Senate Considers How to Protect Small Businesses Hurt by Coronavirus Demand Shocks or Supply Chain Interruptions
Witnesses at the Senate Small Business Committee hearing on the coronavirus pandemic said that small businesses are going to suffer as people stop traveling, shop less in person and go out to eat less as part of a social distancing strategy necessary to slow the spread of the virus. Sen. Ben Cardin, D-Md., the top Democrat on the committee, said in his opening statement that he's heard from a small jewelry company that has interruptions in its Chinese supply chain and is getting demands from distributors to pay up front, because they don't trust that retail sales will happen to pay them back.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
“If you have a 30% decline in revenues, how are you expected to repay [a loan]? We need to take a look at a targeted grant program to keep small businesses afloat,” he said. “This is an extraordinary crisis that requires us to respond in kind.”
In a brief hallway interview after the hearing, International Trade Today asked committee Chairman Sen. Marco Rubio, R-Fla., if the Senate could pass a grant program for small businesses quickly. “How do you define quickly? We can't pass it by unanimous consent, which is the challenge we face today in trying to get something done,” he responded.
Some witnesses focused on the dominance of China in the medical supply and pharmaceutical chemical markets. Rubio alluded to talk of an executive order, not yet released, that would require that federal agencies buy American masks, ventilators and pharmaceuticals. He approves of such a move, because he believes that the guaranteed market would spur more domestic manufacturing of those goods.
Rubio said one of the impediments to more coronavirus testing is a shortage of ingredients from the test, cotton swabs and protective gear for lab workers. “It’s not just China. If you’re India, if you're South Korea, and you make this, you’re going to hoard it, and that’s understandable,” he said.
Rosemary Gibson, who wrote a book about the risk of dependence on China for medicine, testified that India, which supplies the U.S. with 25% of its generic drugs, relies on China for precursor chemicals. She noted that they have instituted an export ban on antibiotics. “We can’t make penicillin anymore, we can’t make vitamin C, we can’t even make aspirin,” she said.
Sen. Josh Hawley, R-Mo., told Gibson her testimony was eye-opening, and said that policymakers “have not recognized true scale of vulnerability to our supply chain.” Hawley asked witness Tim Morrison, a senior fellow at the Hudson Institute, if drug companies moved production of chemicals, active ingredients and drugs to China for economic reasons.
He said they did, and said that originally it seemed smart, as the companies thought they'd do innovation in the U.S. and have older drugs done in China. But now, he said, China is doing innovation, too. “Our current drug policy seems to privilege profit considerations of a few companies over public health,” Morrison said.