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From Exports to Delivery: Simplifying PPE Shipping

PPE

From Exports to Delivery: Simplifying PPE Shipping

From small businesses to large corporations, many are navigating the complex world of importing personal protective equipment (PPE) for employees, family members, and customers as businesses reopen across the globe.

Whether you have navigated these waters before or are new to importing PPE, COVID-19 has changed the game. In response to the changing environment, our team of experts at C.H. Robinson put together information on four key subjects that will help your PPE supply chain run smoother during a time when simplicity is what you need most.

Exporting PPE from China

Over the past several months, China has been the main source for PPE. So, it’s important you’re up to date on the latest regulations to avoid your freight being held up.

China has recently implemented three key policies that relate to PPE exporting.

-Policy 5 requires all medical supplies to meet quality standards of the importing countries, this policy also separated out the process for medical-grade and non-medical-use devices.

-Policy 53 increases CIQ inspection on all PPE products, labels, packaging, and documentation.

-Policy 12 created a white and blacklist of manufacturers and suppliers.

While China’s new policies offer tighter control on PPE being exported, they also have created a dedicated HS-code for PPE products to simplify export declarations.

For a closer look at how China’s regulations impact PPE shipping, check out our recent PPE exporting video featuring our director of product development, Vincent Wong.

U.S. and Canada customs best practices

The next key subject to address is importing PPE into the United States and/or Canada. It’s important you understand various government agency requirements and determine which ones apply depending on whether the PPE is for general or medical use. From there, other factors like labeling, packaging, and marketing of the product can influence these regulations as well.

Importing PPE into the United States

Depending on the PPE commodity you are importing, there can be multiple U.S. Customs and Border Protection (CBP) and U.S. Food and Drug Administration (FDA) requirements to navigate. And due to the nature of the shipping industry, these regulations can change quickly—especially for medical grade equipment.

Importing PPE into Canada

While importing into Canada has some similarities—like changing regulations—there are some clear differences to be aware of as well. It’s important to note that while intended use, labeling, packaging, and advertising can be used to determine medical vs. general use in Canada, this is ultimately determined by the Canadian inspectors.

Whether you are importing PPE into the U.S. or Canada, make certain to watch our video on customs best practices with Ben Bidwell, director of North America customs and compliance, in order to better understand requirements, expectations and regulations for PPE.

Metered freight solutions

In this environment, we’re seeing companies turn to air freight to move their personal protective equipment quickly. However, when the demand for passenger travel plummeted in the wake of the COVID-19 pandemic, a dramatic reduction in cargo capacity followed. As you might imagine, this has drastically changed normal market conditions for air shipping.

While delivering all your PPE as fast as possible via air might seem like your only option, solutions like freight metering, which utilizes both air and ocean, can also meet your needs while providing cost-savings.

Ask yourself:

-How much of our PPE do we really need to fly?

-How much of that is safety stock?

-What’s the end user consumption rate?

-What’s the output rate at the factory?

Answers to these questions and cross-functional conversations that include purchasers, factory contacts, logistics providers, and end users can reveal that only a portion of your purchase order (PO) should fly and a balance of it should ship as ocean freight.

The key to metering your freight is to choose air freight for just enough of your order to match your end-users’ consumption rate. As ocean freight catches up, it can significantly reduce your freight spend.

Looking for more benefits of a metered air and ocean shipping solution for critical PPE orders? Watch our metered freight solutions video, featuring Bogen Chi, director of air freight.

FCL and LCL expedited ocean shipping

Lastly, we understand your need to continue moving your PPE cargo as quickly and cost-effectively as possible. Utilizing expedited less than container load (LCL) or full container load (FCL) shipping could be the differentiator you need. In fact, depending on your PPE’s delivery city, C.H. Robinson’s expedited LCL services can cut traditional LCL transit time by 4 to 14 days and keep your costs nearly 80% lower than air freight services.

Watch our expedited ocean shipping video with Ali Ashraf and Greg Scott to explore if this smart transportation solution is right for your supply chain.

In conclusion

Personal protective equipment has become an extremely important and in-demand commodity as we face COVID-19. So, whether you’re looking to import PPE for the first time or as part of your normal procurement process, C.H. Robinson’s experts can help you build a more resilient supply chain when shipping PPE around the globe. As the market continues to change, our global suite of service offerings and market expertise remains available to help your PPE supply chain. We’re here to help today so you can have a better PPE process tomorrow.

COUNTERFEIT

TRADE IN COUNTERFEIT MEDICAL AND PROTECTIVE HEALTH GOODS SPIKING DURING PANDEMIC

Making matters worse

As the coronavirus pandemic continues to alter lives around the world, predators have seen opportunities to exploit the global health crisis by marketing and shipping counterfeit medical equipment, devices, and pharmaceuticals. In the few months since the beginning of the pandemic, illicit trade in counterfeit medical goods is both widespread and global in nature.

Authorities in the UAE shut down two factories, finding 40,000 fake sanitizers that were actually body sprays. In Cambodia, authorities seized three tons of fake sanitizer and nearly 17,000 gallons of fake alcohol. Australia’s Border Force intercepted shipments of counterfeit and otherwise faulty personal protective equipment.

