As of Friday, September 29, 2023, the United States Congress has not yet reached a spending agreement, raising concerns for companies engaged in international trade operations. A potential Federal government shutdown is looming, set to begin at 12:01 am on October 1, 2023. This shutdown is expected to bring significant disruptions to international trade activities, including agency closures and operational changes that will inevitably cause delays and interruptions in certain trade administrative functions.
Numerous agencies responsible for various trade functions are anticipated to partially or completely shut down if the government shutdown takes effect on October 1st. While essential operations such as processing imports and investigative work will continue, many administrative functions such as reviewing and approving export licenses, providing classification rulings, and conducting trade remedy proceedings will come to a halt for the duration of the shutdown.
U.S. Customs and Border Protection:
According to the Department of Homeland Security contingency plan, essential operations like port of entry operations and cargo security through U.S. Customs and Border Protection (“Customs”) will remain active. However, non-exempt functions such as auditing, policy, regulatory, and training are likely to be halted or slowed down. Certain import activities, including rulings and protests, are expected to be processed at a significantly slower pace.
U.S. Department of Commerce:
Under the Department of Commerce’s contingency plan, necessary International Trade Administration (“ITA”) activities related to national security will continue, but many other functions will cease. Antidumping and Countervailing duty investigations and administrative proceedings will come to a halt, causing significant delays in deadlines. Enforcement and Compliance will continue on a limited basis, leading to potential delays and restrictions to certain government resources.
U.S. International Trade Commission:
The U.S. International Trade Commission (“ITC”) will suspend investigative activities, including certain proceedings such as Section 201, causing disruptions in activities related to Sections 332, 337, 201, and Title VII of the Tariff Act of 1930. Maintenance of the Harmonized Tariff Schedule of the United States will also be affected.
U.S. Department of Treasury:
Key regulatory and enforcement actions, including administration and enforcement of economic and trade sanctions, will continue. However, the Office of Foreign Assets Control (“OFAC”) will not process licenses or provide regulatory guidance during the shutdown.
U.S. Department of State:
While many national security functions within the U.S. Department of State will continue, administrative functions served by the Directorate of Defense Trade Controls (“DDTC”) will be significantly reduced. Licensing and other regulatory functions will experience disruptions.
Companies engaging in international trade should also consider the status of Partner Government Agencies (“PGAs”) like the Food and Drug Administration (“FDA”) and U.S. Department of Agriculture (“USDA”). Any delays in PGAs’ operations during the shutdown may lead to clearance delays.
During this period, companies should prepare for delays and disruptions in their global supply chains, planning their business operations accordingly. Continuous monitoring of developments within the trade community and government agencies is essential. Companies seeking guidance during the shutdown can reach out to Husch Blackwell’s International Trade and Supply Chain team for advice and assistance.
Conclusion
In conclusion, the impending Federal government shutdown, set to commence on October 1, 2023, poses significant challenges for companies involved in international trade operations. With various agencies expected to partially or completely halt essential administrative functions, delays and disruptions in global supply chains are inevitable. Businesses should brace for interruptions in processes related to import and export licenses, trade remedy proceedings, and other regulatory activities.
Staying informed about the status of essential government agencies, especially Partner Government Agencies (PGAs) such as the FDA and USDA, is crucial to anticipate potential clearance delays. As the situation unfolds, companies must adapt their business strategies, preparing for slowdowns and implementing contingency plans to minimize the impact on their operations.
For guidance and support during this challenging period, companies can turn to experts like Husch Blackwell’s International Trade and Supply Chain team. Continuous vigilance and proactive measures are essential to navigate the uncertainties of the government shutdown and mitigate its effects on international trade activities.
