TRADE IN THE TIME OF CORONAVIRUS: UPDATE #5

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       At Neville Peterson LLP, we’ve transitioned to a remote working environment, and remain fully operational during the Coronavirus National Emergency. We get together by Skype biweekly, and we’re getting to see who dyes their hair and who does not. Remarkably, not much dyeing, but a whole lot of honestly earned gray. As one NPLLP professional advised a child, “Each gray hair means you’ve had a profound thought”. And the child advised the NPLLP professional, “Well, by that measure, you’re about out of ideas!”

Child discipline measures are of course confidential, but your naturally-hued NPLLP professionals remain ready to deal with client inquiries. Now, here’s what’s going on:

Customs Allows Temporary, Grudging, Limited, Duty Payment Deferrals

            President Trump on April  19th signed an Executive Order authorizing the Treasury Department to issue a temporary regulation which provides importers with a temporary, limited – and somewhat grudging -- extension of time to pay certain Customs duties.

            The regulation provides importers with a 90-day postponement in paying certain Customs duties if the importer can show that it has experienced “significant financial hardship” as a result of COVID-19. “Significant Financial Hardship” is defined to exit where the operations of the importer have been fully or partly suspended by operation of a governmental order, and the importer’s gross receipts for the period March 13-31, 2020 are less than 60 percent of gross receipts for the corresponding period of 2019.  Importers can self-certify their entitlement to the extension, but must retain records to document the claim to CBP.

            However, the extension does not apply to any entries which include goods:

  • Subject to an antidumping or countervailing duty order;

  • Subject to safeguard tariffs imposed under Section 201 of the Trade Act of 1974;

  • Subject to retaliatory tariffs imposed under Section 301 of the Trade Act of 1974; or

  • Subject to Section 232 retaliatory tariffs under the Trade Expansion Act  of 1962.

The extension is thus limited in scope and duration.  CBP has indicated that delinquency interest will not apply for the 90-day period for which payments are suspended.

            Cargo Systems Messaging Service notice #4243171 contains additional information regarding the deferrals.

FEMA Announces Exceptions to Export Detention Order

            As previously reported the Federal  Emergency Management Agency has ordered Customs and Border Protection to detain proposed exports of medical supplies deemed necessary to address the COVID-19 pandemic. CBP has been directed to temporarily detain exports pending a determination  of whether the export will be allowed, redirected to domestic needs, or subjected to a “rated order” allowing partial exports.

            FEMA has now issued new guidance providing additional exceptions to the export detention orders. Exempt shipments have been expanded to exclude

  • Shipments to U.S. Commonwealths and Territories, Including Guam, American Samoa, Puerto Rico, U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands (Including Minor Outlying Islands). 

  • Exports of Covered Materials by Non-profit or Non-governmental Organizations that are Solely for Donation to Foreign Charities or Governments for Free Distribution (Not Sale) at their Destination(s).

  • ·Intracompany Transfers of Covered Materials by U.S. Companies from Domestic Facilities to Company-owned or Affiliated Foreign Facilities. 

  • Shipments of Covered Materials that are Exported Solely for Assembly in Medical Kits and Diagnostic Testing Kits Destined for U.S. Sale and Delivery. 

  • Sealed, Sterile Medical Kits and Diagnostic Testing Kits Where Only a Portion of the Kit is Made Up of One or More Covered Materials That Cannot be Easily Removed Without Damaging the Kits.

  • Declared Diplomatic Shipments from Foreign Embassies and Consulates to their Home Countries.  These May be Shipped via Intermediaries (Logistics Providers) but are Shipped from and Consigned to Foreign Governments. 

  • Shipments to Overseas U.S. Military Addresses, Foreign Service Posts (e.g., Diplomatic Post Offices), and Embassies. 