Playing whack-a-mole with counterfeit goods

EUROPOL has cautioned that fake blood-screening tests, sanitizers, and pharmaceutical products are increasing in volume in the EU as criminals take advantage of shortages of genuine medical products. EUROPOL is monitoring the trade in counterfeit and substandard products by “listening” to social media platforms, following conversations that mention fake products. The agency reports many new online platforms have cropped up in response to coronavirus to profit illegally from illicit trade in fake medical goods.

Enforcement activity has also ramped up in the United States in response to the significant increase in criminals attempting to capitalize on the pandemic. In mid-April, Immigration and Customs Enforcement (ICE) announced Operation Stolen Promise, a joint effort by experts in global trade, financial fraud and cyber investigations to combat smuggling of counterfeit safety equipment and test kits. The operation quickly shut down over 11,000 COVID-19 domain names for illicit websites. After seizing test kits at an Indianapolis express consignment facility, Customs and Border Protection (CBP) announced it is “targeting imports and exports — mainly in the international mail and express consignment cargo environments — that may contain counterfeit or illicit goods”.

More data, better enforcement?

In early May, ICE’s Homeland Security Investigations announced an unprecedented partnership with private sector companies including Amazon and Alibaba to combat price gougers and scammers online. But will the effort be sufficient? The pandemic has exposed how vulnerable consumers are and how difficult the challenges are for law enforcement, prompting new discussion of potential changes to data collection practices that will better safeguard consumers while aiding law enforcement. Policymakers are also considering ways to shift more burden to the private sector engaged in online sales and trade.

The Country of Origin Labeling (COOL) Online Act was introduced in the U.S. Senate on May 13. The sponsors noted that with the pandemic causing Americans to stay home, online commercial activity has increased, but that products sold online are not sufficiently transparent. The COOL Online Act would require that buyers of products sold online be told the country where the product was manufactured and where the seller is located.

CBP is currently conducting the 321 E-Commerce Data Pilot which requires private sector participants in the pilot program to transmit a significant amount of data to CBP regarding products shipped to the United States. What is yet unclear is whether companies in the supply chain and e-commerce ecosystems will be required to verify that the information submitted to CBP is accurate and whether they will be required to take the step of rejecting products or packages before facilitating shipment to the United States.

Such a requirement obligates private sector entities to take some measure to screen and prevent the export of non-compliant or suspect goods before they leave the country of export. Absent such an obligation, most, if not all, of the burden will remain on CBP – and its counterparts around the world – to protect public safety.

Countering the counterfeiters

Medical communities around the world are still grappling with a virus that has no known cure while law enforcement agencies work to combat the growing volume of counterfeit and substandard medical equipment and pharmaceutical goods marketed by criminals. Meanwhile, international crime watchdog INTERPOL has ominously issued a warning that it expects global markets to be flooded with fake pharmaceuticals as soon as a vaccine does become available.

The policy landscape continues to shift in various ways in the wake of this health crisis. Governments are actively engaging with the private sector regarding potential changes to the collection and sharing of data — and, how both should act on that data — to more effectively prevent counterfeit and illicit goods from even leaving the country of origin in the first place.

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Tim Trainer

Tim Trainer was an attorney-advisor at the U.S. Customs Service and U.S. Patent & Trademark Office. He is a past president of the International AntiCounterfeiting Coalition. Tim is now the principal at Global Intellectual Property Strategy Center, P.C., and Galaxy Systems, Inc.

This article originally appeared on TradeVistas.org. Republished with permission.
detection kits

COVID-19 Detection Kits Market Size Sees 17.3% Growth to Hit USD 8 Billion By 2026

The global COVID-19 detection kits market should increase from USD 3.3 billion till now in 2020 to USD 8 billion in 2026 at a compound annual growth rate of 17.3% for 2020-2026.

COVID-19 detection kits market is anticipated to garner noteworthy growth on account of growing cases of coronavirus registered worldwide. For the record, COVID-19 is a respiratory infection that is highly contagious and transmits through direct contact with an infected person or indirect contact with affected surfaces located near the immediate environment.

As of now, this virus has spread all over the world. Containing its spread has proven to be challenging for most developed as well as developing countries. In a bid to curb the spread of coronavirus, numerous countries are using COVID-19 detection kits that help identify the symptoms of the disease in early-stage patients.

Countries with a huge number of COVID-19 cases are currently going through grave public health problems. As a result, regulatory bodies like the U.S. FDA have decided to ease the regulatory process for COVID-19 detection kits, following the Emergency Use Authorization (EUA) guideline. This has enabled manufacturers to launch their test kits in the market more quickly.

Technological innovation and subsequent development in the field of coronavirus diagnostic kits will enhance the COVID-19 detection kits industry outlook. According to a study conducted by Global Market Insights, Inc., the COVID-19 detection kits market is estimated to reach USD 8 billion by the year 2026.

This growth can be contributed to the below-mentioned trends:

Immense popularity of RT-PCR assay kits-

Rising incidence of COVID-19 around the world could play a crucial role in driving the demand for RT-PCR assay kits. The segment is expected to be more profitable and might achieve 96% of the overall market share within 2020.

