WASHINGTON (4/27/17)--While weeklong media headlines have forecast a government shutdown by midnight tomorrow, it appears the House and Senate Appropriations committees have endorsed the idea of a short-term spending bill to keep the government open while budget negotiations continue. The stopgap measure delays a possible shutdown until Friday, May 5.

 

The bill must pass both chambers by midnight tomorrow (April 28) to avoid the shutdown. The potential progress comes as the new administration has threatened to derail negotiations with last-minute demands. The border wall and health care spending have been two sticking points for congressional and White House negotiators during the past several weeks of discussions to avert a shutdown.

 

The bill to stall a government shutdown until May 5 was introduced late yesterday (April 26) after it became increasingly clear that Congress would not be able to pass a bill this week to fund the government through Sept. 30. Congressional leaders and the White House want to avoid a politically unpopular shutdown, which would close national parks and monuments, furlough thousands of federal employees and delay Americans' tax refunds.

 

If they fail, the result would be a partial government shutdown in which most services would stop except those deemed "essential" — such as national security work performed by the Department of Homeland Security and the FBI. Active duty military personnel would not be furloughed.

 

So what effect will a government shutdown have on global trade – either tomorrow or May 5-- in the near future, if at all? Depending on the length of a shutdown, it would not take long for trade losses to multiply.

The previous government shutdown—in 2013 for 17 days estimates, according to Moody’s, show the cost to the nation was $20 billion overall.

While the length of an imminent 2017 shutdown will remain uncertain, there will be far-flung impacts on trade operations for importers, exporters, transport providers, logistics companies, port authorities--essentially, all involved in facilitating global commerce.

As in 2013, the current analysis of a 2017 shutdown could have similar effects on each government agency. For importers, Customs and Border Protection (CBP) may retain up to 90 percent of its existing employees, while for exporters, the Commerce Department's Bureau of Industry and Security (BIS) will mostly retain 40 percent of its personnel.

In the shutdown four years ago, the U.S. government had contingency procedures in place for such instances. Below is a more detailed description of the 2013 shutdown plans involving trade and key federal agencies:

 

U.S. Customs and Border Protection (CBP)

The following examples are illustrative of U.S. import trade-related activities that could continue during a lapse of appropriations:

  • Passenger processing and cargo inspection functions at ports of entry;
  • CBP revenue collection; and
  • Securing the nation's border by maintaining criminal law enforcement operations, including drug and illegal alien interdiction.
  • While CBP is essential, officers at the border are not impacted. Support functions, including ABI reps, are furloughed.  In 2013, CBP supported an ACE Help Desk collecting issues, but with no staff, they typically responded with “When the ABI reps get back, we will help you.”

 

CBP further indicates non-exempt activities that will be curtailed during a potential shutdown:

  • Planning (strategic, business, budgetary, etc.), research and development, auditing, and training activities;
  • Most policy functions, administrative as well as programmatic, unless those functions can be justified by an exception; and
  • Regulatory, legislative, public, and intergovernmental affairs.


Food and Drug Administration (FDA)

FDA will continue to review imports offered for entry into the U.S., but will cease certain safety activities, including some compliance and enforcement activities, as well as the monitoring of imports. Agency staff who conducts sample analyses on products will continue to work, which is good news for companies whose products have been or may be detained by FDA on import pending the outcome of sample testing.

Department of Commerce

Bureau of Industry and Security (BIS): The Department of Commerce's contingency plan outlines BIS activities that will continue during a funding lapse. Commerce notes that all Office of Export Enforcement (OEE) personnel are considered essential for national security operations. Therefore, the agency will continue investigations, prosecutions, and other activities with DOD, DOJ, FBI, ICE, and other law enforcement and intelligence agencies. In terms of export administration, BIS will keep certain minimal activities in operation, such as:

  • Processing export licenses essential to protecting the U.S. national security;
  • Evaluating transactions involving U.S. export-controlled items to ensure they are exported in accordance with export control requirements;
  • Drafting amendments to the Export Administration Regulations to address emergency foreign policy issues that warrant changes to dual-use export control policies;
  • Negotiating changes to international export control lists; and
  • Hosting international inspectors pursuant to U.S. non-proliferation treaty obligations.

International Trade Administration (ITA): ITA would retain only 3 percent of its staff during the shutdown. ITA has six officers who are based overseas to conduct pre-licensing and post-shipment checks. According to Commerce's contingency plan, these officers will continue to perform these functions.

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Additional sources: CNN, MSNBC, NPR