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Jul 20, 2023
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Shein and Temu: Western customs exposed to tax evasion?

Translated by
Jul 20, 2023

A US parliamentary report has condemned Shein and Temu for exploiting a customs loophole to evade taxes and human rights controls. Europe is not immune to this risk.


To import their products into the US market, Gap and H&M paid $700 million and $205 million respectively in customs duties last year. Shein and Temu paid zero dollars. This has prompted a parliamentary enquiry to reveal that the two Chinese e-tailers are circumventing customs by sending hundreds of thousands of small shipments that fall below the customs tariff threshold.

Under the so-called "de minimis" rule, imports worth less than 800 dollars are exempt from tax. Previously set at 200 dollars, this threshold was raised in 2016, leading to an increase in the number of 'de minimis' shipments. Thanks to their extremely low prices, Shein and Temu alone are responsible for a third of these micro-shipments, and the number is growing. By 2022, the two Chinese companies are estimated to have reached 600,000 daily shipments. And the Washington report is the first document to make the phenomenon official.

Having swept through the American market in the space of a few months, Temu is now joining Shein on the European market, raising the question of what protection the European Union has against these customs bypasses. European customs authorities have not yet responded to our request for information. But for the French Secretary of State for Ecological Transition, Bérangère Couillard, there is no doubt this poses a risk for Europe.

"Of course Europe could also be affected by this problem", the Minister told us on July 11. "We need to take a close look, because the way to combat Shein-style models is to study all their biases. And I think that if there are biases in the United States, it is probably also the case in Europe. At the same time, it's up to the Member States to make it clear that buying Shein has consequences for workers and the environment. This is to combat imports, which can arrive at prices defying all competition, which makes them attractive to consumers."

Shein and Temus shares of "de minimis" shipments to the U.S from China - Extrait du rapport parlementaire américain

On both sides of the Atlantic, the question of human rights is intrinsically linked to these customs issues. In the United States, the investigation by the US House of Representatives is part of the fight against products linked to the Uighurs, who have been banned from the American market. However, by evading US customs, Temu and Shein are also evading cargo controls linked to respect for human rights.

"The only step Temu has taken to ensure that it does not sell goods produced by forced labour is to require its sellers to agree to the 'Third Party Code of Conduct' on its website, which includes the boilerplate wording that the company has a 'zero tolerance policy' for the use of forced, indentured or prison labour. This code makes no mention of Xinjiang, the UFLPA (Uyghur Forced Labour Prevention Act) or any other legal provision," says the parliamentary report. 

The report also points out that, despite being valued at 100 billion dollars (compared to 64 billion for Shein), Temu has no programme for auditing or ensuring the compliance of its suppliers. Above all, the portal admits to the US authorities that it has no system in place to prevent the sale of products linked to Uighurs. Many of the 600,000 shipments passing under the US radar could therefore be the result of forced labour in Xinjiang.

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