As per the Centers for Disease Control and Prevention (CDC), nearly 0.6 million positive COVID-19 cases have been reported up to this date in the U.S. Rising cases in the region may support the demand for RT-PCR assay kits. Other alternatives for RT-PCR assay kits include immunoassay test strips/cassettes.

Escalating demand across APAC-

The outbreak of COVID-19 in densely populated areas like India and China could augment the Asia Pacific COVID-19 detection kits industry over the years. Estimates claim that the regional market is likely to observe nearly 21% CAGR by 2026.

Facilities in APAC have recorded some recurrence cases of COVID-19 after the successful containment of the virus. This could develop the need for COVID-19 detection kits in the future.

Implementation of lucrative business strategies-

Companies operating in the market are implementing multiple growth strategies to expand their product portfolio and geographical presence by taking part in novel R&D initiatives.

Taking March 2020 for instance, Hologic revealed that it will be receiving grant funding from the U.S. government’s Biomedical Advanced Research and Development Authority (BARDA) to scale the production of COVID-19 detection kits. This collaboration would allow the firm to cater to the proliferating demand for detection kits.

Apart from Hologic, Co-Diagnostics, Cepheid, Abbott Laboratories, BGI, F. Hoffmann-La Roche, BioFire Diagnostics, Guangzhou Wondfo Biotech, GenMark Diagnostics, Qiagen, Quidel Corporation, and Mylab Discovery Solutions are some other leading firms in the COVID-19 detection kits market.

Source: Global Market Insights, Inc.

personal protective equipment

Personal Protective Equipment for Infection Control Market to Hit USD 17.1 Billion by 2026

The global Personal Protective Equipment for Infection Control Market should increase from USD 10 billion in 2019 to USD 17.1 billion in 2026.

The massive outbreak of COVID-19 has produced a significant rise in the revenue scale of global personal protective equipment for infection control market. Global Market Insights, Inc., predicts the personal protective equipment for infection control industry to garner appreciable gains over 2020-2026 while depicting a CAGR of -19.3 percent through 2026, perhaps due to the expanding number of surgical procedures and rising awareness about personal safety for infectious diseases.

The lucrative growth map of personal protective equipment for infection control market is evident from the surging importance of safety at vivid workplaces lined with stringent regulatory reforms pertaining to the safety standards. Numerous regulatory authorities have addressed safety standards during operations in manufacturing industries and various service organizations like hospitals and research laboratories.

Moreover, standard operating protocol developed for security and safety against infections at the workplace would favor the business growth over the due course of time. Although the PPE for infection control is unveiling new trends across the globe, the complexity and dearth of time in the production of these might hamper the industry growth to some extent.

Categorized into products, types, and end-use industries, the personal protective equipment for infection control market across the hand and arm product segment is poised to perform exceptionally well in the ensuing years. For the record, hand and arm personal protective equipment market acquired a business share of $4.2 million in 2019. The momentous growth of this segment can aptly be ascribed to the increased risk of infection worldwide. Besides, skin disorder, given the direct contact to toxic pathogens and radioactive materials would propel the industry growth in the years ahead.

Considering the type bifurcation, the disposable PPE market held a considerable revenue share of 74 percent in 2019 and is touted to witness appreciable growth during the mentioned timeframe owing to its ability to reduce risk of infection as it is disposed of after use.

Elaborating further, personal protective equipment for infection control market from the research and diagnostic laboratories segment is set to accrue phenomenal proceeds in 2020, fundamentally due to the growing R&D activities in order to bring forth advanced solutions for diagnosis and treatment. In addition to this, elevating COVID-19 cases worldwide has enunciated the massive demand for PPE in diagnostic laboratories for effective security and functioning.

Personal Protective Equipment for Infection Control market report provides a comprehensive landscape of the industry, accurate market estimates and forecast split by product, application, technology, region and end-use. All quantitative information is covered on a regional as well as country basis. The report provides valuable strategic insights on the Personal Protective Equipment for Infection Control market, analyzing in detail industry impact forces including growth drivers, pitfalls, and regulation evolution. The report also includes a detailed outlook on the Personal Protective Equipment for Infection Control market competitive environment, diving into the industry position of each major company along with the strategic landscape.

Personal Protective Equipment for Infection Control market report is an all-inclusive document, compiled and designed to provide best-in-class research, insightful analysis and accurate quantitative data. The coverage of this research is the most extensive when compared to other similar studies available on Personal Protective Equipment for Infection Control market. The industry ecosystem information presented in this report is next-to-none and aims to address all stakeholders of the industry, irrespective of their size and business function. Details of segmentation and cross reporting structure, wherever feasible, makes this Personal Protective Equipment for Infection Control market research one of its kind to offer the most in-depth, readily available data.

Speaking of the regional demographics, the United States is poised to emerge as one of the most remunerative growth regions for industry given the current coronavirus outbreak. It has been reported that the country captured an overall business share of more than 90 percent of the North America PPR for infection control market in 2019.

This growth is ascribed to the expanding development activities paired with rising healthcare spending. It is imperative to mention that, the ongoing disease spread has urged myriad companies to undertake development activities with an aim to offer effective and accurate solutions to abate the infection transmission across the country while boosting its stance in the global market.

