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This Week In Trade

COVID-19 tariff exclusions requests start coming in as U.S. grapples with pandemic

Posted: March 23, 2020

As of Monday morning, the Office of the U.S. Trade Representative has already received 339 comments stemming from its Friday launch of a COVID-19-related tariff exclusion process for products subject to Section 301 tariffs.

U.S. Trade Representative Robert Lighthizer launched an exclusion process that could exempt more products from the administration’s Section 301 tariffs on Chinese goods after taking flack for tariffs on Chinese medical products, according to a March 20 Federal Register notice. Lighthizer has denied the tariffs have negatively impacted the administration’s ability to respond to the coronavirus pandemic.

Comments received to date have not yet been posted online. The comment period for COVID-19-related tariff exclusions will be open until June 25.

USTR will issue exclusions on a “rolling basis,” USTR’s March 20 notice said. Companies are encouraged to contest exclusion requests within three business days. Each submission “must identify the particular product of concern and explain precisely how the product relates to the response to the COVID-19 outbreak.”

Comments may be submitted for any product covered by the Section 301 tariffs, which are hitting roughly $320 billion worth of Chinese goods. Comments will be accepted even on products subject to pending or denied exclusion requests, the notice says.

In competing op-eds last week, Lighthizer and former USTR Robert Zoellick argued over whether the Section 301 tariffs have affected U.S. preparedness for a global pandemic. Zoellick claimed USTR’s willingness to offer tariff exclusions on medical products was akin to admitting the administration’s policy of “economic isolationism” had failed. Lighthizer responded by saying the U.S. did not impose tariffs on several key goods and contended that medical products that did face tariffs were being replaced by goods from other countries.

The opening of an exclusion process has not quieted calls for USTR to just lift some Section 301 tariffs. “As it seeks to mitigate the impact of the coronavirus, the U.S. government should remove the artificial barriers it has imposed that prevent Americans from buying critical medical supplies from the most affordable and ready supplier possible, whether that is China or any other nation,” Daniel Griswold, a co-director of the trade immigration project at the Mercatus Center at George Mason University, said in a Monday op-ed published in The Hill.

Meanwhile, Congress remains deadlocked over an economic stimulus package aimed at mitigating the economic impacts of the outbreak -- which could hamper global trade.

The administration is also still considering an executive order meant to encourage the reshoring of U.S. pharmaceutical and businesses. White House trade adviser Peter Navarro had said he hoped to have the order ready by the end of last week, but the administration has yet to announce such action.

But Navarro’s efforts are receiving pushback from generic and brandname drug producers. The Association for Accessible Medicines says that while it supports the long-term goal of returning some pharmaceutical manufacturing to the U.S., it is not an adequate response to the coronavirus pandemic.

“As it seeks to mitigate the impact of the coronavirus, the U.S. government should remove the artificial barriers it has imposed that prevent Americans from buying critical medical supplies from the most affordable and ready supplier possible, whether that is China or any other nation,” the association said in a March 20 fact sheet.

“This Big Pharma spin is simply a desperate attempt to stop President Donald J. Trump from moving the production of our essential medicines and medical equipment and supplies to the U.S.,” Navarro told CNBC last week, referring to Pharmaceutical Research and Manufacturers of America lobbying efforts.

“Geographic diversity in the pharmaceutical supply chain enables manufacturers to make adjustments as needed to avoid shortages, which is especially important during national disasters and global pandemics,” PhRMA said in an email. “Now is not the time for sweeping changes to the pharmaceutical supply chain that could cause disruptions.”

As for USTR’s operations during the pandemic, Inside U.S. Trade reported last week that the agency has remained largely silent. It has referred to Office of Management and Budget guidance in response to questions about how the outbreak might affect operations, negotiations and more -- but said nothing else.

Virtual events

A few trade-related events are still scheduled, albeit online. The Washington International Trade Association on Thursday will host a Zoom webinar on the role trade policy can play amid the COVID-19 outbreak. The panel discussion will include Wendy Cutler, the vice president of the Asia Society Policy Institute; Simon Evenett, a professor at the Swiss Institute of International Economics and Department of Economics, University of St. Gallen; and Ralph Ives, the executive vice president of AdvaMed.

The U.S. Chamber of Commerce will release its annual trans-Atlantic economy study on Thursday during a virtual event set to include Marjorie Chorlins, the Chamber’s senior vice president for European affairs; Susan Danger, the CEO of AmCham EU; Dan Hamilton, the president of the Transatlantic Leadership Network and a senior fellow at Johns Hopkins’ Foreign Policy Institute; and Joseph Quinlan, a senior fellow at the Transatlantic Leadership Network. -- Brett Fortnam (bfortnam@iwpnews.com)

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