaged New York City are imported directly to consumers from foreign sellers because they cost less than $800, therefore falling under the de minimis threshold. These products are cheaper than quality, safe electric bicycles and other powered micromobility products because they do not undergo or meet any third-party testing requirements.
Moreover, because these foreign sellers may be beyond the reach of U.S. courts, they are largely able to avoid legal liability to their international consumers. Should the Import Security and Fairness Act be signed into law, or Congress otherwise agrees to lower the de minimis threshold, these unsafe, untested products would face more scrutiny on import and shippers would be required to pay any applicable duties.
The next step to increase consumer safety would be the adoption of new CPSC regulations to create clear standards for all lithium ion batteries used in mobility devices, including e-bikes, that currently avoid scrutiny under de minimis. The best way to protect the public from untested and unsafe lithium ion batteries is to be able to identify and turn them away at the border before they enter the United States.
This one-two punch of federal policy and trade and consumer product safety working together would help ensure that the e-mobility products that Americans need and want are as safe as possible. It would also shift the economic benefit from selling these products back to responsible manufacturers and retailers in the United States. This would be a big win for the government, the economy, and consumers alike.