Although the rising patient pool has produced a shortage of PPE, various organizations like 3M Company, Honeywell, and multiple others, have laid their focus on establishing M&As to manage the increasing demand for these. Thus, these strategic initiatives would enhance the industry outlook over the forecast period.

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Source: Global Market Insights, Inc.

trade protectionism

Trade Protectionism Won’t Help Fight COVID-19

Countries around the world are limiting international trade and turning inward, seeking to produce nearly everything — especially medical supplies — themselves.

The Trump administration, for instance, is considering a “Buy American” executive order that would require federal agencies to purchase domestically made masks, ventilators, and medicines. And over two dozen countries — including France, Germany, South Korea, and Taiwan — have banned domestic companies from exporting medical supplies.

The scramble for self-sufficiency in medical supplies and medicines needed to fight the coronavirus is make-believe. It is neither feasible nor desirable, and will only deepen the pain felt amidst this pandemic.

Governments around the world have responded to COVID-19 by imposing export restrictions on things like ventilators and masks. In mid-April, Syria became the 76th country to follow suit. The import side of things isn’t much better. The World Trade Organization (WTO) reports that tariffs remain stubbornly high on protective medical gear, averaging 11.5 percent across the 164 members of the Geneva-based institution, and peaking at just under 30 percent.

This is no way to fight a pandemic.

It’s not that COVID-19 caused this bout of trade protectionism. It’s just that COVID-19 offers up a useful narrative to promote trade protectionism.

The Trump administration, for instance, has been touting its “Buy American” executive order as a move to spur local manufacturing. Canada has also considered going it alone in ventilators and masks, but recently acknowledged it can’t possibly achieve self-sufficiency in medicines. No one can.

The way many governments see it, the only thing standing in the way of greater self-reliance in medical equipment and medicines is the will to pay for it. The story is that ventilators might be more expensive if made domestically, but that’s the cost of going it alone. It’s only a matter of getting Bauer and Brooks Brothers, for example, to make personal protective equipment, rather than hockey gear and clothing.

But there’s a reason Bauer makes skates instead of surgical masks. It’s better at it, and skates are a much more lucrative business. Bauer didn’t misread the market. It’s heartwarming to hear that Bauer is stepping in to help out, but the company knows that making surgical masks in the US is five times more expensive than making them in China. That’s why 95 percent of the surgical masks in the US are imported.

The absurdity of self-sufficiency in medicines is even more glaring. The US is a major exporter of medicines, but the raw chemicals used to make them are imported. Nearly three-quarters of the facilities that manufacture America’s “active pharmaceutical ingredients” are overseas. To reorient supply chains to produce these ingredients domestically would take up to 10 years and cost $2 billion for each new facility.  Consumers would pay at least 30 percent more at the pharmacy.

The last plug for self-sufficiency in medical equipment and medicines is that it’s not a good idea to depend on adversaries to keep us healthy. We don’t. What’s striking about medicines, medical equipment, and personal protective products is that market share is highly concentrated among allies. For example, Germany, the US, and Switzerland supply 35 percent of medical products sold worldwide. True, China leads the top ten list of personal protective products, at 17 percent market share, but the other nine, including the US at number three, are all longstanding allies. To be sure, the untold story of China is that it depends on Germany and the United States for nearly 40 percent of its medical products.

This past week, the WTO and the International Monetary Fund (IMF) called for an end to the folly of trade restrictions during this pandemic. The communique should have — but obviously couldn’t — call out governments around the world for maintaining, on average, a 17 percent tariff on soap. That tariffs on face masks average nearly 10 percent is baffling. That 20 countries in the WTO have no legal ceiling on the tariffs they impose on medicines is unforgivable.

Self-sufficiency in medical supplies and medicines is a political sop. It’s a narrative that can’t deliver anything but misery. If governments want to fight COVID-19, they should spend more time looking at how they’re denying themselves access to medical necessities, and less time on how to deny others the tools to save lives.

______________________________________________________________________

Marc L. Busch is the Karl F. Landegger professor of international business diplomacy at the Edmund A. Walsh School of Foreign Service at Georgetown University and a nonresident senior fellow in the Atlantic Council.

needles

Global Needles And Catheters Market 2020 – Key Insights

IndexBox has just published a new report: ‘World – Needles, Catheters, Cannulae For Medicine – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

The global needles and catheters market size reached $32.4B in 2018, picking up by 7.3% against the previous year. The market value increased at an average annual rate of +4.8% from 2009 to 2018. Over the period under review, the global needles and catheters market reached its peak figure level in 2018 and is likely to see steady growth in the near future.

Global Trade of Needles And Catheters 2009-2018

In value terms, needles and catheters exports totaled $32B (IndexBox estimates) in 2018. In general, the total exports indicated a remarkable increase from 2009 to 2018: its value increased at an average annual rate of +2.4% over the last decade. Based on 2018 figures, needles and catheters exports increased by +28.1% against 2016 indices. The pace of growth was the most pronounced in 2012 when exports increased by 18% y-o-y.

Exports by Country

In value terms, the U.S. ($7.1B), the Netherlands ($4.4B) and Ireland ($3.9B) constituted the countries with the highest levels of exports in 2018, together comprising 48% of global exports. These countries were followed by Mexico, Germany, Belgium, Costa Rica, China, Malaysia, the UK, Hungary and Poland, which together accounted for a further 36%.

