About 35% of air cargo capacity worldwide has disappeared with the sharp drop in international passenger flights, according to Randy Stanley, UPS vice president for supply chain operations. Stanley and other UPS executives held a webinar April 3 on how the COVID-19 pandemic response is affecting cargo shipments. “Demand has significantly exceeded available capacity, especially on the trans-Pacific trade lane,” said Vito Losurdo, vice president of procurement, referring to air cargo. He referred to the Federal Emergency Management Agency's “air bridge” efforts to rush personal protective equipment to the New York region.
The Canadian government has sent its letter to the U.S. and Mexico certifying it is ready for the USMCA date of entry into force, Deputy Prime Minister Chrystia Freeland announced April 3, but a top Mexican official said his country did not certify it was ready by March 31, which means a June 1 date of entry into force is out of reach.
As countries seek to acquire needed supplies of ventilators, masks and other protective gear, the deputy director for trade and agriculture at the Organization for Economic Cooperation and Development said that nationalizing production of these goods is not the answer for the next pandemic. Julia Nielson, who was speaking on a Washington International Trade Association webinar April 2, said, “I don’t think nationalization of supply has ever meant security of supply.” She said that countries may need to consider the inventories they hold, and redundancies in where they get goods, but that given the way this pandemic is spreading in waves, relying on one country, even your own, could be risky.
As importers wait to hear whether duties can be deferred for 90 days after goods enter the U.S., voices for and against the proposal are speaking out. Reports have said that the deferral would be on most favored nation (MFN), but not sections 301, 232 or 201 actions. President Donald Trump has been coy about whether he will support such a move, or when (see 2004010047).
When asked during a press conference about stories that he would approve a temporary deferral of some tariffs (see 2003310073), President Donald Trump said that an executive order hasn't been presented to him, “so therefore, it's false reporting.” Still, “if we’re going to do something, we’d -- I’d be glad to let you know,” he said. “There's nothing wrong with doing it. But we'll let you know,” he said March 31. If the deferral measures are approved, CBP is expected to limit its deferral to regular, taxes and fees (see 2003300035).
After 47,000 stores in the U.S. closed in a week, Flexport says that so many companies can't take shipments arriving at East Coast ports that those ports are now shopping for more warehouse space. Because importing companies' warehouses are either full or closed, they tell the ports they'll pay demurrage charges for the goods to stay there. “The ports are actually worried now they won’t have enough space,” said Chandrakant Kanoria, Flexport's head of network operations, during a webinar March 31. He said Savannah is hoping to almost double its warehouse space, and the New York and New Jersey terminals are talking with warehouse providers to try to make room, as well. There are problems in the warehouse logistics ecosystem, as well, because Amazon warehouses stopped accepting any goods other than essentials.
Although the trade ministers of the G-20 agreed that nationalist approaches to medical supplies should be temporary, U.S. Trade Representative Robert Lighthizer told other countries' trade ministers that things will need to be different after the crisis passes, as well. “Unfortunately, like others, we are learning in this crisis that over-dependence on other countries as a source of cheap medical products and supplies has created a strategic vulnerability to our economy. For the United States, we are encouraging diversification of supply chains and seeking to promote more manufacturing at home,” he said March 30.
Nineteen of the 28 senators on the Finance Committee -- including Chairman Chuck Grassley, R-Iowa, and top Democrat Ron Wyden of Oregon -- told U.S. Trade Representative Robert Lighthizer that having the U.S.-Mexico-Canada Agreement start on June 1 is too soon.
Compliance is still a necessity even as the way business is conducted changes radically, Venable lawyers told those tuning in for a webinar March 30. Venable partner Lindsay Meyer said that if importers are going to be paying more to get goods that are in short supply, she wanted to remind them that “under the customs regulations, any agreement to change a price for an imported good must happen prior to export.” She said those changes are best reflected in writing, whether in the contract or in an email.
A recent report from the Congressional Research Service noted that even as some countries place export restrictions on supplies needed to fight the COVID-19 pandemic, the president could remove tariffs on medical supplies under Section 318 of the Tariff Act of 1930. The CRS noted the legality of this section has never been tested, but given that so far, federal courts have upheld the constitutionality of Section 232, it could be that the president could have such broad power to remove tariffs, as well.