Good morning. A law that allows low-price packages to enter the U.S. duty-free and with little customs scrutiny has enabled the breakneck growth of two e-commerce companies with roots in China: Shein and Temu. 

Packages valued under $800 can enter the U.S. under simplified procedures known as the de minimis exemption. Lawmakers and some U.S. businesses say it is a loophole that the Chinese companies are using at a huge scale, allowing shipments of products that are unsafe or made with forced labor, while avoiding taxes.

• Big growth: A record of more than one billion packages entered the U.S. in the fiscal year ended Sept. 30 under the de minimis exemption—twice the 2019 level. A congressional study concluded that Shein and Temu alone account for about one in three of those packages.
   
• Tough scrutiny: The U.S.-China Economic and Security Review Commission, a government agency that makes policy recommendations to Congress, criticized Shein’s business practices, citing potential health hazards stemming from harmful chemicals in its products, waste and pollution caused by its high-volume production, and dozens of claims of copyright infringements. The companies also face allegations that forced labor has been used to produce the cheap goods they sell.
   
• Coming changes?: “We should just eliminate the exemption entirely,” said Rep. Mike Gallagher, a Wisconsin Republican who chairs the House Select Committee on the Chinese Communist Party.

Climate activists want SEC to copy California, Europe.

Climate activists are urging U.S. regulators to follow the footsteps of the European Union and California as they work to finish requirements for public companies to disclose their greenhouse-gas emissions.

The lobbying push relates to the most controversial aspect of the SEC’s proposed rule: a provision that some firms estimate the greenhouse-gas emissions not just of their own operations, but also those of their suppliers and customers. Disclosure of what are called Scope 3 emissions is mandated in California’s and the EU’s new laws.

Bankman-Fried struggles on the stand.

FTX founder Sam Bankman-Fried, who on Thursday took the stand at his criminal trial without the jury present, struggled to answer some of the prosecution’s most pointed questions. The FTX founder said he couldn’t recall whether he had conversations with lawyers about key decisions while running the exchange. Assistant U.S. Attorney Danielle Sassoon pressed him to answer whether he recalled having conversations with FTX lawyers prior to November 2022 about Alameda Research spending FTX customer money. “I don’t really specifically. No,” he said.

At one point, U.S. District Judge Lewis Kaplan instructed Bankman-Fried to stop being evasive. “Henceforth, listen to the question and answer the question directly,” he said.

• A U.S. federal trade agency on Thursday found that Apple violated the patent of a rival tech company, a ruling that could lead to an import ban for certain models of the company’s smartwatch.
   
• A raft of cannabis businesses have sued to strike down marijuana restrictions now in place under the federal Controlled Substances Act.
   
• The federal government is investigating allegations of botched customer service by loan-processing companies over their handling of questions about the resumption of student-loan repayments following a three-year pandemic pause.
   
• Brazil is on track to create a regulated carbon market ahead of next month’s United Nations climate action summit, fueling hopes of an export boost despite a controversial decision to exclude the country’s agricultural sector.

U.S. economy grew a strong 4.9%, driven by consumer spree that may not last.

U.S. economic growth surged this summer at the fastest pace since 2021, as consumers spent at a blockbuster rate that will be difficult to sustain.

Gross domestic product expanded at a 4.9% seasonally- and inflation-adjusted annual rate in the third quarter—more than double the second quarter pace—the Commerce Department reported Thursday. But there are warning signs underlying the eye-popping numbers. Americans saved less and their incomes, adjusted for inflation, fell over the summer.

• As Israel signals that it is closer to launching its anticipated ground offensive, U.S. and European officials are urging caution in an effort to minimize a prolonged urban war.
   
• The U.S. said it launched strikes Thursday night on two bases in eastern Syria it believed were used by Iranian groups, the first U.S. offensive military response to a wave of drone and rocket attacks on troops based in Iraq and Syria, the Pentagon said.
   
• Hurricane Otis, the most powerful hurricane to hit Mexico’s Pacific Coast, left at least 27 people dead and four missing in the popular beach resort of Acapulco amid widespread flooding and devastation.
   
• The European Central Bank held interest rates steady, ending a historic run of 10 consecutive rate increases as Europe’s currency union teeters on the brink of recession and uncertainty rises around the global economy.
   
• Wall Street is betting on a messy and divided recovery for U.S. city mass transit systems.

Americans still have a gnawing fear of inflation and what it can do to their personal finances.

• LinkedIn is using generative AI to respond to questions from employees and suppliers on cybersecurity. Its success rate is 90% in early testing. 
   
• A tax code change that affects how companies account for R&D costs is walloping businesses of all sizes.
   
• Detroit scored an unusual win. Its ranking as a venture-capital destination is soaring.

• Ted Pick is a math whiz among math whizzes. He’s also the new Morgan Stanley CEO.
   
• Muslim and Jewish Americans are reporting more harassment, intimidation and assaults since the Oct. 7 Hamas attacks in Israel.
   
• Earlier this month, reporter Ray A. Smith decided to take on the challenge of a lifetime: Try a CEO’s morning routine for one day.
   
• Smuggling migrants toward the U.S. is a booming business.
   
• Wall Street Journal reporter Evan Gershkovich turned 32 on his 211th day of incarceration in a Russian prison as the White House continues to work to secure his release.

Follow us on X at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

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