Hungary experienced the highest rates of growth with regard to the value of exports, among the main exporting countries over the period under review, while exports for the other global leaders experienced more modest paces of growth.

Imports by Country

The largest needles and catheters importing markets worldwide were the U.S. ($5.4B), the Netherlands ($3.4B) and Germany ($2.3B), with a combined 39% share of global imports. These countries were followed by Japan, China, Belgium, France, the UK, Italy, Mexico, Spain and South Korea, which together accounted for a further 33%.

In terms of the main importing countries, China experienced the highest growth rate of the value of imports, over the period under review, while imports for the other global leaders experienced more modest paces of growth.

Import Prices by Country

In 2018, the average needles and catheters import price amounted to $54,311 per tonne, jumping by 2.8% against the previous year. Over the period from 2009 to 2018, it increased at an average annual rate of +1.0%. The growth pace was the most rapid in 2016 when the average import price increased by 67% against the previous year. The global import price peaked in 2018 and is expected to retain its growth in the immediate term.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was the Netherlands ($149,780 per tonne), while South Korea ($33,777 per tonne) was amongst the lowest.

From 2009 to 2018, the most notable rate of growth in terms of prices was attained by the Netherlands, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

PPE

COVID-19 Trade Update: FEMA Implements Export Controls for PPE as CBP Issues Guidance Restrictions

On April 3, 2020, President Trump issued a Presidential Memorandum directing the Department of Homeland Security, through the Federal Emergency Management Agency (FEMA), to utilize the Defense Production Act to restrict the export of scarce domestic materials being used to respond to the spread of COVID-19, including certain personal protective equipment (PPE).

Effective Tuesday, April 7, FEMA implemented this Order through a Temporary Final Rule (the TFR) that restricts U.S. exports of five specific categories of PPE products that were previously designated by the Department of Health and Human Services (HHS) as “scarce or threatened materials.”

U.S. Customs and Border Protection (CBP) has since issued its own internal guidance on the TFR that provides further detail on the scope of the restrictions as well as key exclusions for certain U.S. exporters.

The TFR differs from traditional U.S. export control regulations, such as those administered by the U.S. Departments of Commerce and State, in that there is no licensing system in place and FEMA’s determination is not based on the proposed end-use or end-user of the product – rather, FEMA will assess all U.S. exports of designated PPE materials and reallocate those products domestically as required. Because FEMA is not an agency that traditionally administers U.S. export control regulations, it is critical for manufacturers, suppliers, and distributors of PPE products and related medical materials to be aware of the specific articles impacted by the TFR, the scope of the restrictions, the timeline for implementation, consequences for non-compliance, and the potential for expanded product coverage.

PPE Export Restrictions Overview

The TFR providing for PPE export restrictions is effective as of April 7, 2020 for a period of 120 days. The TFR designates five of fifteen categories of materials previously identified as “scarce or threatened materials” by HHS. In particular, the subject restricted PPE materials are the following:

-N-95 Filtering Facepiece Respirators, including devices that are disposable half-face-piece non-powered air-purifying particulate respirators intended for use to cover the nose and mouth of the wearer to help reduce wearer exposure to pathogenic biological airborne particulates;

-Other Filtering Facepiece Respirators (e.g., those designated as N99, N100, R95, R99, R100, or P95, P99, P100), including single-use, disposable half-mask respiratory protective devices that cover the user’s airway (nose and mouth) and offer protection from particulate materials at an N95 filtration efficiency level per 42 CFR 84.181;

-Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges;

-PPE surgical masks, including masks that cover the user’s nose and mouth and provide a physical barrier to fluids and particulate materials; and

-PPE gloves or surgical gloves, including those defined at 21 CFR 880.6250 (exam gloves) and 878.4460 (surgical gloves) and such gloves intended for the same purposes.

Before any shipments of the above-listed PPE materials can be exported from the U.S., CBP will temporarily detain the shipment so that FEMA can determine whether to:

-Prohibit the export and return the shipment for domestic use;

-Utilize the Defense Product Act (DPA) to issue a “rated order” for the materials (a priority contract or order placed in support of a national defense program under the DPA); or

-Allow the export of part or all of the shipment.

In making its determination, FEMA may consider the following factors:

-The need to ensure that scarce or threatened items are appropriately allocated for domestic use;

-Minimization of disruption to the supply chain, both domestically and abroad;

-The circumstances surrounding the distribution of the materials and potential hoarding or price-gouging concerns;

-The quantity and quality of the materials;

-Humanitarian considerations; and

-International relations and diplomatic considerations.

Scope and Exemptions

On April 9, 2020, CBP issued an updated internal guidance memorandum (CBP Internal Guidance) to its field operators to clarify key definitions and general exceptions to the PPE export restrictions provided for in the TFR.

First, CBP highlights that the focus of the TFR is on “commercial quantities” of PPE exports, currently defined as shipments valued at $2,500 or more and containing more than 10,000 units.

