GOVERNMENT SHUTDOWN NEWS
Industry Notice: Government Shutdown Guidance - The Directorate of Defense Trade Controls continues to be open for normal operations until further notice. With the return of the Defense Technology Security Administration to normal operating status, processing of all incoming licenses has resumed, though there may be some expected delays due to adjudication of existing licenses referred during the shutdown last week. Staffing shortages in other U.S. Government agencies will continue to affect requests for Commodity Jurisdiction determinations. Other regular functions of the Directorate of Defense Trade Controls, such as requests for new or renewing registrations, will continue under normal conditions until further notice. (10.11.13)
Shutdown Has Eliminated CPSC Port Inspection Capacity, Says Senate Report
The ongoing government shutdown has forced Consumer Product Safety Commission (CPSC) to furlough at least 95 percent of its staff, including all port inspectors, bringing the total employees to less than 25 and depriving the agency of all capacity to screen imported products, said a report prepared for an Oct. 11 Senate Committee on Science, Commerce and Transportation hearing . The hearing focused on broad impacts of the government shutdown. The CPSC is no longer able to publish reports of consumer damages and threats via www.saferproducts.gov, a website that receives roughly 100,000 visits and publishes over 1,000 reports each month, according to the report compiled by the majority staff under Committee Chairman Jay Rockefeller, D-W.Va.
"CPSC has virtually no resources to monitor, sample, and conduct activities to enforce lead standards and ensure safety in consumer interactions with other dangerous products," read the report. CPSC inspectors prevented over 1 million units of defective products from reaching consumers in the first half of fiscal year 2012, read the report.
The threat level to consumers could exacerbate as the shutdown continues, according to testimony delivered by Rachel Weintraub, senior counsel at the Consumer Federation of America. “None of the employees currently working are field investigators or port inspectors,” said Weintraub, noting the precise number of CPSC employees currently rests at 23, including the agencies five commissioners.
Government Shutdown Impact Reverberates Through Trade Community
As the federal government shutdown is about to enter its third week, the implications for trade are becoming painfully evident. Exporters are unable to obtain authorization to export certain high-tech goods. Lumber exports remain in warehouses waiting for clearance by APHIS. And, all pesticide imports have stopped because the EPA is not processing the Notice of Arrivals (NOAs), due to the agency's interpretation that the shutdown only allows activities strictly related to public health.
The trade community is mounting an effort to convince EPA Administrator Gina McCarthy to allow EPA officials to review and approve the NOAs, despite the shutdown. In a letter spearheaded by CropLife America and the Chamber, importers told the EPA Administrator, "The current interpretation of EPA’s responsibilities and permitted activities during the ongoing unfortunate government shutdown is having a serious detrimental effect on that international commerce that supports much of pesticide production, and that effect only grows exponentially with each passing day of the shutdown."
The letter further explained, "Of great urgency is availability of products being used now in agricultural production…..Furthermore, given the lead time necessary for distribution of crop seed, the products used for seed treatment and other areas...are equally urgent. Production schedules for formulation of agricultural products are well established and carefully timed well in advance of their filed use, to meet the needs and schedules of crop planting and agricultural production. When those schedules are disrupted now by late arrival of ingredient materials, it can have a ripple effect throughout the preparations for the next growing season. The negative effects of food production may not be evident for several months, but they can be very serious, nonetheless. We don’t want those ripples to grow into tsunamis, affecting crop planting and crop protection now and in the coming season."
NCBFAA supports these efforts and will continue working to alleviate the impact of the government shutdown.
Areas Currently Most Impacted
CBP will likely take into account the various compliance difficulties that are created by the government shutdown, said former Acting CBP Commissioner David Aguilar, who now works at Global Security and Intelligence Strategies, a consulting firm. "Where there is latitude within the statutes or within the authority or the policies," consideration of some the problems created by the shutdown will likely be involved, he said in an interview. "Where timely information is a requisite" and "that information flow is unavailable, that will certainly be taken into account." As the government shutdown appears likely to move into its third week, resolution of the budget issues remain uncertain.
With a number of policy and regulatory functions of the agency stopped -- much of the Office of Regulations and Rulings, for instance -- there's some potential for a logjam once the shutdown stops, a scenario that CBP is likely ready for. "Not only are there plans in place to address any type of backlog that might occur," there likely has been a wide range of considerations as the budgetary concerns have been around for some time, he said.
