All reopening is local, forcing companies to navigate patchwork of laws

SACRAMENTO — Retailers are considering “sneeze guards” and ways to quarantine fitting room items. Restaurant owners are imagining a future with masked servers and temperature checks. Industries built on the personal touch are looking to eliminate physical contact. Businesses may be appealing to Congress for more aid, but they know key details about the economy’s reawakening won’t be hammered out in Washington. The states, counties and even cities are widely expected to decide when each business can open its doors and under what conditions. Industry groups are pleading for coordination as they brace for a jumble of evolving state and local orders that could be nearly impossible to track. And various sectors are jockeying to ensure they can operate as governments ease restrictions in waves. “My suspicion is it’s going to be kind of clunky,” said Jot Condie, head of the California Restaurant Association, who said he expects a challenging “patchwork in the lifting of restrictions.” Governors in Northeastern, West Coast and Midwestern states have announced regional coordination efforts, while protests in state capitals following the president’s calls to “liberate” states could foretell a more chaotic timeline. States like Florida and Minnesota have allowed access to some beaches and parks, and Michigan Gov. Gretchen Whitmer — also under pressure to loosen restrictions despite a death toll double California's — has said she hopes some businesses might reopen May 1. But testing capacity is far below the benchmarks set by public health experts, and Covid-19 is quickly becoming one of the leading causes of mortality in the U.S. with over 42,000 dead as of Tuesday, according to Johns Hopkins University's Coronavirus Resource Center. Those facts weigh heavily on many business leaders as they think about the coming months. “We’re all grasping at straws here,” said Marc Freedman, vice president of workplace policy for the U.S. Chamber of Commerce. “When things get brought back online there’s going to be a certain amount of people holding their breath and hoping it doesn’t blow back in their face. Because we haven’t done this before.” Until last week, when California Gov. Gavin Newsom first broached the subject of restarting the economy, it almost felt taboo to discuss the question openly, said Rachel Michelin, president of the California Retailers Association. “No one was ready for that conversation,” she said. That’s quickly changed. Newsom did not provide a timeline, but he laid out benchmarks the state would use to reopen the economy. They include criteria for testing and contact tracing, health care capacity and development of treatments for Covid-19, among others. Newsom last week also announced that business luminaries, labor leaders and all four living former governors, including Arnold Schwarzenegger and Jerry Brown, would serve on a task force on the state’s economic recovery. New York Gov. Andrew Cuomo presented a matrix showing what types of businesses would likely be able to open first. “We’re really hoping we’ll get a little more clarity from the state and from the governor on what it’s going to take to reopen because our member companies are ready to step up and we want to be part of conversations with him,” Michelin said. Some promising public health measures — such as temperature-taking, which governors have proposed — should be considered along with their logistical, legal and even safety risks, business leaders said. Michelin said she received a disturbing report of a customer spitting on an employee who was simply trying to enforce a city’s mask ordinance. But customers who have been cooped up in their homes could be more amenable to stringent safety protocols than they might have been before the world turned upside down, business leaders say. “I think people right now, they just wish they could get to the point where they could get in a restaurant,” said Tom Bracken, president and CEO of the New Jersey Chamber of Commerce. “I think if the time comes and they’d have to wear masks and take their temperature, and that’s the price of admission, they’ll do it.” Eileen Kean, a New Jersey lobbyist and state director for the National Federation for Independent Business, said she watched the power of advocacy at work as Gov. Phil Murphy defined what businesses were deemed “essential” and allowed to operate. An executive order this month allowed construction crews of five and fewer to build homes if they took certain precautions, a change for which she and others had pushed. Similarly, she noted, some states allowed liquor stores to remain at least partially open while others shuttered them. Those types of decisions, she said, will be in play again as state and local governments assess the risks of restarting the economy. “Lobbyists are in demand,” she said. “Even as you look at reopening, we’re in demand.” One county supervisor from California’s Palm Springs area described the pressure he felt to ea

All reopening is local, forcing companies to navigate patchwork of laws

SACRAMENTO — Retailers are considering “sneeze guards” and ways to quarantine fitting room items. Restaurant owners are imagining a future with masked servers and temperature checks. Industries built on the personal touch are looking to eliminate physical contact.