The CBP Internal Guidance then lists the following export circumstances that are excluded from the FEMA restrictions:

-Exports to Canada or Mexico;

-Exports to U.S. government entities such as U.S. military bases overseas;

-Exports by U.S. Government agencies;

-Exports by U.S. charities;

-Exports by critical infrastructure industries for the protection of their workers;

-Exports by the 3M Company;

-Express or Mail Parcels that do not meet the “commercial quantity” definition above;

-In-transit shipments.

However, it is important to note that as of April 16, the Internal CBP Guidance on exclusions for the TFR has not been formally published in the Federal Register or elsewhere by CBP, and may be subject to additional revisions in its final form.

Practical Advice and Next Steps

All U.S. manufacturers, suppliers, and distributors of PPE materials or other products designated by HHS as “scarce or threatened” (the relevant HHS guidance can be found here) that are considering exporting their products for sale need to have a comprehensive understanding of the FEMA TFR and applicable export restrictions. Expect additional CBP and/or FEMA guidance in the near future with refined definitions, clarifications as to how the exclusions will be administered, and further details on how product definitions will be determined. It may be the case that additional products identified by HHS as “scarce or threatened” in connection with the fight against the spread of COVID-19 will be added to the list of restricted products for exports, including portable ventilators and certain drug treatment products that contain chloroquine phosphate or hydroxychloroquine HCl. Additional export, exporter, or product-based exclusions may be issued in the finalized published FEMA/CBP guidance as well.

In the meantime, U.S. exporters of PPE products can expect delays at CBP ports around the country as FEMA and CBP develop and implement the TFR and related policy guidance. If you have any questions about the TFR, the impact of the TFR on exports of PPE products, or whether a particular product or proposed export is covered by a CBP exclusion, please contact a member of Baker Donelson’s Global Business Team.

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Alan Enslen is a shareholder with Baker Donelson and leads the International Trade and National Security Practice and is a member of the Global Business Team. He can be reached at aenslen@bakerdonelson.com.

Julius Bodie is an associate with Baker Donelson who assists U.S. and foreign companies across multiple industries with international trade regulatory issues. He can be reached at jbodie@bakerdonelson.com.

masks

Global Imports of Breathing Appliances and Gas Masks Recorded the Highest Growth Before the COVID-19 Pandemic

IndexBox has just published a new report: ‘World – Breathing Appliances And Gas Masks – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

Global Trade of Breathing Appliances and Gas Masks  2013-2018

In 2018, the amount of breathing appliances and gas masks exported worldwide totaled $1.7B (IndexBox estimates). The total export value increased at an average annual rate of +5.5% over the period from 2013 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2018 when exports increased by 15% year-to-year. In that year, global breathing appliances exports reached their peak.

Exports by Country

The U.S. ($375M), Germany ($332M) and the UK ($279M) were the countries with the highest levels of exports in 2018, together accounting for 57% of global exports. These countries were followed by France, China, Poland, Australia, Taiwan, Chinese, Canada, Russia, South Korea and Mexico, which together accounted for a further 27%.

Poland experienced the highest rates of growth with regard to the value of exports, among the main exporting countries over the period under review, while exports for the other global leaders experienced more modest paces of growth.

Export Prices by Country

In 2018, the average breathing appliances export price amounted to $64,941 per tonne, going up by 6% against the previous year. Over the period from 2013 to 2018, it increased at an average annual rate of +5.1%. The growth pace was the most rapid in 2017 when the average export price increased by 14% year-to-year. Over the period under review, the average export prices for breathing appliances and gas masks reached their maximum in 2018 and is expected to retain its growth in the immediate term.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was France ($109,043 per tonne), while Mexico ($12,629 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Russia, while the other global leaders experienced more modest paces of growth.

Imports by Country

In value terms, the U.S. ($232M), Germany ($187M) and Canada ($96M) appeared to be the countries with the highest levels of imports in 2018, with a combined 30% share of global imports. The UK, France, Australia, China, Denmark, the Netherlands, South Korea, Chile and Indonesia lagged somewhat behind, together accounting for a further 27%.

Denmark recorded the highest rates of growth with regard to the value of imports, among the main importing countries over the period under review, while imports for the other global leaders experienced more modest paces of growth.

Import Prices by Country

The average breathing appliances import price stood at $61,064 per tonne in 2018, growing by 2.7% against the previous year. Over the last five-year period, it increased at an average annual rate of +2.7%. The most prominent rate of growth was recorded in 2014 when the average import price increased by 8.7% year-to-year.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was Australia ($85,291 per tonne), while Indonesia ($26,559 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Australia, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

humanitarian

ECONOMIC SANCTIONS EXEMPT HUMANITARIAN TRADE

Ailing Relations

Iran has been among the worst affected countries from COVID-19, having emerged as an early hotspot outside China. As of April 7, there were an estimated 62,589 confirmed cases with over 3,800 deaths. Iran’s cases appear to have peaked in late March, but exact numbers are unknown due to the secretive nature of its totalitarian regime. Other countries throughout the Middle East began reporting cases in late February and continue to battle spread of COVID-19 due to travel linked to Iran.

U.S. offers of assistance were rejected by Iran’s Supreme Leader Ayatollah Ali Khamenei, who said publicly on March 22, “You might give us a medicine that would spread the disease even more or make it last longer.”

