December 2017
December 1, 2017
February 2018
February 1, 2018

January 2018

2018, A New Year With New Resolutions

After December took Washington D.C. on a weather roller coaster between 20 and 60 degrees, January starts off the new year with a steady forecast of COLD. Enough to frost the nose of a gentleman from Virginia. Temperatures in the mid-west and northeast have been so frigid that even truck and train travel have been impacted by frozen batteries and rail switches. We'll have to wait and see what other surprises 2018 has in store for us.

Top Story: Tax Reform Bill Officially Kills Border Adjustment Tax

President Trump signed the new tax reform bill into law on December 22nd, the first significant reform of the U.S. tax code since 1986 (Ronald Reagan was President.) Changes have been made to both individual and corporate tax rates, however there is no provision for taxes related to import activity. This officially puts an end to the Border Adjustment Tax that had been included in early forms of the tax reform package.

Individual provisions in the new legislation technically expire by the end of 2025, though some people expect that a future Congress won't actually let them lapse. Most of the corporate provisions are permanent. There are still seven tax brackets for individuals, but the rates have changed. For single filers, the standard deduction has increased from $6,350 to $12,000; for married couples filing jointly, it's increased from $12,700 to $24,000.The state and local tax deduction, or SALT, remains in place for those who itemize their taxes -- but now there's a $10,000 cap. Previously, filers could deduct an unlimited amount for state and local property taxes, plus income or sales taxes.

From now on, anyone buying a new home will only be able to deduct interest on the first $750,000 of their mortgage debt. That's down from $1 million. Current homeowners are able to keep their current deduction. This is likely to affect people looking for homes in more expensive coastal regions. The deduction for student loan interest, which is up to $2,500 per year, is safe.

The deduction for medical expenses wasn't cut. In fact, it's been expanded for two years. In that time, filers can deduct medical expenses that add up to more than 7.5% of adjusted gross income. In the past, the threshold for most Americans was 10% of adjusted gross income.

Drivers of plug-in electric vehicles can still claim a credit of up to $7,500. Just as before, the full amount is good only on the first 200,000 electric cars sold by each automaker. GM, Nissan and Tesla are expected to reach that number sometime next year.

Homeowners who sell their house for a gain will still be able to exclude up to $500,000 (or $250,000 for single filers) from capital gains, so long as they're selling their primary home and have lived there for two of the past five years.

In the past, funds invested in 529 savings accounts wasn't taxed -- but it could only be used for college expenses. Now, up to $10,000 can be distributed annually to cover the cost of sending a child to a "public, private or religious elementary or secondary school." This change is a win for Education Secretary Betsy DeVos.

Graduate students still won't have to pay income taxes on the tuition waiver they get from their schools. Such waivers are typically awarded to teaching and research assistants.

The deduction for moving expenses is gone. There may be some exceptions for members of the military, but most people will no longer be able to deduct the cost of their U-Haul when they move for work.

Before tax reform passed, people could deduct the cost of having their taxes prepared by a professional, or the money they spent on tax prep software. That break has been eliminated.

The corporate tax rate has been cut from 35% to 21% starting next year. The alternative minimum tax for corporations has been thrown out altogether. Corporate earnings are expected to go up as a result.

E214 Arrives in ACE

The e214, the electronic ‘form’ most FTZs use for reporting arriving shipments to U.S. Customs, has finally been moved to the ACE environment. ACE Deployment G, Release 3A went live in the ACE production environment on December 9th with a “lift and shift” of the previous e214 data format.

This means that no changes were made to the e214 data format. Unfortunately, no provisions for viewing the data were made available with the release, so FTZ operators do not yet have any reporting capabilities with the data in their e214 filings.

In addition to e214 capabilities, this deployment included Manufacturer ID Creation, and Statement Reports are now available for testing.

Oil Shipment Flares Tensions with China

Any goodwill between the United States and China that came about from President Trump’s recent visit there has quickly evaporated. South Korea says it has seized a ship which illicitly transferred oil to North Korea. Per United Nations Security Council sanctions, it is illegal for U.N. members to conduct ship-to-ship commerce with North Korea.

The discovery soured already difficult trade relations with the world’s most populous country. President Trump tweeted that China had been caught "red-handed," adding that he is "very disappointed that China is allowing oil to go into North Korea." (more)

The president doubled down on that tweet in remarks delivered later in the day to The New York Times. When asked about his tweet, Trump acknowledged that he had to this point been "soft on China" in terms of trade, hoping that Beijing in return would help rein in North Korea's nuclear ambitions.

"If they're helping me with North Korea, I can look at trade a little bit differently, at least for a period of time. And that's what I've been doing. But when oil is going in, I'm not happy about that," Trump said. "If they don't help us with North Korea, then I do what I've always said I want to do. China can help us much more, and they have to help us much more."

South Korean press reported Friday that government officials had impounded the Lighthouse Winmore – a Hong Kong-registered vessel believed to have engaged in an illegal ship-to-ship transfer with a North Korean ship back in October.

