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Expanded Tariff Relief, Other Trade Measures Sought by Businesses for COVID-19 Response

Monday, April 27, 2020
Sandler, Travis & Rosenberg Trade Report

Two major U.S. business groups are calling for tariff relief and other measures to help their members respond to and recover from the COVID-19 pandemic and the measures taken to minimize its impact.

(Sandler, Travis & Rosenberg has launched a new resource page to help members of the trade community keep track of the latest COVID-related policies and procedures and understand how best to respond. ST&R will also be conducting COVID-related webinars this month on the regulatory and policy framework and the impact on trade. In the meantime, this ST&R article identifies steps trade businesses can take to mitigate the effects of the crisis.)

Both the National Association of Manufacturers and the U.S. Chamber of Commerce are calling for additional duty and tariff relief. Both said the U.S. will need increased supplies of personal protective equipment and other essential goods in the near term that cannot all be sourced in the U.S. NAM therefore called on the administration to facilitate trade in these items, including by avoiding the imposition of additional tariffs and export restrictions (the Federal Emergency Management Agency has already restricted exports of some PPE).

The Chamber went further, calling for the U.S. to unilaterally lift tariffs related to medical products and pharmaceutical inputs from all countries, not just Section 301 tariffs on China. The Office of the U.S. Trade Representative has granted Section 301 tariff exclusions for some medical products needed for the pandemic response and has initiated a process to consider others. However, the Chamber said it would be more effective to just eliminate all medical product tariffs, stating that the USTR process (1) is time-consuming, (2) requires specific inputs to be linked to COVID-19 response efforts, which is sometimes impossible, and (3) diverts the attention of medical officers, scientists, and public health experts from “the more pressing demands of procurement, advanced R&D, and manufacturing.”

Moreover, the Chamber said, the administration should automatically extend all Section 301 tariff exclusions slated to expire in the coming months and work with other countries on a World Trade Organization agreement to eliminate all tariffs on medical devices and PPE for the duration of the COVID-19 crisis.

In the longer term, NAM said that once the U.S. begins to focus on economic recovery efforts it should take the following steps to encourage exports and facilitate trade.

- expedite duty drawback payments and Section 301 tariff refunds

- extend tariff relief programs such as the miscellaneous tariff bill and the Generalized System of Preferences

- increase the competitiveness of the Export-Import Bank

- recommit to an active trade agenda, including by restarting phase two China trade agreement negotiations and launching negotiations on trade agreements with the European Union, United Kingdom, and Kenya

- postpone internal U.S. government discussions on potential U.S. withdrawal from the World Trade Organization generally and WTO agreements specifically

- expand U.S. government export promotion programs

- develop a targeted list of products for which Section 301 tariffs and retaliatory tariffs can be suspended or removed and, in the interim, credit tariffs being paid back to the companies affected

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