Trade restrictions created as result of the coronavirus COVID-19 crisis will change trade years from now and may lead to fewer international shipments in the medical arena, panelists said on a webinar March 26 hosted by the Washington International Trade Association.
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The Senate Finance Committee chairman, joined by 11 other Senate Republicans, is asking President Donald Trump to consider a total moratorium on new or raised tariffs, as well as examining how tariffs and import and export restrictions specific to medical supplies can be tackled. They praised the Office of the U.S. Trade Representative for excluding some medical supplies from Section 301 tariffs since the novel coronavirus COVID-19 pandemic spread to the U.S., but said a wider review should be done to make sure none remain. And they encouraged him to coordinate with other countries that have imposed export restrictions in response to COVID-19, so that there aren't cost increases and “critical supply shortages.”
While they are pleased that the Office of the U.S. Trade Representative is seeking information about how Section 301 tariffs are hindering the fight against the spread of COVID-19, three pro-trade Democrats told USTR Robert Lighthizer that “this move alone is not enough to stop the harm that is being done to our health care system and economy. We request that you temporarily suspend tariffs or at least greatly expedite and simplify the tariff exclusion process during this difficult time. Immediate tariff relief will have numerous positive effects, including reducing disruptions to existing supply chains and easing the economic burden on our companies and their workers.”
The coronavirus bill pending in Congress includes a provision that could help importers that have been unprofitable after the imposition of Section 301 or Section 232 tariffs. According to draft text of the CARES Act (Coronavirus Aid, Relief and Economic Security Act), companies can use the losses they incurred in 2018, 2019 or 2020 to get income tax refunds from the previous five years. They could apply now for those 2018 and 2019 losses.
The end of passenger flights between Europe and the U.S. has led to a two-thirds drop in air cargo capacity for those routes, said Neel Jones Shah, Flexport's global head of airfreight, during a March 24 webinar. “Freighters are stepping up, they are filling some of the gap, but rates are much higher,” Shah said. He said that for trans-Atlantic air cargo, importers should expect to pay $4 to $6 a kilogram.
More than 75 members of the House, both Republicans and Democrats, are asking the Defense Logistics Agency and the Office of the U.S. Trade Representative not to restrict purchase of personal protective equipment -- such as N95 masks, also called respirators, gloves, gowns, and shoe covers -- to U.S. sources. They say that importing is critical to stop the shortages.
The American Association of Exporters and Importers is asking the Trump administration to help importers and exporters deal with the impact of COVID-19 response measures, whether that impact is a cash crunch, the effects of telework or business decisions made in response to delays in shipments from China. The group is asking the administration to extend the time to respond to regulatory notices that are paper based, including entry filings deadlines, because telecommuting makes it more difficult to manage the paper flow. It is also asking CBP to extend the protest period for customs duties and decisions.
Tourism between the U.S. and Mexico is barred, beginning at 11:59 p.m. March 20, and continuing until April 20, but “this temporary alteration in land ports of entry operations should not interrupt legitimate trade between the two nations or disrupt critical supply chains that ensure food, fuel, medicine, and other critical materials reach individuals on both sides of the border,” the U.S. government said in a notice. Individuals engaged in lawful cross-border trade are specifically exempted from the restrictions.
Bold action from the administration to address the economic fallout of the COVID-19 response crisis is needed, the Business Roundtable said in a letter sent March 18 to the Trump administration. It asked for “immediate tariff relief through the duration of the global pandemic," among other things. "Tariff relief can support the public health response as well as economic recovery. As an immediate step, the U.S. government should suspend tariffs on all medical and health products and other supplies necessary for the public health response to the COVID-19 outbreak.” It suggested that the administration work to ensure expedited customs clearance authorities, unspecified regulatory flexibility and, possibly, more money for transportation and port infrastructure. It criticized buy local provisions for goods needed for the epidemic, as well as export controls on those goods, saying they exacerbate scarcity problems.
The language of the U.S.-Mexico-Canada Agreement says that in order for the treaty to take effect on June 1 -- as U.S. officials have told Congress they want -- the countries would have to agree that they're ready 12 days from now. Kenneth Smith Ramos, a former top negotiator of the NAFTA rewrite, said the three countries cannot say they've completed their internal procedures by then. “#NotHappening,” he wrote in English at the end of a tweet in Spanish.