A federal regulation to restrict U.S. exports of personal protective equipment for health care workers in the name of national defense and COVID-19 containment, includes an exemption for producers that export pursuant to “pre-existing commercial relationships.”
The Federal Emergency Management Agency’s exemption to a regulation issued Tuesday also said the agency won’t “purchase” such items from U.S. manufacturers with “continuous export agreements with foreign customers since at least January 1, 2020” so long as at least 80 percent of the company’s domestic production of the items was distributed in the U.S. in the last year.
The exemption appears to be crafted to protect Minnesota manufacturer 3M Co., which announced on Monday that it had reached a deal with the administration under which it could continue exports of personal protective equipment, but also would import 167 million masks from its China factory over the next three months. Many news reports have cited shortages of the equipment as doctors and nurses try to deal with the COVID-19 pandemic.
“FEMA and 3M have been engaged in regular conversation about how best 3M may satisfy the FEMA-issued DPA [Defense Production Act] order from its foreign manufacturing facilities, and the DPA process is designed to provide flexibility to 3M to plan for and execute this order,” a FEMA spokesman said Wednesday.
But the FEMA spokesman declined to say whether the exemption to export in the regulation was a precondition for 3M’s agreement to bring in more masks from China.
3M did not respond to requests for clarification, but its statement on Monday describing the “plan” it had reached with the administration left little doubt that the company had worked out a deal that protected its option to continue exporting protective masks and clothing to Canada and Mexico.
“The Administration is committed to working to address and remove export and regulatory restrictions to enable this plan,” the 3M statement said. “The plan will also enable 3M to continue sending U.S. produced respirators to Canada and Latin America, where 3M is the primary source of supply.”
3M said it produces 35 million protective masks monthly in the U.S., or 420 million yearly. If it exports 20 percent, a level suggested by the FEMA exemption, that would be some 80 million. While imports of 167 million from China will help, it's also clear from health industry data that the domestic shortage of masks will remain acute.
3M also cited the “humanitarian implications” of its agreement with the administration.
The FEMA order cited the president’s authority under the Defense Production Act of 1950 to require companies give priority to contracts the president “deems necessary or appropriate to promote the national defense.” The DPA also grants him authority to “allocate” materials or services to promote national defense.
Customs and Border Protection is granted authority to stop shipments of five categories of personal protective equipment at the border, and the administration has authority to purchase such goods for domestic use.
The administration also issued a series of executive orders asserting authority to control the distribution of the items in civilian markets, including authority “to prevent domestic brokers, distributors, and other intermediaries from diverting such material overseas.”