Businesses may be appealing to Congress for more aid, but they know key details about the economy’s reawakening won’t be hammered out in Washington. The states, counties and even cities are widely expected to decide when each business can open its doors and under what conditions.

Industry groups are pleading for coordination as they brace for a jumble of evolving state and local orders that could be nearly impossible to track. And various sectors are jockeying to ensure they can operate as governments ease restrictions in waves.

“My suspicion is it’s going to be kind of clunky,” said Jot Condie, head of the California Restaurant Association, who said he expects a challenging “patchwork in the lifting of restrictions.”

Governors in Northeastern, West Coast and Midwestern states have announced regional coordination efforts, while protests in state capitals following the president’s calls to “liberate” states could foretell a more chaotic timeline. States like Florida and Minnesota have allowed access to some beaches and parks, and Michigan Gov. Gretchen Whitmer — also under pressure to loosen restrictions despite a death toll double California's — has said she hopes some businesses might reopen May 1.

But testing capacity is far below the benchmarks set by public health experts, and Covid-19 is quickly becoming one of the leading causes of mortality in the U.S. with over 42,000 dead as of Tuesday, according to Johns Hopkins University's Coronavirus Resource Center. Those facts weigh heavily on many business leaders as they think about the coming months.

“We’re all grasping at straws here,” said Marc Freedman, vice president of workplace policy for the U.S. Chamber of Commerce. “When things get brought back online there’s going to be a certain amount of people holding their breath and hoping it doesn’t blow back in their face. Because we haven’t done this before.”

Until last week, when California Gov. Gavin Newsom first broached the subject of restarting the economy, it almost felt taboo to discuss the question openly, said Rachel Michelin, president of the California Retailers Association.

“No one was ready for that conversation,” she said.

That’s quickly changed. Newsom did not provide a timeline, but he laid out benchmarks the state would use to reopen the economy. They include criteria for testing and contact tracing, health care capacity and development of treatments for Covid-19, among others.

Newsom last week also announced that business luminaries, labor leaders and all four living former governors, including Arnold Schwarzenegger and Jerry Brown, would serve on a task force on the state’s economic recovery. New York Gov. Andrew Cuomo presented a matrix showing what types of businesses would likely be able to open first.

“We’re really hoping we’ll get a little more clarity from the state and from the governor on what it’s going to take to reopen because our member companies are ready to step up and we want to be part of conversations with him,” Michelin said.

Some promising public health measures — such as temperature-taking, which governors have proposed — should be considered along with their logistical, legal and even safety risks, business leaders said. Michelin said she received a disturbing report of a customer spitting on an employee who was simply trying to enforce a city’s mask ordinance.

But customers who have been cooped up in their homes could be more amenable to stringent safety protocols than they might have been before the world turned upside down, business leaders say.

“I think people right now, they just wish they could get to the point where they could get in a restaurant,” said Tom Bracken, president and CEO of the New Jersey Chamber of Commerce. “I think if the time comes and they’d have to wear masks and take their temperature, and that’s the price of admission, they’ll do it.”

Eileen Kean, a New Jersey lobbyist and state director for the National Federation for Independent Business, said she watched the power of advocacy at work as Gov. Phil Murphy defined what businesses were deemed “essential” and allowed to operate. An executive order this month allowed construction crews of five and fewer to build homes if they took certain precautions, a change for which she and others had pushed. Similarly, she noted, some states allowed liquor stores to remain at least partially open while others shuttered them.

Those types of decisions, she said, will be in play again as state and local governments assess the risks of restarting the economy. “Lobbyists are in demand,” she said. “Even as you look at reopening, we’re in demand.”

One county supervisor from California’s Palm Springs area described the pressure he felt to ease restrictions on certain sectors.

“There are some industries there that are knocking on my door, they're asking me to consider,” said V. Manuel Perez, chairman of the Riverside County Board of Supervisors. “And I will be considering that, but once again, only after we have enough information, enough data to say, 'You know what, I think we can go ahead and move forward with modifying some of the guidances and be willing to take that risk,' if you will. Knowing, though, that what we don't want is another surge, and quite frankly, being at the center of being blamed for the possibility of more positives and the possibility of more deaths.”

