At Neville Peterson LLP, we’re continuing to work in remote mode, assisting our clients and trying to keep international trade rolling along.  Herewith, the latest news affecting international trade.

Food and Drug Administration

The FDA revoked Emergency Use Authorization (EUA) approvals for more than 60 Chinese makers of protective masks which are similar to the N95 respirator device. FDA explained that the withdrawals to quality issues found by federal regulators with the imported products which were determined not to have a particulate filtration efficiency of 95%. As a result, the updated list of authorized respirator producers from China now only lists 14 qualified manufacturers.

The FDA also updated its Emergency Use Authorization to provide that only manufacturers, and not importers, can request to be added to “Appendix A” which lists filtered faceplate respirator (FFR) manufacturers eligible for importation, “Importers will no longer be allowed to submit a request to add an FFR to Appendix A” the agency said.

Potential importers and traders should also be aware of the high levels of fraud being attempted in connection with PPE purchases. Our firm recently performed due diligence on a company’s proposed purchase of some 25 million N95 respirators and quickly determined that the offer was fraudulent. There were a number of indicators that “raised red flags” during the due diligence process. The offer to produce and deliver 25 million 3M respirators was clearly bogus in light of the fact that 3M only produced 20 million N95 respirators in the last year. We stand ready to assist clients in evaluating potential PPE purchases.

United States International Trade Commission

A report by the United States International Trade Commission (ITC) identified 112 line items in the Harmonized Tariff Schedule describing goods which are needed to fight COVID-19. While the majority of these 112 tariff lines are not subject to regular or Section 301 duties, there are approximately 55 HTS ten-digit statistical numbers which are subject to Section 301 tariffs which have not yet been the subject to exclusions issued by the United States Trade Representative. Goods which have not received exclusions include diagnostic testing instruments, protective gear and medical oxygen. Both House Ways and Means Committee Chairman Richard Neil (D-MA) and Senate Finance Committee Chairman Chuck Grassley (R-IA) have joined in a request that tariffs for all of these products, which range from 2.5% to 16% plus Section 301 duties in some cases, be the subject of tariff suspensions for at least a ninety day period. As of this writing, USTR had not responded or taken any action in response to the ITC report or Congressional pleas. Which makes one wonder why Congress has not simply legislated the tariff suspensions, which it has the power to do. 

Confusion from the White House:

In a recent television interview, the President raised the possibility that he might hike tariffs further on Chinese goods as a punishment for China’s role in the COVID-19 outbreak. The President indicated that “we are not going to get rid of tariffs.” Pressed by importers as to whether the Administration might consider waiving Section 301 tariffs on Chinese goods to enable United States firms struck by COVID-19 to be more competitive, the President demurred, asserting that the government has “taken those tariffs and given a lot of them to the farmers and farmers that would have really been forced out of business by China when they were targeted.”

Separately, U.S. and Chinese trade negotiators publicly reaffirmed their adherence to President Trump’s “Phase One” trade agreement with China, under which China is to purchase $200 billion of American goods over the next 2 years. Many observers have questioned whether interruptions in global supply chains caused by the COVID-19 crisis will make it impossible for China to fulfill its purchase commitments.

Customs and Border Protection

Noting that importers have goods arriving in May or June cannot benefit from the ninety-day-tariff deferral the Administration offered for MFN duties, a number of Republican senators have expressed interest in extending the duty deferral program through statute. Senator Roy Blunt (R-MO). a member of the GOP leadership, indicated that he was open to the idea that a further tariff extension could be part of the next COVID-19 relief package senators Mike Rounds (R-SD) and Richard Blumenthal (D-CT) were both open to further tariff relief, although the notion was opposed by Senator Rand Paul (R-KY), who expressed opposition to the idea (but apparently did not realize that the proposal was for duty-payment suspension, and not forgiveness)

“Low value” commercial shipments valued at $800 or less are flooding Customs’ systems, as homebound consumers turn to online sales to provide needed goods. To address processing problems, a new Cargo Systems Messaging Service bulletin, #42629672, which provides additional  instructions for importing low-value packages, whether on carrier manifests or through Type 86 Customs entries. CBP has director carriers to limit master bills of lading to  a maximum of 10,000 related House (NVOCC) bills, and has directed that all Master and House B/Ls be filed in the Automated Manifest System before an entry is made. Truck shipments are limited to 100,000 waybills per filing, but a single truck crossing can count as multiple truck trips. Other carriers are being urged not to transmit more than 20-30,000 bills per hour.

Commerce Department New Section 232 Investigations Commenced

The Commerce Department has commenced two new investigation regarding whether imports of products pose a threat to national security and require “import adjustment” under Section 232 of the Trade Expansion Act of 1962. The new inquiries involve Mobile Cranes and Laminated Cores for Power Transformers. In both cases, domestic manufacturers contend that they are being driven out of business by unfair competition and cheap imports. The President also signed an executive order authorizing the Department of Energy to cease purchasing imports of certain power plant equipment, particularly from China and Russia.

United States Trade Representative

The US Trade Representative released two more sets of Exclusions from Section 301 tariffs on Chinese goods, a large set of exclusions from Tranche 3 tariffs (currently set at 25% ad valorem) and this morning a smaller set of exclusions from Tranche 4 tariffs (currently at 7.5% ad valorem, reduced from 15%). The Tranche 4 exclusion contains some medically related goods, such as dental floss, hospital ID wristbands, pill crushers, and Bluetooth tracking devices,

For help regarding these or other trade topics in these challenging times, please contact a Neville Peterson LLP professional.