According to the U.S. State Department, the United States has offered more than $100 million in medical assistance to foreign countries, including to the Iranian people, and reports that Iranian health companies have been able to import testing kits without obstacle from U.S. sanctions since January. The U.S. government has urged Iranian leaders to be more truthful about its efforts to contain the virus.

Iran assistance

Humanitarian Trade Exemptions

U.S. economic sanctions against Iran include a general exemption for U.S. exports of agricultural commodities, food, medicines and medical devices to Iran and an authorization process to obtain licenses for a specific list of medical supplies and equipment not covered under the general exemption. Such licenses are usually given for one year.

The U.S. government recently reinforced its messaging that sanctions are directed at the Iranian regime, stating: “[Sanctions] are not directed at the people of Iran, who themselves are victims of the regime’s oppression, corruption, and economic mismanagement.”

A 2019 Congressional Research Service report suggests U.S. sanctions have limited access by the Iranian population to “expensive Western-made medicines such as chemotherapy drugs,” due to a lack of bank financing for such transactions and that the limited supplies that exist have gone to elites.

Role of Financing

Between 2018 and 2019, overall U.S. trade with Iran went from small to very small under tightened sanctions. In 2018, U.S. exports to Iran were valued at $425.7 million. In 2019, U.S. exports had decreased 82 percent to $73.1 million.

Underlying that decrease in trade, even of humanitarian-related goods and services, reflects a tendency toward over-compliance by banks and multinational firms that avoid transactions with Iran to minimize possible violations of U.S. sanctions. Doing so, even inadvertently, could cut off their access to vital U.S. financial markets. The U.S. government has also explicitly cited concerns about the Iranian regime’s abuse of humanitarian trade to evade sanctions and launder money.

To close these loopholes, in October 2019 the Treasury Department announced a new payment mechanism “to facilitate legitimate humanitarian exports to Iran.” The measure restricts the role of the Central Bank of Iran in facilitating humanitarian trade, which the U.S. government views as financing terrorism. It also imposes rigorous reporting requirements to thwart diversion of funds intended for humanitarian use.

By late February 2020, as the COVID-19 medical crisis unfolded in Iran, the U.S. Treasury Department issued a general license authorizing certain humanitarian trade transactions involving the Central Bank of Iran while also approving the use of a Swiss financial channel to finance such transactions.

The Swiss Humanitarian Trade Arrangement (SHTA) enables Swiss-based exporters and trading companies in the food, pharmaceutical and medical sectors to access a secure payment channel with a Swiss bank to guarantee payments for their exports to Iran. Novartis was the first Swiss company to send medicine for use in cancer treatments. Germany, France and Britain have also used this new channel to offer a $5.5 million package to Iran to help fight the coronavirus.

exemptions in sanctions

Trade in Food and Medicine

Much has been written recently about governments restricting exports and otherwise increasing the cost of traded medical supplies during the pandemic.

For two decades now, the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) has ensured that each U.S. country-based sanctions program provides for trade of agriculture, medicine and medical devices under a broad humanitarian exemption. This is intended to limit potential adverse effects on civilian populations who are not the target of sanctions.

The United Nations Security Council maintains 14 active sanctions programs that also include humanitarian exemptions driven by the belief that a supportive and healthy citizen population is necessary to achieve improvements in a sanctioned regime.

Recently, the United Nations Security Council approved a humanitarian exemption to sanctions against North Korea (DPRK) requested by the World Health Organization for diagnostic and medical equipment to address COVID-19. The United States supported this decision.

Exemptions Thwarted by Totalitarian Regimes

The health impacts of embargoes are difficult to isolate and quantify. They may not become apparent until years after resource shortages occur. Domestic production challenges can also play a role. For example, Iran produces 97 percent of its medicines locally, but a third of these drugs rely on active ingredients that are imported, according to the head of Iran’s Food and Drug Organization.

Although humanitarian trade exemptions are intended to mitigate shortages of essential supplies, totalitarian regimes are known for putting their goals before the needs of their citizens. The negative impacts of sanctions are often compounded by inequitable distribution or outright theft of essential goods and ongoing civil conflicts.

In any case, it’s difficult to know the net effect of sanctions and humanitarian trade exemptions because data on key indicators of health effects are often missing or unavailable from embargoed regimes. However, it is clear that enabling trade in essential goods like food and medical supplies has served a role in health diplomacy for decades.

During her career in international trade and government affairs, the author worked with pharmaceutical and medical device manufacturers to navigate U.S. sanctions policies and requirements.

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Sarah Smiley is a strategic communications and policy expert with over 20 years in international trade and government affairs, working in the U.S. Government, private sector and international organizations.

This article originally appeared on TradeVistas.org. Republished with permission.

cargo

GLOBAL CARGO IS LEAVING ON A JET PLANE

With the ongoing threat of COVID-19, airlines have seen a precipitous drop in passenger travel and are focused on the possibility of a voluntary or mandated halt to U.S. passenger flights. In response, major carriers are finding ways to keep flying during the global health crisis.