Aguilar lauded the ongoing work of the career CBP employees that "continue to basically ensure that those things that are critical to our country and to the trade" are functioning and that the effects of the shutdown are minimized. They are at the forefront at making sure that CBP remains "open for business" as port operations continue despite the budget fight, he said. While it seems likely that the shutdown's effect on partner government agencies could be slowing some trade processing, "but to the degree that CBP can do everything that they can to ensure that there's continuity, I have full faith," that is being done, he said. One of the most important parts of the CBP's handling of the shutdown is an open line of communication with industry, he said.
CBP is probably looking at some alternatives for the CBP Trade Symposium, now scheduled for Oct. 24-25 in Washington, if the government shutdown were to continue, said Aguilar. "CBP is actually working very hard right now to look at any options, any adjustments," and will likely send out notifications soon, he said. Aguilar had to deal with a postponed trade symposium during his time at the agency due to Hurricane Sandy.
A lot of people have asked us when Congress will take up the Miscellaneous Tariff Bill (MTB) and legislation to extend the Generalized System of Preferences (GSP) program. The short answer is likely not anytime soon.
Unfortunately, the Congressional trade agenda has been put on the backburner. This is despite the fact that the MTB, which contains hundreds of expired duty suspensions and reductions, has been expired since December 31, 2012; and despite the fact that the GSP program has been expired since July 31, 2013. [NOTE: We expect Congress to ultimately combine MTB and GSP legislation in a package that also includes legislation granting President Obama Trade Promotion Authority (TPA). TPA, also known as “Fast Track Authority” limits Congress to up-or-down votes on free-trade agreements and bars all amendments, and would allow for passage in Congress of the TransPacific Partnership (TPP) agreement. This trade package could also include a Customs authorization bill, although there is no guarantee of that].
The fact is that Congress is likely to put off all of these trade issues until the very end of the year, given the government shutdown and debt ceiling debate is consuming valuable floor time, and is forcing Congress to put off debating other issues that were always in the queue ahead of trade (one example of this is the Water Resources Development Act (WRDA), legislation that sets policy for the Army Corps of Engineers and authorizes funding for maintenance dredging and other port improvement projects). It doesn’t help that each individual piece of the trade package faces its own problems: Senate Republicans have been blocking consideration of the MTB over concerns that individual duty suspensions or reductions are earmarks, and are therefore banned by Congress; a Senator from Oklahoma has a “hold” on GSP legislation because he has taken issue with the way the lost duty revenue would be made up; and negotiations over TPA legislation have been bogged down by disagreements over labor and environmental standards (not to mention the fact that the TPP may not be concluded by the end of the year, as the USTR continues to insist will be the case).
While the trade agenda may be on hold for the moment, we continue to reinforce with members of Congress from WA, OR and CA what these trade programs mean for companies in the region, describe the economic harm that results from expiration of these programs, and make clear the importance of extending these programs retroactively to the date on which they expired. We are also working as part of larger trade coalitions, delivering the same messages to all Members of Congress.
Provided by the Pacific Coast Council and FBB Federal Relations Affiliated with Lindsay Hart, LLP
FCC Closure Preventing Telecom Manufacturers from Shipping New Products
New product introductions are in danger of being delayed by the government shutdown, officials at the Telecommunications Industry Association (TIA) said Oct. 8. Products by TIA members need certification from FCC-approved telecommunication certification bodies (TCBs), but those labs can’t submit their reports to the now-shuttered FCC websites for ultimate approval. Without FCC approval, manufacturers can’t ship their products. "No new devices of any kind that need FCC approval can be marketed in the U.S. until the shutdown ends," TIA General Counsel Danielle Coffey said.
It "impacts all our members that are in the product approval process to get products to market," said TIA President Grant Seiffert. Part 15 interference compliance, Part 68 compliance for equipment connected to the public switched telephone network, and handset approval are all on hold, he said. "If you don’t get the good seal of approval, you cannot sell into the market," Seiffert told us. "It’s already started hurting them," Coffey said of TIA’s members. Samsung, which has a new product coming out, has been "up in arms" about the delay, Coffey said. Motorola Mobility and Intel have also expressed concerns, she said.
It’s hard to quantify the impact of a one-week delay, but it can ripple throughout product timelines, Seiffert said. Companies have detailed product launch plans, and any delays can affect sales and revenue, he said. “From a strategic planning sense, if they’re launching a new product and cannot, that has a Slinky effect on everything down that supply chain.” A longer delay could even affect what’s on the market for consumers to buy during the holiday season, Seiffert said.
US Customs and Border Protect New York/Newark Issues Public Bulletin on Tariff Rate Quota Handling
The notice advises the trade that shipments subject to Tariff Rate Quota are being released at the lower duty rate during the Government Shutdown. CBP Headquarters will work with the ports in the future to determine appropriate tariff rates as required. CBP advised that shipments released at the lower duty rates may be subject to future CBP duty bills if quota is unavailable. The importing community also has the option of warehousing the product during the shutdown.
