Government shutdown holds up export licenses

Once the export control agencies are back in operation, it could take weeks for their staffs to dig out from the backlog of license requests.

Government shutdown holds up export licenses

Once the export control agencies are back in operation, it could take weeks for their staffs to dig out from the backlog of license requests.

Government shutdown holds up export licenses

Once the export control agencies are back in operation, it could take weeks for their staffs to dig out from the backlog of license requests.

 
It’s radio silence for U.S. exporters attempting to get answers on the status of pending export license applications during the ongoing federal government shutdown, now in its 12th day.
    Export licenses are handled primarily by the Commerce Department’s Bureau of Industry and Security (BIS) and the State Department’s Directorate of Defense Trade Controls (DDTC), in addition to agencies with export control oversight in the Defense and Energy departments.
    BIS also has been forced to put other export control requests, such as classification requests, encryption reviews and registrations and advisory opinions, on hold during the shutdown.
    “This means that no applications that were pending prior to the shutdown have been further processed and any new applications will not be reviewed until the government shutdown has stopped,” said Paul DiVecchio, principal of Boston-based export control consultancy firm DiVecchio & Associates.
    In particular, he said BIS’ halt in processing license applications and other requests has placed a significant administrative burden on the export compliance operations of many of his clients.
   DiVecchio said even if the federal government received budget relief from Congress and restored operations on Friday, it will take BIS, DDTC and other export control agencies weeks to work through the license backlog. BIS, for example, processes about 2,000 applications a month.
    The last time that U.S. exporters experienced a similar administrative backlog in the federal government regarding export licenses and requests occurred during the 17-day shutdown in October 2013.
    “Suffice to say that exporters who need these licenses from Commerce and State operate in an extremely competitive global marketplace and these types of delays only harm our exports and economy at large,” said Eric Hirschhorn, who served as undersecretary for industry and security and head of BIS during the Obama administration.
    “Obviously, it’s going to take some time to clear out the license backlog,” he added. “BIS is already stretched thin.”
Normally, the fourth quarter is a peak season for air cargo. So, essentially flat growth in November is a big disappointment. While our outlook is for 3.7 percent demand growth in 2019, downside risks are mounting. Trade tensions are cause for great concern. We need governments to focus on enabling growth through trade, not barricading their borders through punitive tariffs.
Spot container rates from Shanghai to Los Angeles were $2,274 per FEU as of Jan. 17, while rates from Shanghai to New York were $3,245 per FEU, up 67 percent and 13 percent year-over-year, respectively, according to Drewry’s World Container Index.
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