10 Jan 2019
Trade Agencies Continue to Be Impacted by Partial U.S. Government Shutdown
The continuing partial shutdown of the U.S. federal government has begun to affect key trade agencies as it nears its three-week mark. Certain security-related functions, including U.S. Customs and Border Protection’s import processing and border control operations, have been designated as essential and are therefore still being carried out. However, the longer the partial government shutdown goes on the more it will affect Americans as well as those who export to the United States.
For example, the U.S. Department of Commerce missed its 8 January deadline for publishing a key economic data report: the U.S. Census Bureau’s monthly update on the evolution of U.S. international trade in goods and services for November 2018. The Census Bureau website links to a post on the DOC website indicating that most Census data are not being updated during the shutdown. The failure to update these data will impact other trade-related information, such as the DOC Office of Textiles and Apparel’s monthly reports on U.S. textile and apparel trade.
The DOC website indicates that most services and activities provided by the International Trade Administration are on hold. Other agencies that have been completely shut down include the Bureau of Economic Analysis (thereby precluding the issuance of gross domestic product and related data) and the Economics and Statistics Administration. Implementation of export control regulations is being continued by essential employees as a national security priority. However, the ITA’s closure has resulted in a halt to all processing of steel and aluminium tariff exclusion requests, along with all trade promotion activities and many other activities. According to George Mason University’s Mercatus Center, as of 20 December 2018, about 57 percent of the 44,389 steel/aluminium product exclusion requests filed to date were still pending. Approximately 32 percent of the requests filed to date have been approved while about 10 percent have been denied.
Meanwhile, the continued closure of the U.S. International Trade Commission raises doubts as to whether it will be able to meet its 15 March deadline for issuing a report on the probable economic effects of the U.S.-Mexico-Canada Agreement. This report is required for the USMCA to receive the expedited congressional consideration provided under the trade promotion authority law. Sources state that the report could be finished on time if the shutdown ends soon but could be pushed back if it continues, especially if the USITC uses the full 105 days available. Any delay in the USITC report could then postpone congressional consideration of the agreement.
U.S. firms working with foreign investors on deals requiring approval by the Committee on Foreign Investment in the United States should also be aware that all CFIUS reviews are currently on hold. CFIUS reviews were greatly expanded under the Foreign Investment Risk Review Modernization Act of 2018, which became law in August 2018. CFIUS is chaired by the U.S. Treasury Department, which advises on its website that during a lapse in appropriations any other information on the website may not be up to date, transactions submitted via the website may not be processed, and Treasury personnel may not be able to respond to questions or requests. As an inter-agency committee, CFIUS is affected by disruptions at multiple departments and agencies.
Moreover, press reports indicate that Transportation Security Administration employees responsible for security screenings at U.S. airports are missing work for health-related reasons at higher rates than usual, ostensibly to protest is expected to work without pay as essential employees. Meanwhile, televised reports are broadcasting longer than usual lines at U.S. airport security checkpoints.
Other U.S. departments affected by the shutdown include Agriculture, Homeland Security, State and Transportation, as well as many smaller agencies. Certain agencies were able to continue normal operations for a few days based on prior funding, but the longer this shutdown continues the more agencies will be affected by the lack of new funding. While the White House and Congress have continued to have discussions regarding the shutdown – primarily focused on expenditures for security on the U.S. border with Mexico – President Trump’s televised address to the nation on 8 January did not offer a clear path forward to resolve the current stalemate.