Lawyers Say Bonded Warehouses, FTZs May Grow in Popularity as Result of COVID-19

As Thompson Hine lawyers on a webinar discussed exemptions to the Federal Emergency Management Agency restrictions on exports of personal protective equipment, they noted that goods held in bonded warehouses or in foreign-trade zones aren't subject to the controls. As a result, they expect the two to become more widely used over the next year.

Samir Varma said, “Even on the import side, people are going to be looking at bonded warehouses and free-trade zones.”

Francesca Guerrero said that she's been hearing from companies that are trying to do intra-company transfers most often for this export issue. The FEMA guidance does not cover gowns, and does not even cover all masks. However, Guerrero advised that if you're trying to export a good similar to those covered, “that doesn’t fall under the rule at all but you want to make sure it’s quickly cleared, you can also consider a letter of attestation.”

That letter has to have a certification at the bottom, she said. “The important point is to be clear, provide them enough detail, but still try to be concise and specific so it gets processed quickly.”

During the question-and-answer period at the end of the April 30 webinar, Guerrero was asked what compliance issue is getting overlooked during the COVID-19 crisis response. She said “things are crazy and people are buying stuff ... for millions of dollars on a handshake,” but companies have to be aware that if they're trying to get their shipments expedited through international customs, they could run up against the Foreign Corrupt Practices Act. “There’s a high FCPA enforcement risk right now,” she said.

The lawyers also shared lists of countries that have expedited imports pro-actively, including Costa Rica, which is allowing Customs officials to use photocopies of documents; India, which is giving priority to imports of in-vitro diagnostic tests for COVID-19; and Saudi Arabia, which has issued importing permission for the same sorts of kits. Many countries have reduced tariffs or value-added taxes on some categories. They listed Brazil, Costa Rica, El Salvador, the European Union, the Eurasian Economic Union, Honduras, Indonesia and the Philippines.