FDA Import Review Continues While Other Services are at Reduced Levels
Food and Drug Administration Import Operations staff are continuing to perform their import review functions during the federal government shutdown, but the agency is working at reduced service levels for inspections and other activities.
FDA can not accept fiscal year 2014 user fees during the shutdown. That has put a hold on FY 2014 registration for drug and device facilities. The agency has also stopped accepting other registrations that require fees, such as the Device Registration Listing Module (DRLM) and the Center for Devices and Radiological Health Export Application and Tracking System (CECATS). The FDA Center for Drug Evaluation and Research is continuing its review of applications submitted before Oct. 1. Also, food facility registrations are unaffected because they don’t require user fees.
FDA posted details of how the shutdown will affect its medical product activities under the Prescription Drug User Fee Act (PDUFA), Generic Drug User Fee Act (GDUFA), Biosimilar User Fee Act, and Medical Device User Fee Act, as well as for other non-PDUFA and non-GDUFA drugs. In general, FDA will continue to accept PDUFA and GDUFA applications that don’t require fees during the shutdown, but will not accept any new applications that require FY 2014 user fees. It expects to continue its review of PDUFA, GDUFA, and MDUFA applications submitted before Oct. 1. The agency said it will halt its activities related to biosimilars during the shutdown, except for emergency work. Posting at: www.fda.gov
Miami FSVP Meeting Canceled
FDA also canceled its meeting on the Foreign Supplier Verification Program and third-party auditor proposed rules that was set for Oct. 10-11 in Miami, Fla., according to the registration page for the meeting.
Link to gov't offices and agencies affected by the shut down as provided to CNN
Government shutdown: What's closed, what's open?
Some of the most recent impact on Trade since the Government Shutdown includes:
CBP Rulings on Hold During Government Shutdown
CBP has stopped the processing of ruling requests as a result of the ongoing impasse over government funding, said people with knowledge of the agency's operations. Several CBP officials in the Office of Regulations and Rulings said in voicemail messages they weren't at work because of the shutdown. CBP has estimated that 52,673, of its 59,561 employees will be "exempt and estimated to be retained during a federal funding hiatus." Most of those exemptions are related to the agencies ongoing revenue collections.
BIS Decision to No Longer Process Export Licenses Will Debilitate Export Community, Says Industry
The Bureau of Industry and Security (BIS) ceased accepting export license applications for controlled items due to the government shutdown. The agency will no longer accept export license applications, classification requests, encryption reviews, encryption registrations, or advisory opinion requests, nor will it process pending actions, it said. The SNAP-R application on BIS is also no longer available and will not be activated until funding is restored following resolution on government appropriations. The stoppage at BIS may severely hamper business activity for the export community, industry said on Oct. 4 "For controlled items, it means exporters can not ship items without licenses. This is really a significant problem,” said President and CEO of American Association of Exporters and Importers Marianne Rowden.
CBP Still Processing Protests in Several Major Ports During Shutdown
CBP seems to be accepting and processing protests, despite the government shutdown. CBP personnel at the Port of Los Angeles/Long Beach are still working on protests, confirmed a spokesman with the port’s public information office. Industry sources tell us the Ports of New York/New Jersey and at John F. Kennedy International Airport have also confirmed they will be processing protests, although with some delays. And other industry sources tell us the ports of Laredo and Detroit seem to be processing protests as well.
CBP To Delay ACE Deployment
CBP is postponing the planned Oct. 5 deployment of several Automated Commercial Environment (ACE) pieces due to the government shutdown, the National Customs Brokers and Forwarders Association of America said in an alert. While CBP is ready to deploy on schedule, "due to limited personnel resources within CBP--notably the absence of Client Representatives--and complications being experienced with normal release and post-release processing often related to [Partner Government Agency] systems and their resource limitations during the hiatus, CBP did not want to put further stress on the trade at this time," NCBFAA said.
NCBFAA agrees with this decision and stressed "to CBP that remaining functionality should not be eliminated or compromised if the hiatus stretches into new development schedules," it said. "In addition the NCBFAA stressed the importance of providing the trade adequate time for development, testing, and reliance on ACE over ACS and it is important that time not be compressed with future deployments. To the extent possible, CBP will continue to work on new development; the brokerage community should continue to work with their software developers during this time as well." New capabilities in the ACE update were to include ACE Reports Software Upgrade, ACE Cargo Release Pilot Expansion, Partner Government Agency Message Set, Entry Summary Validations.
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