TRADE IN THE TIME OF CORONAVIRUS: UPDATE #3

At Neville Peterson LLP, we’ve transitioned to a remote working environment, and remain fully operational during the Coronavirus National Emergency. Perhaps a bit less well-groomed than we started, but operational nonetheless Now, more than ever, it is essential for businesses and their service providers to remain in contact and available to provide assistance. This is our latest update on the state of trade during these trying times.

No Tariff Deferral Forthcoming:  While trade groups and importers have implored the Administration to provide some sort of tariff relief during the National Emergency, such as a deferral of payment for Customs duties, the idea was recently rejected. National Economic Adviser Larry Kudlow shot the idea down in a recent interview with Bloomberg News, saying that while a plan to defer payment of Most Favored Nation (MFN) tariffs had been considered, it was rejected as being “too complicated” and because it “might send the wrong signals”.

United States Trade Representative:  Prospects for June 1, 2020 enactment of the United States-Mexico-Canada Free Trade Agreement (USMCA), the recently-agreed replacement for NAFTA, failed after the United States and Mexico failed to meet an April 1, 2020 deadline to certify that they were ready for implementation. 

Canada issued a letter proclaiming its readiness on March 31, and Mexico followed with a letter on April 4th. If the US certifies its readiness during April, a July 1, 2020 USMCA implementation is still possible.

USTR also quietly reversed two Section 301 exclusion denials it had issued to GOJO Industries, the maker of Purell Hand sanitizer. On April 3, 2020, the USTR granted GOJO exclusions for certain e-collars and pumping stations, after the press had reported the earlier denials.

Food and Drug Administration (FDA):  The FDA has broadened its Emergency Use Authorization (EUA) to allow the importation Chinese-made KN-95 respirators, provided they are “authentic”. Our firm has prepared a guide and supporting materials for persons looking to import masks and respirators to combat the spread of the Coronavirus.

Customs and Border Protection (CBP) – CBP has announced the formation of a “COVID19 Cargo Resolution Team” within the Pharmaceuticals, Health and Chemical Center of Excellence and Expertise. The CCRT “triage incoming inquiries, coordinate with affected ports, and respond directly as appropriate”, in an effort to expedite the importation of legitimate medical devices and personally protective equipment (PPE). The CCRT can be contacted at COVID19_RELIEF_IMPORTS@cbp.dhs.gov.

CBP is still operating a toll-free number to reach the Centers of Excellence  and Expertise (CEE) on these matters – 1-866-295-7624.

Customs has also closed its Anchorage Port Office for at least 14 days, after an employee in the office tested positive for COVID-19.  During the closure, packages, physical correspondence, petitions and samples should be directed to the CBP cargo office at Anchorage’s Ted Stevens International Airport.

Customs is making adjustments in other cities as well. The San Francisco port has reduced operating hours and staffing for its Entry Branch, and has indicated that import specialists will  be working from  home, with a few staffing the office two days a week. Customs’ Miami office has indicated that all submissions to the Fines, Penalties and Forfeitures office should be submitted by email at miamifpf@cbp.dhs.gov, and payments should be made through Pay.Gov.

Meanwhile, CBP Headquarters has urged port offices to exercise “maximum discretion” in trying to ensure trade flows and in dealing with problems arising from  the coronavirus pandemic This includes increased demand for Customs bonded warehouses and other facilities to store inbound cargoes while importers’ businesses are closed. Another problem arises with cargo resting at the ports as the lay order period expires, and the goods are threatened with being sent to General Order storage.

Our firm has already filed several applications to allow “constructive bonded warehousing”.

U.S. International Trade Commission: The ITC has closed its building to the public through at least April 24, 2020. The Office of the Secretary is accepting electronic submissions only. The Commission has noted that the Office is the Secretary is not monitoring general phone lines. Persons with inquiries should e-mail the Office of the Secretary and a staff member will respond.

United States Court of International Trade (CIT):  The CIT has closed its courthouse at One Federal Plaza in Manhattan altogether, Clerk Mario Toscano announced, and will conduct business electronically only. Hearings will be done by teleconference or electronic link. Our firm  participated last week in an antidumping appeal conducted by teleconference, with 20 participants from across the country, and it was efficiently handled. Trials, where needed, will pose a thornier problem, and are likely to be deferred or postponed.

The Scramble for Supplies:  As the coronavirus pandemic spreads, various anxious countries have imposed export bans or restrictions on critical medical supplies, such as masks, respirators, ventilators, and personal protective equipment (PPE). President Trump, in invoking the Defense Production Act to direct Minnesota’s 3M corporation to produce masks, requested the company to cease exports of masks to Canada and Latin America. The company objected, saying it would not abandon those markets, where its products form a significant part of supplies. Canadian Prime Minister Justin Trudeau, along with several Provincial Premiers, objected, noting that trade in these products is a “two way street”.  India banned exports of the antimalarial drug hydroxychloroquine, which President Trump has touted as a treatment for COVID-19, although his medical and scientific advisers have noted there is no clinical proof of the drug’s effectiveness.

United States trade advisers have also decried the country’s dependence on China to supply some of these essential items, noting that the US imported some $12.8 billion worth of drugs, medical supplies, active pharmaceutical ingredients and essential food products from China in 2018.

In an effort to reduce red tape for medical suppliers, the Department of Justice, Antitrust Division recently issued a determination that joint sourcing, logistics and shipping operations being carried out by five (5) major medical suppliers – McKesson, Owens & Minor, Cardinal Health, Medline Industries and Henry Schein – did not violate antitrust rules.

If you have any questions regarding these issues, please contact any Neville Peterson LLP professional.