ANNOUNCEMENT 27 Mar 2020

This $2.2 trillion initiative includes some provisions that discriminate in favor of U.S. firms, primarily through government aid to industry.

NUMBER OF INTERVENTIONS

8

  • 8 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

US Congress, H.R.748 - CARES Act, 116th Congress (2019-2020), issued on 27 March 2020: https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf
US Congress, H.R.748 - CARES Act summary: https://www.congress.gov/bill/116th-congress/house-bill/748

Inception date: 27 Mar 2020 | Removal date: 31 Dec 2020

State loan

On March 27, 2020, a $500 billion fund was created following the signing into law of bill (H.R.748) commonly known as the third coronavirus stimulus bill.

Under the fund, $471 billion have been allocated to eligible American businesses which have incurred losses as a result of the COVID-19 outbreak. More specifically, $17 billion is allocated to firms which are "critical to maintaining national security” (a category that is not further defined in the law) and a minimum of $454 billion is allocated to “programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system that supports lending to eligible businesses, States, or municipalities.”  The financial support is provided through the Secretary of the Treasury to eligible companies in the form of loans as well as loan guarantees, and other investments, see related interventions. 

Additionally, companies operating in the aviation industry have been earmarked a total of up to $29 billion in support under the fund, see related intervention. Any additional funds not allocated to the aviation industry will be allocated to the remaining beneficiaries. 

The law places some notable restrictions on the firms that may receive such support. A recipient is generally required to pledge that it “will not outsource or offshore jobs for the term of the loan and 2 years after completing repayment of the loan.” Recipients must also promise that the funds “will be used to retain at least 90 percent of the recipient’s workforce, at full compensation and benefits, until September 30, 2020,” and that it “intends to restore not less than 90 percent of the workforce of the recipient that existed as of February 1, 2020, and to restore all compensation and benefits to the workers of the recipient no later than 4 months after the termination date of the public health emergency.”

The loans must be made in the Calendar Year 2020. The fund was created under Title IV, Subtitle A of the CARES Act (H.R.748). 

Notably, a provision in bill (H.R.748) amends the Defense Production Act of 1950 to relax for limited periods certain standards set in that law. That law provides inter alia that the president may direct that loans be made to private business enterprises “to reduce current or projected shortfalls of industrial resources, critical technology items, or materials essential for the national defense.” The CARES Act amends that statute to suspend for one year the requirement that such “financial assistance may be extended only to the extent that it is not otherwise available from private sources on reasonable terms.” It also suspends for one year a provision setting a $50,000,000 limit on the amount that may be loaned or purchased under this law without notification to Congress.

The CARES Act also suspends for two years a provision in the Defense Production Act requiring congressional approval for any action resulting in shortfalls exceeding $50,000,000. It also suspends for two years a provision setting a $750,000,000 ceiling on the value of the Defense Production Act Fund. This is a fund that the president may use to finance loans, purchases, and other activities under the Defense Production Act.

Notably, under the stimulus package, several financial support interventions have been adopted, see related interventions. Notably, a few additional provisions of the bill are not separately reported here but are tangentially related to trade. These do not explicitly meet the threshold levels for reporting by the GTA (i.e., at least $10 million) or do not appear prima facie to constitute an outright subsidy or discrimination. These include two provisions in Title I of the bill (entitled the Keeping American Workers Paid and Employed Act) that allow for unspecified levels of loan forgiveness. One of them authorizes the Small Business Administration to reimburse “financial losses relating to a foreign trade mission or a trade show exhibition that was cancelled solely due to a public health emergency declared due to COVID-19 if the reimbursement does not exceed a recipient’s grant funding.” Another provides for the forgiveness of government loans that have been made to small businesses, allowing these funds to be used to cover losses incurred for payrolls and certain other costs (i.e., mortgages, rent, and utility payments). Lastly, “financial assistance that shall exclusively be used for the continuation of payment of employee wages, salaries, and benefits” has also not been covered.