The federal government has a critical role to play in protecting workers from catching the deadly virus, and it’s too soon to discuss a broader reopening of the economy, argues Rebecca Reindel, safety and health director for the AFL-CIO. The labor federation represents many of the employees who have continued to report to work during the crisis.

“There’s totally inadequate worker protection on the job, and that’s happening now,” Reindel said. “The thought of bringing more people back under those conditions, we’re not there yet. Those are some things that can’t be figured out state by state because an infectious disease doesn’t have state boundaries.”

Shuttered businesses that intend to reopen are looking to essential industries for safety ideas. Michelin said retailers around the nation are sharing ideas such as removing the once-ubiquitous cosmetic and perfume samples from makeup counters, installing shields and creating contact-free checkout options.

Until there is a vaccine or proven treatment, the customer experience might be starkly different than it was before the pandemic, said Allan Zaremberg, who heads the California Chamber of Commerce. But that might be exactly the kind of assurance that gets people in the door.

“Nobody wants to be in the ICU,” he said. “Nobody wants their parents to be in the ICU, so I think it’s a reflection of what the public is going to expect.”

Colby Bermel and Stephanie Murray contributed to this report.

Source : Politico USA More   

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Coronavirus won’t kill globalization, but will clip its wings

EU will not seek an all-out break with China, but will seek to reshore some key industries.

Coronavirus won’t kill globalization, but will clip its wings

Coronavirus has touched a raw nerve. Fearing they have undermined their security through overreliance on China, European politicians are stressing that manufacturing must return to the EU.

As the crisis deepened, the EU's Internal Market Commissioner Thierry Breton conceded that Europe may have gone "too far in globalization" and become too reliant on "one country, one continent." German Chancellor Angela Merkel argued that the pandemic reveals the need for a "certain sovereignty here" obtained through a "pillar of domestic production."

For the self-sufficiency hard-liners, that means rolling back globalization. Armed with new technologies like 3D printers, they see a prime opportunity to rein in supply chains for machinery that stretch out to East Asia.

Current and former EU economy ministers, diplomats, business people and economists contacted for this article stressed such a wholesale revolution is unlikely, but predicted a reshoring of selected critical industries, particularly medical supplies.

For many EU leaders, the most disarming shock of the crisis has been Europe's fumbling inability to make face masks or the basic chemicals required for pharmaceuticals. Nurses in wealthy countries like Italy, Spain and even the U.S. donning trash bags for lack of gowns showed the fragility of international supply chains.

The buzzword, though, is likely to be diversification rather than all-out reshoring.

"We must learn lessons from the crisis," German Economy Minister Peter Altmaier told POLITICO. "For example, when it comes to the question of dependency on just one supplier or just one region."

Face masks and pharma

Reshoring had been steadily climbing the political agenda, even before the virus forced countries into lockdown. Late last year French Economy Minister Bruno Le Maire criticized the carmakers Peugeot and Renault for making vehicles in Morocco, Slovenia and Turkey.

The EU's own industrial strategy, launched last month, also identified the need "to make the most of localization as an opportunity to bring more manufacturing back to the EU in some sectors.”

The hapless response over medical supplies, however, has propelled the debate to a more practical level. Both France and Germany were quick to identify the pharmaceutical sector as a key area where reshoring made sense.

Industry ministers and business leaders who loved talking about the sharing economy, artificial intelligence and 5G, were suddenly asking anyone with a sewing machine to help make face masks.

The lack of coordination in Europe stood in stark contrast with the Asian Tigers, whose factories within days pumped out masks by the millions, along with large-scale testing kits that allowed them to contain the virus where the alleged rich world — Europe and the U.S. — conspicuously failed.

Indeed, the Europeans were playing catch up. The carmaker Seat in Spain said it had started making ventilators at one of its plants. French President Emmanuel Macron announced last week that a group of French companies will ramp up production of masks and ventilators.

Back to the drawing board

The shambles over medical equipment dealt a painful blow to advocates of the theory of comparative advantage, which underpins globalization. The theory says that countries should specialize in what they make best. Free trade will make sure that every country gets what it needs at a better price on the world market than if it tried to make everything itself.

