Government Shutdown Impacts on Trade

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Government Shutdown Impacts on Trade

Author: sales@jsconnor.com

22-Jan-19

Government Shutdown Impacts on Trade

While the daily transactions of clearing import cargo through customs and processing export clearances through AES have, for the post part, avoided serious problems due to the government shutdown, there are some issues that could hurt trade participants.

For example, the office of the U.S. Trade Representative has issued exclusion approvals for Section 301 tariffs for almost 1,000 different requests covering the $34 million worth of products on list one. However, the ACE system through which we file customs declarations with CBP will not be updated to reflect the new exclusions until about 10 days after the government re-opens. In the meantime, importers eligible for the approved exclusions will have to continue paying the increased tariffs.

Also, importers entitled to refunds under the normal liquidation process or drawback transactions are not being issued refunds until the government re-opens. Additionally, CBP is not issuing any new rulings to importers through the CROSS system.

Since almost 90% of the Commerce Department has been furloughed the International Trade Agency and Bureau of Industry and Security is only operating with a skeleton crew, if that much. There is no activity on anti-dumping and countervailing duty cases. This will likely have a cascading effect for months to come impacting pending deadlines. BIS has been unable to issue any rulings on the 100,000 exclusion requests related to Section 232 tariffs on steel and aluminum.

Some federal agencies have been working on funding that was approved at varying levels prior to the shutdown but will start to be impacted as time moves on. For example the U.S. Trade Representative announced on January 14th that it would start implementing furloughs.

The U.S. Coast Guard, responsible for marine safety and terminal security, is the only military service branch that is working without pay. Twenty percent of their workforce is civilian and most of them have been furloughed. They are performing most of the basic functions to keep commercial ship traffic moving but certain administrative functions like licensing and permitting are not getting done.

All of these situations are resulting in backlogs that will take some time to clear out when the shutdown ends. These backlogs will be more severe the longer the shutdown continues.

The Federal Maritime Commissions ceased all operations as of December 26th.

We will continue to monitor the impacts of this now this record setting shutdown and keep you advised on further developments. And hope the shutdown will end soon before causing more complications and backlogs that will take longer to work through.