Globally traded goods generally require a lot of paperwork. That’s
true whether you are shipping clothing or critical items. In this
QAD Precision Report, we will look at US regulations regarding the
export and import of goods required to tackle the global Covid-19 pandemic.
Around the world governments, regional authorities and even
individual hospitals have placed large orders to purchase much needed
supplies to fight Covid-19. In response, many manufacturers
have retooled their production lines to make ventilators, hand
sanitizer, masks, gloves and other medical personal protective
equipment (PPE). In addition, life sciences companies have been
ramping up operations to increase the output of testing kits and vital
components to stop the spread of the coronavirus or treat those infected.
Ensuring that critical items get where they need to be is a priority.
Unfortunately, this can cause transportation bottlenecks. This March,
many European countries closed their borders in order to stop the
spread of Covid-19. As a result, both travellers trying to return
home, and freight trucks carrying essential supplies experienced long
delays getting through internal EU borders.
Reports suggest that port
congestion is likely to be an issue in the US. Many businesses
have shut their doors and furloughed staff to prevent the spread of
the virus. As a result, many importers do not have the ability to move
imports from the ports to warehouses, distribution centers and
outlets. A further complication is that many countries have restricted
the export of critical supplies, including PPE.
US companies engaged in the import, export or development of goods to
combat Covid-19 have a number of regulatory obligations that they must meet.
The US Food and Drug Administration (FDA) has responded to the
challenges posed by the pandemic. The FDA has been issuing guidance to
help accelerate the development of testing kits, respiratory masks and
other critical goods.
On 16 March, the FDA
announced measures to expand testing capabilities. Under this
guidance, individual states can take responsibility for authorizing
tests. The laboratories conducting the tests can engage directly with
state authorities instead of going through the FDA.
Furthermore, the FDA also stated that — under certain circumstances
— it would not object to commercial manufacturers distributing, and
laboratories using, new commercially developed tests before the FDA
granted an Emergency Use Authorization (EUA).
In addition, the FDA issued a EUA that allows for the use in health
care settings of certain ventilators, and devices modified for use as
ventilators that meet FDA criteria for safety, performance and labeling.
Through these measures, the FDA hopes to expedite testing, treatment
and other medically necessary goods. Manufacturers can keep abreast of
guidance changes by following the FDA daily updates here.
In the US, the Bureau of Industry and Security (BIS) is responsible
for determining what goods are subject to Export Administration
Regulations (EAR). A number of medical devices are categorized as
EAR99. That means they can be exported without a license. You can see
the full list of BIS EAR99 medical devices here.
However, it is important to note that this exemption does not apply to
Iran or Sudan. Companies must apply to the Office of Foreign Assets
Control (OFAC) for one-year specific licenses for export or reexport
to these countries.
Furthermore, many chemicals,
pharmaceuticals, biological and genetic materials, including
vaccines are subject to export controls. This also applies to
biological processing equipment, testing kits and technologies:
Biological agents and genetic elements (1C351-4)
Vaccines (ECCN 1C991)
Biological processing equipment (ECCN 2B352)
Technology (ECCN 1E001, 2E001, 2E002, 2E301)
As a result, life sciences companies that are collaborating with
research partners outside of the US, need to remain compliant with
export controls when sending samples across borders. Should critical
paperwork be missing, samples could be delayed or destroyed by
authorities. Furthermore, US manufacturing companies that employ
foreign staff must also comply with deemed
Of equal importance is the necessity of ensuring that delicate
life sciences samples are properly transported. These may be
sensitive to temperature, humidity or other environmental factors.
The US imposes duties on a number of medical supplies. Face masks,
such as the N95 surgical masks (HTS# 6307.90.98) have a general import
duty of 7 percent.
Hospital beds (HTS #9402) and certain medical supplies (HTS #3005)
such as wadding, gauze, bandages and other variants of such articles,
such as dressings and adhesive plasters carry no duties.
Ventilators used for respiratory purposes (HTS# 9019.20.00.00) for
ozone therapy, oxygen therapy, aerosol therapy, artificial respiration
or other therapeutic respiration apparatus as well as parts and
accessories for such ventilators are also duty free.
Propyl alcohol and isopropyl alcohol (HTS# 290512),
used in the manufacture of hand sanitizer, can carry a duty rate of
5.5 percent, depending on where it comes from. However, exemptions
apply to a number of countries, such as Australia, Chile and Singapore.
Furthermore, Section 301 tariffs apply to some medical goods imported
from China. For example, hand sanitizer, disposable medical headgear,
thermometers and patient monitors are subject to 25 percent duties
when imported from China.
However, as a result of the Covid-19 crisis, the US has granted
temporary exemptions on some medical products made in China. These
include items such as sterile drapes and disposable shoe covers, as
well as face and medical masks. The exemption runs until 1 September
In order to fight the spread of Covid-19, many companies have turned
their production lines to making hand sanitizer. The FDA has issued
guidelines for companies that do so. Specifically, the FDA will not
take action against companies that are not currently regulated to make
alcohol-based hand sanitizers. However, such companies do have to
abide by a number of guidelines. These guidelines include the
ingredients used, whether a company follows World Health Organization
preparation recommendations, and the conditions under which the
manufacturer makes hand sanitizer. You can find details on the FDA
Isopropyl alcohol and ethanol can both be used to manufacture hand
sanitizer. These products can be flammable and cause irritation to the
eyes. Therefore, when they are shipped, the correct hazmat procedures
must be followed.
QAD Precision, a division of QAD Inc., provides industry-leading global
trade compliance, and multi carrier transportation
execution solutions from a single, integrated platform. An
ISO-certified company, QAD Precision assists companies to streamline
and transportation operations, optimize deliveries, and increase
logistics ROI. QAD Precision’s scalable and extensible solution easily
integrates with existing ERP and WMS solutions. Industry leaders in
every region of the world rely on QAD Precision’s global support
centers to leverage thousands of carrier services and manage millions
of global trade and shipping transactions every day. For more
information about QAD Precision, visit www.qadprecision.com.