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This Week In Trade

COVID-19 response: U.S. groups call for a lifting of export controls, tariffs

Posted: March 16, 2020

Tariffs, export controls and global supply chains are all part of a growing debate over how governments should respond to the coronavirus pandemic, with U.S. groups this week calling on other countries to refrain from using export controls and for the U.S. to lift tariffs on Chinese goods.

Export controls are being implemented in Europe on medical products, to the ire of U.S. consumer goods companies. U.S. lawmakers are calling for the administration to work to make America less reliant on China for pharmaceuticals. Meanwhile, government employees are being encouraged to work from home as events across the District have been postponed, canceled or moved online.

The Consumer Brands Association, formerly the Grocery Manufacturers Association, is warning that export controls enacted in India, Germany, France, the Czech Republic, Turkey and Russia could limit the U.S. supply of vital medicines, cleaning products and medical goods.

“In response to the COVID-19 outbreak, we have already seen multiple countries enact restrictions on the export of base materials, chemicals, medical supplies and ingredients,” the group wrote in a March 15 letter to U.S. Trade Representative Robert Lighthizer and Secretary of State Mike Pompeo. “If other countries were to follow suit by significantly disrupting the supply chain of these critical ingredients, it could substantially increase the risk of product shortages in the United States, and thus pose a serious threat to the public health.”

The group noted that export restrictions imposed by India on 26 active pharmaceutical ingredients and medications, including acetaminophen, which is used in over-the-counter medicines “to treat the flu-like symptoms caused by COVID-19,” the letter says.

Other countries have imposed export controls on medical products like masks, gloves and suits -- goods that are already reportedly in short supply in the U.S., according to the letter.

“Global export restrictions drastically increase the risk that the United States will face shortages of products that are vital to responding to COVID-19, and consequently pose a serious threat to public health,” the letter says. “Moreover, issues could compound quickly if similar restrictions affected products intended for food, nourishment and recovery of the general population. To avoid these consequences and get ahead of any potential compounding concerns, Consumer Brands urges the Department of State and the USTR to take all possible actions to combat these export restrictions and protect the global supply chain.”

The U.S. Chamber of Commerce, meanwhile, on Monday reiterated its call for the U.S. to lift tariffs on Chinese goods, a request some House Democrats and retail groups made last week. “I think they’re going to have to show some flexibility on tariffs because it hurts our country it hurts our small businesses it hurt employees and I think we have to lower the tariffs right now,” Myron Brilliant, the Chamber’s executive vice president and head of international affairs, said on a video conference with reporters on Monday.

Chad Bown, a fellow at the Peterson Institute for International Economics, says U.S. tariffs have hampered the U.S.’ ability to fight back against the coronavirus outbreak. “In the aggregate, U.S. imports of Chinese medical products hit with 10 to 25 percent U.S. tariffs beginning in 2018 fell by 16 percent, or nearly $200 million, between 2017 and 2019,” he said in a blog post Friday. “At the same time, U.S. imports of these products from the rest of the world increased by 23 percent. The differences were especially large in CT systems, patient monitors and pulse oximeters, and certain types of disposable medical headwear.”

White House trade adviser Peter Navarro is pushing for a “buy America” executive order he says could be signed by the end of the week, which would discourage the U.S. reliance on China for pharmaceuticals. “We have an executive order -- we're racing to the finish line,” he said on Fox Business News on Sunday. “We could sign it as early as the end of this week. It's a three-pronged strategy consistent with what President Trump has done from the get-go in terms of onshoring jobs. It's buy American, it's deregulate, and it's innovate technology.”

Sen. Marco Rubio (R-FL), citing conversations with President Trump, last week said the order would be a “first step toward increasing domestic production by enforcing Buy American requirements for pharmaceuticals & medical supplies & fast-tracking [Federal Drug Administration] approval.”

More broadly, planned trade negotiations have been canceled or postponed as travel restrictions and social distancing measures are being implemented across the globe. The World Trade Organization has canceled its meetings through April and postponed its 12th ministerial, which was set for June, indefinitely. EU Trade Commissioner Phil Hogan has scrapped a planned trip to Washington, DC, with a Commission official citing canceled events as the reason. Hogan was scheduled to give a speech at the Georgetown law school and travel to Canada to meet with other trade ministers to discuss WTO reforms. Both events were canceled. -- Brett Fortnam (bfortnam@iwpnews.com)

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