G-20 Pledges Only Limited Trade Restrictions Amid COVID-19

Law360 (March 26, 2020, 6:18 PM EDT) -- Leaders for the Group of 20 nations on Thursday committed to keeping international trade flowing during the coronavirus outbreak, but suggested that restrictions may still be needed to preserve public health.

The G-20 leaders said in a joint statement Thursday that barriers need to be lifted "to ensure the flow of vital medical supplies, critical agricultural products, and other goods and services across borders."

"We reiterate our goal to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open," the G-20 said.

However, the leaders noted that "emergency measures" that are "targeted, proportionate, transparent, and temporary" may still be needed at this time.

The G-20 statement came as leaders around the globe grapple with their trade policy responses to the pandemic. A Swiss-based monitoring organization reported this week that 54 governments have placed some form of export restriction on sensitive medical equipment.

In the U.S., trade associations and lawmakers are pushing President Donald Trump to take more action to fill medical supply shortages in the U.S.

On March 19, Trump invoked a provision of the Defense Production Act — a law created during the Korean War to ramp up private production of medical equipment — that allows the U.S. Department of Health and Human Services to prioritize contracts so federal government orders of ventilators and other medical products are filled before commercial orders.

But the Coalition for a Prosperous America said in a Wednesday statement that the U.S.' four biggest ventilator manufacturers are still unable to secure needed parts from their current suppliers to ramp up their productions to meet the needs of U.S. hospitals overwhelmed by COVID-19.

"We've heard troubling reports that some multinational ventilator companies are sending supplies to other countries and opposing the use of the Defense Production Act during this shortage," CPA said.

The coalition said that Trump should use the DPA to provide its members with funding to manufacture needed medical equipment parts.

The more extreme and largely untested provisions in the DPA that Trump has not yet invoked authorize the president to use loans and other incentives to boost the production of critical goods and allow the government to take over distribution chains for national defense purposes.

Lawmakers have also urged Trump to examine U.S. trade policy to guarantee that current import and export restrictions are not stopping much needed medical supplies and equipment from entering the U.S. to combat the coronavirus.

Senate Finance Committee Chairman Charles Grassley, D-Iowa, along with 11 other Republican senators, suggested in a Wednesday letter addressed to Trump that the U.S. lift tariffs on medical supplies, drugs and other health products and temporarily suspend duties for select companies.

"Similar to the IRS providing Americans an additional 90 days to make tax payments without incurring interest or penalties, a duty deferral would be a commonsense way to improve the liquidity of our businesses during this time of economic disruption," the senators said.

The lawmakers also said that the president should cease all plans on new tariffs or tariffs increases and drop movement on an anticipated "Buy American" executive order that would require federal agencies to buy U.S.-made medical supplies and equipment.

More than 90 national and local trade associations including the U.S. Chamber of Commerce and the National Foreign Trade Council echoed the senators' sentiments in a Wednesday letter to the Trump administration, telling the government officials that a "Buy American" order would be "counterproductive."

"Preventing federal agencies from sourcing medical equipment and pharmaceutical ingredients from abroad — or that are made with non U.S. inputs — would only exacerbate the supply shortages racking the United States," the organizations said. "If we implement localization requirements, many of our trade partners would assuredly follow our lead and limit imports from the United States."

--Additional reporting by Dorothy Atkins. Editing by Michael Watanabe.

For a reprint of this article, please contact reprints@law360.com.

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