The Lighthouse Winmore, which was chartered by Taiwan's Billions Bunker Group, in mid-October docked in South Korea's Yeosu Port to receive a load of Japanese oil. South Korean officials said they were told the ship was scheduled to travel to Taiwan but instead met up with a North Korean vessel in international waters, transferring 600 tons of refined oil in the process.

"China's hurting us very badly on trade, but I have been soft on China because the only thing more important to me than trade is war, OK?" Trump said, suggesting Beijing's intervention could help circumvent a potential war with Pyongyang. "My deal [with China] was that, we've got to treat them rough. They're a nuclear menace so we have to be very tough."

The President's strong language suggests relations with China may be headed further south.

2017 Goes Down As One Of The Most Complicated For International Trade.

From an international trade standpoint, the year 2017 will go down as one of the most complicated during the past 20 years. Here in North America, everybody monitored the moves by the Trump administration to shape relationships with our major trading partners. As we begin a brand-new year, let’s recap percolating issues that will become even more prominent in 2018:

The European Union continued to deal with internal issues, as Germany, its economic leader, tried to advance its goal of increased economic integration for the organization. In Asia, China’s economy continued to hum along.

On June 23, 2016, the United Kingdom voted to leave the European Union, which is slated to take effect on March 29, 2019. This move is referred to as Brexit, interpreted to be part of a wave of nationalistic sentiment that has embedded itself in many European countries. The vote triggered heated discussions by UK and EU officials pertaining to developing the protocol for separation.

Many economists are predicting the move could cause a decrease in the UK’s GDP, thus affecting every UK citizen. Both sides will scramble in 2018 to figure out how to separate one of Europe’s largest economies from the rest of the continent, and what this will mean for trade and financial markets.

In Asia and Latin America, major economies are forging ahead to try to salvage the proposed trade agreement previously referred to as the Trans-Pacific Partnership (TPP), after President Donald Trump, as one of his first acts as president, decided to pull the U.S. out of any future negotiations. Renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), after U.S. withdrawal and Trump’s repudiation of the multilateral trade agreements, the remaining partners committed to making the agreement a reality, without U.S. participation. The 11 members are Mexico, Canada, Australia, Japan, Chile, Brunei, Malaysia, New Zealand, Peru, Vietnam, and Singapore. If they are successful in establishing a working trade format for CPTPP, they will have formed one of the most powerful trade blocs in the world.

Closer to home, the fifth round of the North American Free Trade Agreement (NAFTA) renegotiation talks will continue in January. The Trump administration demanded the renegotiation talks after the president lambasted NAFTA as the “worst agreement ever,” during his presidential campaign. Four rounds of negotiations have been held in the U.S., Canada, and Mexico, and the fifth is planned sometime in January. Negotiators had hoped to finish talks by the end of 2017, but this did not happen. Serious impasses remain, as negotiators have been vocally critical of the amount of good faith negotiating that each is bringing to the table.

As the negotiations come to a close, more and more pressure will be brought upon the Trump administration to preserve NAFTA by the U.S. agricultural, manufacturing and raw materials sectors, which have benefited from the agreement during the past 23 years. There is a great fear that if nothing substantial comes out of the NAFTA renegotiations, Trump will have backed himself into a corner by asking for the renegotiations in the first place, with no alternative left than to withdraw the U.S. from the agreement for face-saving purposes. NAFTA will either continue, albeit in a modified format – the extent of which cannot be predicted at this point – or rescinded in 2018.

Finally, a heavy focus should be on China in 2018. This year, the Trump administration locked horns on trade with traditional trade partners in Europe and the Americas. If the U.S. continues to move toward a more isolationist stance as pertains to geopolitical affairs and trade, China seems poised to step in to fill the void.

With its massive production base, large national market and ample capital to inject into foreign countries, China could become an attractive alternative to trading partners who feel like they are being abandoned or spurned by the U.S.

From a trade standpoint, the U.S. is at a crossroads with the direction it could take on expanding its presence and influence across the world. As the Trump administration enters its second year, the cleverness or folly of its policies will start to show, and trade is no exception. An old proverb – “May you live in interesting times” – can be interpreted as both a wish and a curse. The next 12 months will provide us the answer as to which 2018 will be.

Another World Region Set Aflame May Increase Trade Tensions

U.S. President Donald Trump is again accusing Pakistan of sheltering terrorists whom American forces are fighting in neighboring Afghanistan.

In his first Twitter message of 2018, Trump wrote, "The United States has foolishly given Pakistan more than 33 billion dollars in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools. They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!"

Washington has long accused Islamabad, particularly its security institutions, of turning a blind eye or covertly helping the Afghan Taliban and the Haqqani Network to stage cross-border attacks against Afghan and U.S.-led forces.

It is not immediately clear whether Trump is threatening to cut financial assistance to Pakistan. The United States suggested in August it would hold up $255 million in military assistance until Pakistan cracks down on extremists.

The Pakistani government summoned U.S. ambassador David Hale to the foreign ministry to protest and seek an explanation for Trump's remarks, reported local media.

