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US Regulations on Importing and Exporting Critical Goods

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. 

FDA Responds to Covid-19 Challenges 

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.

Medical Devices, Pharmaceuticals and Export Controls

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 ensure compliance 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 export laws

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.

Medical Supplies and Tariffs

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 this year. 

Hand Sanitizer and FDA Regulations

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 guidance here.

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.

About QAD Precision – Trusted Global Trade and Transportation Execution

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 their import, export 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.

 

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