March 26, 2020

GOP Advocates for Trade Relief for Companies Impacted by COVID-19

Leading Senate Finance Committee Republicans laid out a list of trade actions on March 25 that they believe the Trump administration should consider to help to ease the economic downturn tied to the coronavirus pandemic. A copy of their letter to President Trump can be found here.

The influential group, led by Sen. Chuck Grassley (R-IA), suggested various relief measures would be welcome to support the stalling economy and also cautioned against the administration’s suggestions of new “Buy American” requirements. The administration recently floated a proposal that would restrict government agencies’ purchase of pharmaceuticals and medical products to U.S.-made goods only, and there is language in the proposed CARES Act that would require an evaluation of the U.S. medical supply chain, including U.S. reliance on critical drugs and devices from outside of the United States.

The letter laid out some concrete steps that it suggested the administration could pursue to immediately reduce the burden on the U.S. economy, emphasizing to the president that “One area where you have immediate tools at your disposal to decrease the economic harm from COVID-19 is trade policy.” Among the specific trade policy-related suggestions from the senators were to:

  • Increase coordination among U.S. trading partners to lessen import and export restrictions on COVID-19 materials to address the global pandemic.
  • Refrain from any executive orders that would require U.S. government agencies to purchase U.S.-made drugs and medical supplies, which would risk “paralyzing an utterly critical supply chain[.]”
  • Remove existing Section 301 tariffs on Chinese-origin medical supplies and equipment. While the U.S. Trade Representative's Office recently opened a period for public comment to reduce such tariffs, the senators emphasized that the administration can be more proactive in targeting key tariff provisions for immediate tariff relief.
  • Expand tariff relief under the current Section 301 exclusion, including by automatically extending for one year any exemptions for products that have already been granted, and approving requests that were previously denied.
  • Provide a voluntary 90-day deferral on the collection of duties for importers that request it in order to help increase liquidity.
  • Impose a “total moratorium” on any new tariffs or tariff increases, and suspend any pending or new tariff actions such as those that may be contemplated against the EU in the ongoing trade dispute over civil aircraft subsidies.

Time will tell whether the administration takes any of these suggested trade relief measures to heart, but the economic benefits would likely be tangible for many U.S. businesses. Companies that have been impacted by the tariffs and the COVID-19 virus should follow these developments closely and consider appropriate options to protect their interests.

As the number of cases around the world grows, Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.

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