As industry sees an increase in parties invoking force majeure clauses (see 2002140027) due to the COVID-19 pandemic response measures, courts will more closely review force majeure disputes to determine whether companies are simply trying to escape a difficult economic situation, commercial litigation lawyers said. Before invoking the clause, parties should make sure compliance with their contracts is impossible due to the pandemic. “The courts … are going to be very astute to look for people trying to use COVID-19 as a force majeure excuse where actually the contract was just not economic for them anyway,” Sean Upson, a lawyer with U.K.-based Stewarts law firm, said during an April 9 webinar.
Exports to China
Cuba was unable to receive a recent shipment of medical supplies due to U.S. sanctions, according to an April 3 press release from Cuba’s ambassador to China. Cuba said a U.S. transport company hired to make the delivery on behalf of a donor rejected the shipment “at the last minute” due to “the economic, commercial, and financial blockade” against Cuba. Cuba said the shipment, organized by Chinese businessman Jack Ma, would have included a donation of ventilators, gloves and other personal protective equipment to combat the coronavirus. The White House did not comment.
China plans to upgrade its online declaration system to allow companies to more easily apply for tariff exemptions for imported U.S. goods (see 2003180018), according to an April 7 report from Xinhua, China’s state-run news agency. The online system will allow companies to more conveniently submit their “procurement plans” and allow authorities to better process exemption applications, Xinhua said. The system will especially help applications “involving a procurement amount of less than 3,000 U.S. dollars or when the time of import approached,” the report said. The system will also include a process to “accelerate re-editing for approved” procurement plans, transactions records and other information, Xinhua said.
Export Compliance Daily is providing readers with some of the top stories for March 30 - April 3 in case you missed them.
Export controls on masks used by medical workers -- an idea that had been floated (see 2004030063) -- have been averted, 3M announced the evening of April 6. The multinational company is producing 35 million masks a month in the U.S., and the president had said none of that production should be exported to Canada and Latin America, major recipients of that output. But now, the administration will address U.S. regulatory restrictions that prevented some Chinese masks from being used for medical workers, and 3M will import 166.5 million N95 masks, mostly from its China plant, over the next three months, the company said. “The plan will also enable 3M to continue sending U.S. produced respirators to Canada and Latin America, where 3M is the primary source of supply,” the press release noted.
President Donald Trump issued a “Team Telecom” executive order on April 4 that formalizes the executive branch’s process for reviewing foreign takeovers of U.S. communications assets, but some observers questioned the extent to which it will alter the status quo. The departments of Homeland Security, Defense and Justice do those evaluations. Federal Communications Commission Chairman Ajit Pai said the EO means the commission can advance a 2016 proposal to speed up the review process.
Technology and semiconductor trade groups are objecting to increased export restrictions under consideration by the Trump administration, saying the controls could lead to industry uncertainty with significant impacts on semiconductor companies. In an April 6 letter to Commerce Secretary Wilbur Ross, the groups urged the administration to request industry input before finalizing the rule, which reportedly includes three measures to tighten restrictions on China’s ability to obtain advanced U.S. technology (see 2004020012).
Trade in products that are in severe shortage during the coronavirus COVID-19 pandemic accounted for 1.7% of world trade in 2019, according to a new report from the World Trade Organization. Although many of the medical products that are traded face no tariffs in many countries -- medicines rarely face a tariff, and they account for more than half the traded value -- there are goods that still face high tariffs. The WTO said the average applied tariff for hand soap is 17% and the average tariff on protective gear such as gowns, gloves and masks is 11.5%.
President Donald Trump has invoked the Defense Production Act to try to claim more 3M masks for U.S. workers, made in the U.S. or in China. The company issued a statement April 3 that said: “In the course of our collaboration with the Administration this past weekend, the Administration requested that 3M increase the amount of respirators we currently import from our overseas operations into the U.S. We appreciate the assistance of the Administration to do exactly that. For example, earlier this week, we secured approval from China to export to the U.S. 10 million N95 respirators manufactured by 3M in China.
China recently announced procedures for returns of cross-border exported and imported e-commerce goods, according to an April 3 report from the Hong Kong Trade Development Council. Traders seeking to return goods must apply to China’s customs authority to “engage in return business,” the report said. Any returns must come with a “guarantee” that the returns are the original goods, the report said, and must be completed within a certain time frame. The measures for returns of exports took effect March 27, and for returns of imports, on March 28.