US government shut down will have cross-border impacts

A potential US government shutdown will take place on Saturday, Sept. 30, 2023, after an impasse in Congress prevented the passage of a budget bill.

Companies engaged in trade in or with the US should expect to be impacted in numerous ways, including by disruptions to transportation services and freight fluidity.

It will also impede the ability of federal agencies to process customs documentation.

Starting Oct 1, 2023, if the government shuts down, over 438 government agencies will suspend normal operations. However, “essential” workers will continue to provide vital services, such as those relating to national security or activities to protect life and property.

The trade industry must prepare for impacts on trade operations for importers, exporters, transportation and logistics companies, customs brokers, and all other parties involved in global trade. These agencies are asking members to prepare for a shutdown.

The agencies include:

• U.S. Customs and Border Protection (CBP)
• Department of the Treasury’s Office of Foreign Assets Control (OFAC)
• Department of Commerce’s Bureau of Industry and Security (BIS)
• Department of State’s Directorate of Defense Trade Controls (DDTC)
• Department of Transportation (DOT)
• Census Bureau (Census)
• Federal Maritime Commission (FMC).

Federal government activities related to imports, including tariff exclusion request processing, antidumping duty and countervailing duty investigations, and other regulatory and administrative activities, will likely cease during a government shutdown.

During a 2018 shutdown, the Department of Commerce’s International Trade Administration furloughed a significant number of its staff and halted its antidumping duty and countervailing duty investigations. The Department of Commerce suspended the processing of Section 232 tariff exclusion requests for steel and aluminum imports.

However, CBP is expected to continue its normal operations at U.S. ports. CBP is expected to continue cargo processing and inspections at the U.S. ports of entry, security screenings and revenue collection, and enforcement activities related to alleged antidumping duty and countervailing duty evasion pursuant to the Enforce and Protect Act.

However, policy, regulatory, legislative, auditing, and training activities will likely be suspended in line with past practices.

As September 30 approaches, exporters to the US should also be aware of the operational impacts of a potential government shutdown on other Partner Government Agencies (PGAs) involved with processing imported merchandise, including the U.S. Environmental Protection Agency, U.S. Food and Drug Administration, and U.S. Department of Agriculture, which may result in slower clearance of shipments subject to review.

The impact of a federal government shutdown on the transportation sector will vary between agencies and modes of transportation. The DOT will continue activities for safe travel and movement of vehicles; the FAA will continue essential activities such as air traffic control services; and the Maritime Administration will continue functions necessary for protecting human life and US vessels.

On the other hand, the Federal Maritime Commission will likely suspend virtually all activities for the duration of the shutdown. As a result, the trade industry will be unable to contact the Commission; access the FMC online databases such as the Agreements Notices & Library; or submit new filings or applications, such as ocean transportation intermediary licenses, service contracts, tariff registrations, vessel-operating common carrier and marine terminal operator agreements, certifications of financial responsibility for cruise lines embarking from U.S. ports, and agreement reports.

Formal and informal adjudicatory and investigatory proceedings pending before the FMC or the administrative law judges are also expected to be temporarily suspended until the government reopens.