April 17, 2020
Categorized: Digital Trade | Think Policy
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Today, IBM submitted the following letter in response to the US Trade Representative’s request for comments on COVID-19-related modifications to current 301 tariffs on imports from China.
April 17, 2020
The Honorable Robert Lighthizer
United States Trade Representative
600 17th Street, N.W.
Washington, DC 20006
Request for Comments on Additional Modifications to the 301 Action to Address COVID-19: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation; Docket No. USTR-2020-0014
Dear Ambassador Lighthizer:
The IBM Corporation respectfully submits this written response to USTR’s request for comments regarding additional modifications to the Section 301 actions against China, specifically the removal of duties on medical care products to address COVID-19.
This review comes at a critical time. Our world is the throes of an unprecedented health crisis that has affected every country, upended daily life, and wreaked havoc on national economies. Only bold and concerted action by the U.S. Government, working in tandem with the private sector, will alleviate this health crisis and help restart our economy.
To that end, we welcome USTR’s review of current tariffs on imports from China under Section 301. We urge the Administration to provide not only immediate tariff relief on imports of medical supplies from China, but tariff relief on all imports imposed under Section 301. These actions will help provide critical access to medical supplies and deliver economic relief to American companies and workers during this period of extraordinary economic and financial hardship.
Ensuring Access to Medical Supplies
The COVID-19 crisis has necessitated a debate about global supply chain vulnerabilities for medicines and medical supplies. While steps are being taken to ramp up domestic production of needed supplies, supply chains will still require critical imported inputs, and for the moment the United States has an urgent need to import medical supplies. Increased availability of basic medical goods, such as facemasks, will also help companies like IBM implement the safe and responsible return-to-work policies that are prerequisites for restarting the U.S. economy.
IBM stands ready to work with the Administration to address long-term supply chain vulnerabilities and ensure that the United States is prepared for future health emergencies. But the Administration should act to address the current shortages impacting our health care system by lifting Section 301 tariffs on medical imports from China.
Broader Tariff Relief to Support the U.S. Economy
Prior to the outbreak of the COVID crisis, the global economy was already experiencing increased stress, exacerbated by global tariffs and trade frictions. An August 2019 report by the nonpartisan Congressional Budget Office, for example, linked tariffs and trade uncertainty to slowing U.S. GDP growth.
And in a September analysis released before the COVID-19 pandemic, the Federal Reserve Board of Governors estimated that disruptions in investment and industrial production caused by tariffs would cause GDP to decrease by a full percentage point in 2020.
This deceleration in global trade has been severely exacerbated by the COVID-19 crisis, further harming U.S. economic growth. We urge the Administration to take decisive action to strengthen American business by granting temporary relief from all tariffs imposed against China under Section 301.
Tariff relief will provide immediate cash flow and liquidity support for companies of all sizes that import goods into the United States. It will allow companies to redirect tens of billions of dollars that would otherwise be paid in tariffs to more pressing and immediate needs, such as funding employee payrolls and benefits, maintaining limited operations during the lockdown, investing in the maintenance of critical infrastructure, and providing liquidity to quickly ramp up business activity once restrictions are lifted.
Announcing immediate tariff relief would also send an unmistakable message to financial markets that the Administration will take any and all steps to protect the U.S. economy.
At this time of economic uncertainty and dislocation, we urge the Administration to provide immediate tariff relief and help America recover from the global COVID-19 pandemic. Thank you for your consideration.
Vice President, Government and Regulatory Affairs
(Download the PDF letter here)