But the pandemic showed that in times of crisis, the world market collapsed. Companies remained loyal to their governments or bound by local export bans.

This came on top of research from economists working with César Hidalgo at the Massachusetts Institute of Technology, which in the past years has shown that countries that export a wide variety of more complex products, such as Japan or Switzerland, fare much better in terms of future growth and income inequality than countries that rely on just one industry, such as oil or soybean exporters.

Even staunch advocates of free trade started questioning whether countries had pushed the global division of labor too far.

French economist Philippe Aghion criticized what he said was excessive "deindustrialization, offshoring, extended value chains," in his country, in an op-ed for Les Echos last week. "Quietly, France has deindustrialized, it has pushed the offshoring of its value chains to the limit."

"It is difficult, even in a war economy, to mobilize non-existent capacity and evaporated know-how."

Strategic sectors

In what is maybe the strongest sign of a shift in European thinking yet, Merkel on Monday joined her French counterpart Macron in calling for economic "sovereignty" for Europe. The traditionally liberal leader argued that the crisis had made it clear that EU countries need to define a set of Europe-based "strategic capabilities."

In her remarks, Merkel made a distinction between production capacity that her government would build up immediately to tackle the health crisis — notably masks — and a wider set of systemically critical sectors, which EU governments would identify after the crisis.

“We will have a discussion on the question of what strategic capabilities we must and want to have in Europe. We will then have to develop these in a very targeted manner,” she said. “These will be the decisions to be taken once we have overcome the most serious parts of this crisis in the health sector.”

Diplomats and ministry officials said EU governments are likely to define such a set of "critical" industries that they want to reshore, but it is unclear whether this would happen at a national or an EU-wide level. The obvious risk would be wasteful overlaps across Europe as each country scrambles to build very similar plants for medical supplies.

With this in mind, French Economy Minister Le Maire, as well as Internal Market Commissioner Breton, have called for Brussels to play a role in the reshoring of those yet-to-be-defined industries.

The difficulty with identifying such sectors is obvious: Where to stop? The next crisis to hit may not be a virus but the eruption of a supervolcano — which could cripple air transport and freight and bring about a volcanic winter, turning trains, greenhouses and fossil fuels into the strategic industries.

Alicia García-Herrero, chief economist for Natixis bank, pointed out the reshoring list could indeed be lengthy.

"This could be for a lot of sectors. If the next crisis was a collapse of the electricity system, you would need to reshore production of turbines."

"If you push that argument it's the end of globalization and the single market," she added. "It would be autarky."

Instead, García-Herrero said companies would diversify their supply chains to become less reliant on China. Within the EU, she said, Brussels should step up to enforce the single market and prevent countries like France and Germany from restricting their exports to neighboring Italy and Spain.

No end to globalization

EU trade chief Phil Hogan this week pointed out that total independence from imports was an "unattainable goal" for the EU.

“Self-sufficiency is not an option,” Hogan told the European Parliament's trade committee on Tuesday. However, he acknowledged that “we should reduce our trade dependencies that make us vulnerable.”

Even Paris recognizes that reshoring only makes sense in narrowly defined sectors. “A violent and massive decline in globalization is unlikely,” said an internal memorandum prepared for the French government and quoted by Le Monde, “because companies have no reason to give up the advantages of international production chains in terms of costs, competitiveness and profitability.”

Instead, the report recommended diversification away from China.

Similarly, former Italian trade minister Carlo Calenda said reshoring makes sense only for a very small number of sectors. “In general this approach risks triggering commercial wars and protectionism. After a crisis of demand and supply, the last thing we need is a subsequent export crisis,” he told POLITICO.

García-Herrero said EU companies had woken up to this need to diversify when China shut its factories in February. "The lesson of COVID-19 is that it is better to pay a little bit more to have security," she said. "Part of the production will move much closer to Europe, to countries where companies feel they know the political risks," she predicted.

German Economy Minister Altmaier warned that "the consequence of the crisis must not be increased protectionism and renationalization.

"Our prosperity is based on the principle of an economy based on the division of labor," he told POLITICO."But of course companies will have to focus on further diversification in the future, reducing dependencies and making our economy more resilient."

Source : Politico USA More   

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