One more provision of the bill that might arguably be trade-related requires that certain medical products (e.g., personal protective equipment, diagnostic tests, etc.) be added to the Strategic National Stockpile. This purchasing requirement does not directly entail any new Buy American requirements, however, nor does it entail an export ban or other intervention.

AFFECTED SECTORS

 
N/A

AFFECTED PRODUCTS

 
N/A
Inception date: 27 Mar 2020 | Removal date: 31 Dec 2020

Loan guarantee

On March 27, 2020, a $500 billion fund was created following the signing into law of bill (H.R.748) commonly known as the third coronavirus stimulus bill.

Under the fund, $471 billion have been allocated to eligible American businesses which have incurred losses as a result of the COVID-19 outbreak with  $17 billion being earmarked for "critical to maintaining national security”. The financial support is provided through the Secretary of the Treasury to eligible companies in the form of loan guarantees as well as loans and other investments, see related interventions.

Additionally, companies operating in the aviation industry have been earmarked a total of up to $29 billion in support under the fund, see related interventions. Any additional funds not allocated to the aviation industry will be allocated to the remaining beneficiaries. 

The law places some notable restrictions on the firms that may receive such support. The loans must be made in the Calendar Year 2020. The fund was created under Title IV, Subtitle A of the CARES Act (H.R.748). 

 
N/A
 
N/A
Inception date: 27 Mar 2020 | Removal date: 31 Dec 2020

Capital injection and equity stakes (including bailouts)

On March 27, 2020, following the signing into law of bill (H.R.748) commonly known as the third coronavirus stimulus bill, a $500 billion fund was created.

Under the fund, $471 billion have been allocated to eligible American businesses which have incurred losses as a result of the COVID-19 outbreak with  $17 billion being earmarked for "critical to maintaining national security”. The financial support is provided through the Secretary of the Treasury to eligible companies in the form of investments as well as loans and loan guarantees, see related interventions.

Additionally, companies operating in the aviation industry will also receive support under the fund, see related interventions. Any additional funds not allocated to the aviation industry will be allocated to the remaining beneficiaries hereunder. 

The law places some notable restrictions on the firms that may receive such support. The loans must be made in the Calendar Year 2020. The fund was created under Title IV, Subtitle A of the CARES Act (H.R.748). 

 
N/A
 
N/A
Inception date: 27 Mar 2020 | Removal date: 31 Dec 2020

State loan

On March 27, 2020, a $500 billion fund was created following the signing into law of bill (H.R.748) commonly known as the third coronavirus stimulus bill. Under the fund, $29 billion has been earmarked for certain business operating in the aviation industry.

More specifically, up to $25 billion has been allocated to passenger air carriers and related firms providing such services including aircraft repair and ticket agents. Up to $4 billion have been specifically earmarked for cargo air carriers.

The financial support is provided through the Secretary of the Treasury to eligible companies in the form of loans as well as loan guarantees, and other investments, see related interventions. The law places some notable restrictions on the firms that may receive such support. Companies must be located in the United States with significant operations in the country and with a majority of its employees being based in the United States. Additionally, certain requirements are made on companies to retain their workforce for a certain duration and not in this context outsource said workforce.

The law further authorizes the Secretary of Transportation “to require, to the extent reasonable and practicable, an air carrier receiving loans and loan guarantees … to maintain scheduled air transportation service as the Secretary of Transportation deems necessary to ensure services to any point served by that carrier before March 1, 2020.”

The loans must be made in the Calendar Year 2020. Additionally, other businesses are also eligible to receive financial support under the fund, see related intervention. The fund was created under Title IV, Subtitle A of the CARES Act (H.R.748).

Notably, under the stimulus package, several financial support interventions have been adopted, see related interventions. 

 
N/A
 
N/A
Inception date: 27 Mar 2020 | Removal date: 31 Dec 2020

Loan guarantee

On March 27, 2020, a $500 billion fund was created following the signing into law of bill (H.R.748) commonly known as the third coronavirus stimulus bill. Under the fund, $29 billion has been earmarked for certain business operating in the aviation industry.