  • In-Transit Merchandise:  Shipments in Transit through the United States with a Foreign Shipper and Consignee, Including Shipments Temporarily Entered into a Warehouse or Temporarily Admitted to a Foreign Trade Zone. Shipments for Which the Final Destination is Canada or Mexico.

  • Shipments by or on behalf of the US Government, including its military.

FDA, Customs Work to Streamline Imports of COVID-19 Supplies

            The Food and Drug Administration and United States Customs and Border Protection are working to expedite the importation of protective equipment and other medical supplies needed to provide relief during the Coronavirus pandemic. The FDA has set up a special import assistance page on its website, with contact information for persons seeking to expedite FDA clearance of incoming medical supplies. Email inquiries can be addressed to covid19FDAImportingInquiries@fda.hhs.gov.

In addition, Customs has migrated its email box for the COVID-19 Cargo Resolution team to a new web-based portal, according to CSMS 42364745. The new portal can be found at http://imports.cbp.gov.

        The Food and Drug Administration has also issued an Emergency Use Authorization covering imported face shields. The EUA sets out conditions for allowing the importation of face shields which have not previously been registered with or approved by the agency on an FDA form 510(k).

            FDA and some states are also reporting shortages of fluids needed to conduct dialysis procedures. COVID-19 patients are suffering an abnormally high rate of kidney failure, necessitating that they be placed on dialysis. This is creating regional shortages of the fluids required for the procedure.

European Union

As countries struggle to find needed medical supplies and some (including the United States) lock exports of such supplies, EU Trade Commissioner Phil Hogan is calling on governments to suspend tariffs on essential medical supplies, and has proposed the initiation of negotiations aimed at seeking a permanent worldwide elimination of tariffs on medical products similar to the Information Technology Agreement (ITA) which eliminated tariffs on computer and many telecommunications products.

Department of Justice

The Justice Department is issuing guidance in a number of cases and is changing procedures as a result of the Coronavirus pandemic.

DOJ has assigned Assistant United States Attorneys in all U.S. Attorneys’ offices to provide counseling on possible price gauging in the sale of necessary medical equipment.

In addition, the Justice Department has provided updated guidance to its March 31, 2020 order regarding Temporary Suspension of Affirmative Civil Debt Collection and Enforcement Activities During the COVID-19 Pandemic. DOJ has temporarily stopped affirmative civil debt collection and enforcement activity. It has clarified that the Justice Department may still file liens against debtors’ property and that United States attorneys may collect settlement payments pursuant to a voluntary settlement agreement. Limitations on taking action to enforce debts and civil penalties are currently scheduled to continue through May 31, 2020.

USTR/USMCA

The United States Trade Representative and other government agencies continue to work toward a proposed July 1, 2020 implementation of the United States-Canada-Mexico Agreement (USMCA),  the proposed replacement for the North America Free Trade Agreement. CBP has indicated that preliminary implementation structures may be posted on its website imminently. As of this writing, they had not been posted.  

A bipartisan group of Congressmen recently wrote to USTR requesting that implementation of the automotive rules of origin for USMCA be delayed, since most automakers are currently shut, and they require more time to work with their first and second-tier suppliers on implementation. USTR was initially opposed to any delay, but reportedly is willing to reconsider.

          Although USTR sought public comments regarding additional Section 301 exclusions for devices essential to the COVID-19 response, it has not yet issued any new exclusions.

Short Takes

We’ve noted some billing discrepancies from Customs for Section 301 tariffs for entries made during late May and early June 2019. This was the period when Section 301 tariffs Tranche 3 products were increased from 10 percent to 25 percent ad valorem, and the effective date was something of a moving target. Importers should review their bills accordingly.

USTR has announced its intention, once again, to revoke the exclusion from Section 201 measures on solar panels given to Bifacial Solar Panels. However, a Court of International Trade injunction currently blocks implementation of any such change.

          For help regarding these or other trade topics in these challenging times, please contact a (naturally-hued, well-groomed) Neville Peterson LLP professional.