Protectionism at Home and Abroad
As countries are working to contain COVID-19 among their respective populations, a disturbing trend is appearing that is impacting legitimate commerce.
In the United States, the President has invoked the Defense Production Act – a law designed to use the power of the federal government to compel companies to take action. Notably, the government used it to compel GM to make ventilators which they were already working on.
Late last week, the President signaled his intent to use it on 3M in order to ensure a sufficient supply of masks and respirators for the domestic market by prohibiting them for export. The White House and 3M have since reached agreement allowing for exports, but this same “keep it here” has begun to appear in other countries.
In India, the government was prohibiting the export of a number of potential treatment drugs, but has since lifted the ban after pressure from the United States.
What we are hearing now is that the European Union has taken steps to prohibit the export of any commodity that can be used for medical support during the pandemic. They are reviewing export manifests in greater detail and generic words such as “textiles” are triggering a delay while the actual commodity is relayed to them. Customs authorities see textiles as having the potential to be used to make masks when they are instead specifically for a different industry such as automotive and do not have the ability to be repurposed for medical use.
This increased scrutiny has also been extended to plastic parts as well.
Overcrowded ports, coupled with blanked sailings for Easter and a drop in shipping volumes, mean any type of hold associated with additional customs scrutiny has the potential to cause a multiple-week delay.
The declaration from the Commission dated March 14th is attached. The challenge we have is that there are some numbers which are “dual-use”. In other words it is a generic classification that can be used for multiple items.
We are speaking with exporters to ensure that we provide more detailed descriptions for bills of lading and export declarations to eliminate the potential for confusions and subsequent holds. We will also continue to work very hard with customs authorities to try to prevent these delays.
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