As of Friday September 29, 2023, the United States Congress has yet to reach a spending agreement, as a result companies with international trade operations should prepare for a potential Federal government shutdown. The shutdown, which is expected to take place beginning as of 12:01 am October 1, 2023, will cause significant changes to international trade operations including agency closures and operational changes that will inevitably delay and disrupt certain trade administrative functions.
Many agencies responsible for many trade functions are expected to shut down partially or completely if the Government shutdown commences on October 1st. While certain operations such as processing imports and investigative work will continue, many administrative functions such as reviewing and approving export licenses and providing classification rulings, and conducting trade remedy proceedings will be halted for the duration of the shutdown.
U.S. Customs and Border Protection
According to the Department of Homeland Security contingency plan, port of entry operations and cargo security will remain active as essential operations through U.S. Customs and Border Protection (“Customs”). Certain import activities such as auditing, policy, regulatory, and training are non-exempt functions which are not required to be carried out during a shutdown and as such will likely be halted or slowed during this time.
In line with the previous 2019 shutdown, Customs will likely continue their review and response to Enforce and Protect Act (“EAPA”) allegations and allegations of trade fraud. However, we expect various import operations within Customs such as rulings and protests to be processed at a significantly slower pace. In addition, certain offices such as Forced Labor Communications may not be considered essential and could effectively have an impact on regulatory support such as those under the Uyghur Forced Labor Prevention Act (“UFLPA”).
U.S. Department of Commerce
Under the Department of Commerce’s (“Commerce”) contingency plan, certain International Trade Administration (“ITA”) activities deemed necessary for national security will continue, such as trade policy deliberations and negotiations. However, many functions performed by Commerce will cease. In the previous 2019 government shutdown, the ITA and the Bureau of Industry and Security (“BIS”) operated with minimal staff and limited resources. All Antidumping and Countervailing duty investigations and administrative proceedings including annual administrative reviews will cease causing deadlines to be significantly delayed. According to the current contingency plan, Enforcement and Compliance will continue on as needed/ limited basis. As such, companies should expect potential delays and restrictions to certain government resources such as the official records depository/database “ACCESS.”
BIS also experienced significant operational delays during prior shutdowns such as with certain export licensing activity. However, we expect for export enforcement operations, specifically investigations, to continue. During the prior government shutdown, SNAP-R, the platform used by businesses to submit export licenses and commodity classification requests, was non-operational for the duration of the shutdown. Even if SNAP-R is operational during the shutdown, companies should expect significant processing delays as BIS will likely cease the review and approval process during the shutdown except for emergency export license applications.
U.S. International Trade Commission
During the 2019 government shutdown, the U.S. International Trade Commission (“ITC”) suspended investigative activities, including aspects of certain proceedings such as with Section 201. The ITC’s 2022 contingency plan notes that significant activities such as litigation for which time extensions have not been granted, and government functions that directly support active litigation to which the USITC or the United States is a party, will continue. However, investigative activities, including proceedings under Sections 332, 337, 201, Title VII of the Tariff Act of 1930 will be disrupted, as well as maintenance to the Harmonized Tariff Schedule of the United States.
U.S. Department of Treasury
The Department of Treasury recently publish a contingency plan detailing which departmental functions will be operational during the shutdown. According to the plan, 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 be processing licenses or providing regulatory guidance during the shutdown.
U.S. Department of State
Because the U.S. Department of State serves many national security functions, many functions within the Department will continue as detailed in the contingency plan. However, the administrative functions, such as those served by the Directorate of Defense Trade Controls (“DDTC”), which oversees compliance with the International Traffic in Arms Regulations (“ITAR”), will be severely curtailed. Enforcement and criminal investigations will continue, but companies should expect licensing and other regulatory functions to be disrupted.
Companies should also be aware of the status of Partner Government Agencies (“PGAs”) which assist in facilitating the import and export of merchandise such as the Food and Drug Administration (“FDA”) and U.S. Department of Agriculture (“USDA”). Any operational delays in PGAs during the shutdown may cause further clearance delays. More information visit the FDA contingency plan and USDA contingency plan.
During the shutdown, companies should expect delays and disruptions to their global supply chains and plan accordingly for business operations. We will continue to monitor developments within the trade community and government agencies and provide updates as more information becomes available.