American Airlines and United Airlines, for example, have offered their passenger aircraft for charter cargo flights. Even in normal times, the lower deck of passenger aircraft carries cargo to maximize the utilization of space. With the sharp scale-back in passenger travel, however, the companies are offering dedicated cargo runs to deploy their assets and replace revenue while helping to keep supply chains moving and facilitate the shipment of essential goods.

Attention All Passengers:

Many air travelers don’t realize that it’s not just their own and fellow travelers’ luggage that checked in for their flights. The big passenger airlines generally have a lot of available space in their bellies. With operating costs covered by passenger tickets, the airlines often generate supplemental revenue by carrying packages, freight or mail for the U.S. postal service on board passenger flights.

In turn, cargo shippers secure relatively cheap space and can get goods close to their ultimate destination given the dense network of airports serving passenger flights around the world. Even logistics players like UPS and FedEx partner with passenger airlines, particularly in emerging markets where trade volumes may not justify the deployment of their own regularly-scheduled aircraft. Technology tools enable precise coordination to ensure goods off-loaded from a freighter aircraft make their departure on a passenger aircraft and vice versa.

Cargo split

The trend is taking off. The International Air Transport Association (IATA) has been cited as estimating the split between cargo carried by passenger airlines and freighter aircraft at 60/40 and forecasts that will grow to 70/30 in the coming years.

In 2018, American Airlines moved 2 billion pounds of cargo and raised $1 billion of cargo revenue despite not operating cargo aircraft. Airlines based in Asia such as Korean Air and Cathay Pacific do have freight fleets, but still carry more than half of their cargo in the bellies of passenger aircraft. McKinsey has noted that with the expansion of the major Middle Eastern passenger carriers and new aircraft designs with large belly-cargo configurations, the belly capacity of Middle Eastern carriers flying into Europe in 2016 equaled the capacity of more than 100 weekly Boeing 777 freighter flights.

Open Skies

“Open Skies” agreements governing the transport of people, pallets and packages are designed to enable market forces to guide decision-making about routes, capacity, and pricing. Critically, Open Skies agreements also provide both passenger and cargo flights unlimited market access to partner markets and the right to fly to all intermediate and beyond points. The United States now has Open Skies agreements with over 100 partners around the world, including both bilateral agreements and two multilateral accords. So-called fifth freedom rights – also called beyond rights – are a core element of Open Skies agreements, permitting a carrier to fly to a second country, offload passengers and cargo, pick up new passengers and cargo, and continue on to a third country.

Over 100 Open Skies

While Open Skies agreements provide benefits to both passenger and cargo carriers, cargo carriers to a large extent fly international packages and freight themselves, while passenger carriers utilize codeshare agreements and worldwide alliances. The different business models and complex tie-ups can produce a divergence in interests. A prominent example was the dispute between the “Big Three” U.S. passenger carriers – American, Delta, and United – and the governments of the United Arab Emirates (UAE) and Qatar, who the carriers alleged were providing billions of dollars in subsidies and other benefits to their state-owned carriers: Emirates, Etihad, and Qatar Airways. Among other serious concerns, this raised red flags about subsidized fifth freedom operations (e.g., Newark-Athens-Dubai) and the potential for their expansion, negatively impacting U.S. passenger airline service to the Middle East and India.

U.S. Airlines for Open Skies, a coalition that included FedEx, Atlas Air, the Cargo Airline Association and JetBlue (which has a code-sharing agreement with Emirates), opposed the call of the Big Three for restricted Gulf fifth freedom rights (a violation of the U.S.-UAE and U.S.-Qatar Open Skies agreements if restricted involuntarily). The cargo carriers expressed concern that challenges to the Open Skies accords with Qatar and the UAE put at risk the fifth freedom rights that cargo carriers depend on for their complex global networks. They discounted the view that the U.S. could breach passenger fifth freedom rights without setting a dangerous precedent for the equivalent all-cargo rights.

The dispute was ultimately resolved in 2018 through U.S. government agreements with the Qatar and UAE governments under which the parties acknowledged that government subsidies adversely affect competition and committed to financial transparency and business on commercial terms.

Air Cargo Players

In the Upright Position for Takeoff

As passenger carriers step up to support cargo at this extraordinary time, you may not know that from 1997-2001, UPS also ran passenger operations. For a period of years, the company had contracts with tour companies and cruise lines to offer vacation flights as well as charters for college and pro sports teams, politicians, the press corps and others. In under four hours, a 727-100QC could be ready to carry 113 passengers. See here for the UPS Quick Change process.

Air cargo capacity is critical at this time of crisis and the airlines’ role is deemed a critical infrastructure industry by the Centers for Disease Control and Prevention (CDC). American Airlines reports that its recent cargo-only charter carried medical supplies, mail for active U.S. military, and telecommunications equipment and electronics to support people working from home. United’s wide-body charter cargo flights are likewise getting critical goods into the hands of businesses and people in need. Stakeholders across the cargo and passenger industries look forward to a post-pandemic era where all can return to their respective roles in transporting people and cargo globally, described well by United’s slogan “Connecting People. Uniting the World.”

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Leslie Griffin is Principal of Boston-based Allinea LLC. She was previously Senior Vice President for International Public Policy for UPS and is a past president of the Association of Women in International Trade in Washington, D.C.

This article originally appeared on TradeVistas.org. Republished with permission.