More specifically, up to $25 billion has been allocated to passenger air carriers and related firms providing such services including aircraft repair and ticket agents. Up to $4 billion have been specifically earmarked for cargo air carriers.

The financial support is provided through the Secretary of the Treasury to eligible companies in the form of loan guarantees as well as loans and other investments, see related interventions. The law places some notable restrictions on the firms that may receive such support. Companies must be located in the United States with significant operations in the country and with a majority of its employees being based in the United States. Additionally, certain requirements are made on companies to retain their workforce for a certain duration and not in this context outsource said workforce.

The law further authorizes the Secretary of Transportation “to require, to the extent reasonable and practicable, an air carrier receiving loans and loan guarantees … to maintain scheduled air transportation service as the Secretary of Transportation deems necessary to ensure services to any point served by that carrier before March 1, 2020.”

The loans must be made in the Calendar Year 2020. Additionally, other businesses are also eligible to receive financial support under the fund, see related intervention. The fund was created under Title IV, Subtitle A of the CARES Act (H.R.748).

Notably, under the stimulus package, several financial support interventions have been adopted, see related interventions. 

 
N/A
 
N/A
Inception date: 27 Mar 2020 | Removal date: 31 Dec 2020

Capital injection and equity stakes (including bailouts)

On March 27 2020, $29 billion was allocated to certain business operating in the aviation industry following the establishment of a $500 billion fund created by way of bill (H.R.748) commonly known as the third coronavirus stimulus bill. 

More specifically, up to $25 billion has been allocated to passenger air carriers and related firms providing such services including aircraft repair and ticket agents. Up to $4 billion have been specifically earmarked for cargo air carriers.

The financial support is provided through the Secretary of the Treasury to eligible companies in the form of investments as well as loans and loan guarantees, see related interventions. The law places some notable restrictions on the firms that may receive such support. Companies must be located in the United States with significant operations in the country and with a majority of its employees being based in the United States. Additionally, certain requirements are made on companies to retain their workforce for a certain duration and not in this context outsource said workforce.

The law further authorizes the Secretary of Transportation “to require, to the extent reasonable and practicable, an air carrier receiving loans and loan guarantees … to maintain scheduled air transportation service as the Secretary of Transportation deems necessary to ensure services to any point served by that carrier before March 1, 2020.”

The loans must be made in the Calendar Year 2020. Additionally, other businesses are also eligible to receive financial support under the fund, see related intervention. The fund was created under Title IV, Subtitle A of the CARES Act (H.R.748).

Notably, under the stimulus package, several financial support interventions have been adopted, see related interventions. 

 
N/A
 
N/A
Inception date: 27 Mar 2020 | Removal date: 01 Jan 2021

Tax or social insurance relief

On March 27, 2020, President Trump signed into law a bill (H.R.748) commonly known as the third coronavirus stimulus bill and formally entitled the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Under the stimulus package, Section 4007 of Title IV, an excise tax relief on aviation fuel, airfares, and the transportation of goods is provided to the aviation industry. While the bill does not estimate the value of this forgiveness, public data indicate that these taxes accounted for about $16 billion in government revenue in Fiscal Year 2018.

The excise tax holiday is in force for the year 2020.

 
N/A
 
N/A
Inception date: 27 Mar 2020 | Removal date: 30 Sep 2020

Financial grant

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. Under the CARES Act, a number of financial support measures were adopted. One of such measures was the provision of $9.5 billion that the U.S. Department of Agriculture may provide to certain agricultural beneficiaries. 

More specifically the CARES Act stipulated that these funds are provided: “to prevent, prepare for, and respond to coronavirus by providing support for agricultural producers impacted by coronavirus, including producers of specialty crops, producers that supply local food systems, including farmers markets, restaurants, and schools, and livestock producers, including dairy producers.”

The financial support is provided until 30 September 2020.

 
N/A