"I can confirm the Ambassador was asked to come to the Foreign Office tonight. He did and met with officials there. I don't have any comment on the substance of the meeting, " a U.S. embassy spokesman told Voice Of America.

Islamabad denies allegations it is harboring Afghan insurgents and instead complains anti-state militants are using the neighboring country for terrorist attacks against Pakistan.

Trump unveiled his new South Asia policy last August, in which Pakistan was blamed for providing "safe haven" to terrorists.

American officials have also warned that if Islamabad does not take actions against terrorist havens on Pakistan soil, Washington will do so unilaterally.

The Pakistan military last week warned Washington against any unilateral military action on its soil, saying U.S. allegations of terrorist sanctuaries in the country are "unfounded" and "no more valid" because "indiscriminate" security operations have targeted all terrorist groups.

"We have paid a huge price both in blood and treasure. We have done enough and we cannot do anymore for anyone," said the chief military spokesman, Major-General Asif Ghafoor.

Instability in the region could lead to trade woes with Pakistan and neighboring allies.

U.S. Foreign-Trade Zones Board Activity

  • Estee Lauder Inc. submitted a notification of proposed production activity to the FTZ Board for its facility within FTZ 35, in Bristol and Trevose, Pennsylvania. LEARN MORE
  • Voestalpine Texas, LLC, received approval for proposed production within Subzone 122T, in Portland, Texas. LEARN MORE
  •  North American Hoganas Company received approval to establish Subzone 295B (in Johnstown, Hollsopple and St. Mary's, PA), subject to the FTZ Act and the Board's regulations. LEARN MORE
  • R.W. Smith & Co/TriMark USA, LLC, was granted approval to establish Subzone 168C in Lewisville, Texas, subject to FTZ 168's 1,909-acre activation limit. LEARN MORE
  • BMW Manufacturing Co., LLC, was granted approval to expand subzone 38A in Duncan, South Carolina, subject to FTZ Act and Board Regulations, including one in Section 400.13. LEARN MORE
  • Motiva Enterprises LLC has submitted an application to expand Subzone 116A by 2 acres in Port Arthur, Texas. LEARN MORE
  • Westlake Chemical Corp. in Foreign-Trade Zone 154, is requesting the authority to expand Subzone 154C to include Site 2, containing 853 acres. They are further requesting that the expanded subzone (including both the proposed and existing site) not be subject to FTZ 154's 2,000 acre activation limit, in Baton Rouge, Louisianna. LEARN MORE
  • AFE, Inc., submitted a notification of proposed production activity for their facility within Foreign-Trade Zone 41, concerning monitors, displays, and televisions in Milwaukee, Wisconsin. LEARN MORE
  • Traxys Cometals Processing, Inc., has submitted a notice of proposed production activity concerning Manganese and Aluminium alloy agents in its facility within FTZ 158, in Jackson, Mississippi. LEARN MORE
  • Orgill, Inc., has received approval to expand Subzone 280B in Post Falls and Coeur d'Alene, Idaho LEARN MORE
  • Aker Solutions, Inc., has submitted a notification of proposed production of Undersea Umbilicals, for their facilities in FTZ 82, in Mobile, Alabama. LEARN MORE
  • Eastman Kodak Co., has received approval for proposed production of Printing Flexographic Plates in their facility within FTZ 106, in Oklahoma City, Oaklahoma. LEARN MORE
  • Nisshinbo Automotive Manufacturing, Inc., has received approval for proposed production of Automotive Brake Linings, Pads, and Disc Pads for their facility within Foreign-Trade Zone 26, Site 33, in Covington, Georgia. LEARN MORE
  • Voestalpine Texas, LLC has received approval for proposed production of Hot Briquetted Iron By-Products in their facility in FTZ Subzone 122T in Portland, Texas. LEARN MORE
  • Brose Tuscaloosa, Inc., has received approval for proposed production concerning Automotive Seats, Drives and Door Frames for its facility in FTZ 98 in Vance, Alabama. LEARN MORE
  • The application to reorganize FTZ 269 under the ASF is approved, subject to the FTZ Act and the Board's regulations, INCLUDING an ASF sunset provision for magnet sites that would terminate authority for Sites 1 and 2 if not activated within five years from the month of approval in Athens, Texas.  LEARN MORE
  • Consolidated Diesel Company has received approval and authority to expand Subzone 214A and to remove existing Site 3 in Enfield, North Carolina. LEARN MORE

Comments or suggestions on our publication? The editorial staff of the Foreign-Trade ‘Zine, the eMagazine of FTZ News would love to hear from you.

2018, A New Year With New Resolutions

After December took Washington D.C. on a weather roller coaster between 20 and 60 degrees, January starts off the new year with a steady forecast of COLD.  Enough to frost the nose of a gentleman from Virginia.  Temperatures in the mid-west and northeast have been so frigid that even truck and train travel have been impacted by frozen batteries and rail switches.  We’ll have to wait and see what other surprises 2018 has in store for us.

 

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