Ian Cohen

Countries will more strictly review transactions involving foreign direct investment as the COVID-19 pandemic continues, especially the U.S., which could increase scrutiny and export controls in the biotechnology sector, trade lawyers said. The Committee on Foreign Investment in the U.S. may increase reviews of transactions involving health care technology to keep critical virus-fighting resources in the U.S., said Aimen Mir, a trade lawyer with Freshfields Bruckhaus Deringer. Mir, who also formerly served as the Treasury Department’s deputy assistant secretary for investment security, said the pandemic will also cause CFIUS and other agencies to increasingly look to prevent transfers of pathogen-related technologies and to maintain technology leadership in the biotechnology sector.

Companies will likely be faced with a reshuffled supply chain after the novel coronavirus COVID-19 pandemic subsides, placing greater importance on maintaining sound trade compliance programs even as business uncertainty increases, said Kerry Contini, an export control and sanctions lawyer with Baker McKenzie. As supply chain actors struggle to stay in business and as new parties enter and leave the supply chain, companies may face a host of new suppliers or customers, Contini said, a transition that will likely affect global industries on a large scale.

More progress has been made on China’s agricultural commitments under the U.S.-China phase one trade deal, including an agreement relating to poultry exports and an updated list of U.S. facilities eligible to export beef and grain to China, the Office of the U.S. Trade Representative said March 24. The progress shows China is “moving in the right direction” to fulfill its purchase agreements, Agriculture Secretary Sonny Perdue said in a statement. USTR Robert Lighthizer released an update on Chinese agricultural commitments earlier this year (see 2002250055).

The European Union will allow exports of protective medical equipment to additional countries and territories less than a week after announcing it was restricting exports to countries outside the EU (see 2003160047). Export authorizations will be exempt for shipments to Norway, Iceland, Liechtenstein, Switzerland, the Vatican, Andorra, the Faroe Islands, San Marino and territories that have “special relations” with Denmark, France, the Netherlands and the United Kingdom, the EU said in a March 20 guidance. The EU released further guidance detailing the amendment, a “guideline” for the changes and an annex containing templates for export authorization applications and member state notifications. The change took effect March 21.

European governments are skeptical about the use of U.S. export controls to restrict transfers of sensitive technologies even as the U.S. ramps up attempts to convince them to adopt similar measures, according to a March 18 report from the Mercator Institute for China Studies. As the U.S. has taken an increasingly aggressive approach to restricting emerging technology sales to China, Europe increasingly sees export controls as a “blunt instrument” for tackling technology risks, the report said, viewing them instead as a U.S.-driven effort to contain China's rise.

Agricultural exporters and shippers are losing “hundreds of millions of dollars” due to shipping uncertainty and cargo detention penalties caused by the response to the coronavirus pandemic, said Peter Friedmann, executive director of the Agriculture Transportation Coalition. Friedmann was critical of the Federal Maritime Commission, which has yet to finalize a proposed rule issued last year that would provide guidance about how the FMC assesses the fairness of demurrage and detention practices. The rule’s public comment period ended in October.

United Kingdom customs and trade logistics operations may be quickly overwhelmed when the U.K. officially leaves the European Union next year, which could lead to delays at ports and create significant shortages of customs intermediaries, two U.K. industry experts said. The U.K. is expected to face a shortage of more than 40,000 customs intermediary staff and 50,000 truck drivers, all while export declarations are expected to increase by 500%, said John Lucy, a trade manager at the Freight Transport Association, and George Baker, founder of U.K.-based shipping company George Baker Shipping. “These factors will add significant potential costs and time implications in order to cross borders,” Lucy said during a March 16 webinar hosted by the Institute of Export & International Trade.

Although Chinese ocean operations and domestic trucking activities are returning to normal, there remains significant concerns over equipment and space availability for ocean fighters around the world, according to a March 17 emailed alert from Crane Worldwide Logistics. Air cargo transportation also remains uncertain, with availability of ports in China constantly changing and countries canceling flights to regions with high concentrations of coronavirus cases, the alert said.

The head of the Commerce Department Bureau of Industry and Security revoked a shipping company’s export privileges for 15 years for export violations but ordered a review of the assessed fine, saying it was too high, according to a March 11 order. The company and its chairman -- Singapore-based Nordic Maritime Pte. Ltd and Morten Innhaug, respectively -- were originally fined more than $30 million by an administrative law judge, who also revoked the company’s export privileges until the fine was paid, according to the order. But Cordell Hull, BIS’s acting undersecretary, said the fine was too high, ordering the judge to review its decision to impose the penalty.

The European Commission announced export controls on shipments of certain protective medical equipment, which will now require authorizations before being sent to third countries, according to a March 15 press release. Several European countries also announced travel restrictions due to the coronavirus, including Germany and Poland, which may impact supply chains and cargo shipments.