As China begins to rebound from the coronavirus COVID-19 outbreak (see 2003170043), it is preparing for sustained negative impacts on its supply chains due to the pandemic’s spread across the rest of the world, officials said during a March 30 press conference held by the State Council Information Office. China said its imports and exports fell by nearly 10 percent in January and February compared with the same period last year, and expects that trend to continue due to the fact that its supply chains are “deeply integrated” in regions being hit hard by the pandemic, such as Europe and the U.S.
Exports to China
The government of Canada issued the following trade-related notices as of March 27 (note that some may also be given separate headlines):
There's been a recent uptick in international enforcement activity involving counterfeit medical goods, the World Customs Organization said in a notice. “ While the world is gripped by the fight against COVID-19, criminals have turned this into an opportunity for fraudulent activity,” the WCO said. “There have been an alarming number of reports quoting seizures of counterfeit critical medical supplies, such as face masks and hand sanitizers in particular. Customs and law enforcement agencies in China, Germany, Indonesia, Uganda, Ukraine, United Kingdom, United States and Vietnam, to name but a few, have reported such seizures in the past three weeks.” There's also been a recent trend of export licensing requirements for “certain categories of critical medical supplies, such as face masks, gloves and protective gear,” the WCO said.
Senior administration officials agreed to new measures to further restrict foreign exports of chips to Huawei (see 2003050041), according to a March 26 Reuters report. The measures would alter the Foreign Direct Product Rule to restrict foreign sales that contain U.S. chip making equipment, Reuters said, although it remains unclear if President Donald Trump will sign off on the change. Trump has said that he wants to ease restrictions on exports and sell more to China (see 2002180057). The change, which has been discussed within the administration for months (see 1912100033, 1912130052 and 2002050047) has been met with criticism from the semiconductor industry (see 2002180060). The White House and the Commerce Department Bureau of Industry and Security did not comment.
Trade restrictions created as result of the coronavirus COVID-19 crisis will change trade years from now and may lead to fewer international shipments in the medical arena, panelists said on a webinar March 26 hosted by the Washington International Trade Association.
Companies will likely be faced with a reshuffled supply chain after the novel coronavirus COVID-19 pandemic subsides, placing greater importance on maintaining sound trade compliance programs even as business uncertainty increases, said Kerry Contini, an export control and sanctions lawyer with Baker McKenzie. As supply chain actors struggle to stay in business and as new parties enter and leave the supply chain, companies may face a host of new suppliers or customers, Contini said, a transition that will likely affect global industries on a large scale.
China increased its value-added tax refund rates for exports, according to a March 24 report from the Hong Kong Trade Development Council. The change, which took effect March 20, raised the refund rates for nearly 1,100 products to 13% and raised the rates for another group of about 400 products to 9%. Products with a 13% rate now include porcelain sanitary ware, metal products, gemstone and chemical; goods with a 9% rate include plant growth regulators, fruits and meat, the report said.
Export Compliance Daily is providing readers with some of the top stories for March 16-20 in case you missed them.
More progress has been made on China’s agricultural commitments under the U.S.-China phase one trade deal, including an agreement relating to poultry exports and an updated list of U.S. facilities eligible to export beef and grain to China, the Office of the U.S. Trade Representative said March 24. The progress shows China is “moving in the right direction” to fulfill its purchase agreements, Agriculture Secretary Sonny Perdue said in a statement. USTR Robert Lighthizer released an update on Chinese agricultural commitments earlier this year (see 2002250055).
China’s General Administration of Customs released a list of measures for increasing restrictions and streamlining port procedures during the coronavirus disease COVID-19 outbreak, including increased “interception and crackdown” on “unqualified anti-epidemic materials,” according to an unofficial translation of a March 19 notice. China said it has destroyed or returned more than 300,000 imports of “unqualified” protective equipment and stressed that the country needs to import “immunized materials” for domestic production of the equipment. As part of the measures, China is establishing “green channels” for agricultural products and other food imports at “key ports,” 24-hour advance clearance for certain imports and priority inspections. The measures will “simplify customs clearance procedures and reduce customs clearance costs throughout the process,” China said, which includes payment deferrals for certain taxes and reduced late payment fees for money owed to China’s GAC. China previously announced reduced penalties for delayed import declarations and other measures to ease customs procedures (see 2003120019 and 2002250031).