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Senate Holds Confirmation Hearing for CBP's McAleenan

Late last month US Customs and Border Protection indefinitely delayed the most recent release of the Automated Commercial Environment (ACE.) At press time CBP wasn’t been able to say when the last capabilities will be deployed or what the issue is.

ACE is now three years behind schedule and more than $1 billion over budget. Though designed with the intent of streamlining cross-border trade, replacing the antiquated Automated Commercial System (ACS) and allowing shippers to easily transmit documents with government agencies, the system will still not capture all Foreign-Trade Zone transactions, most notably admissions, even after this final release.

This release including the last of the so-called “core” trade capabilities — liquidation, reconciliation, drawback, duty deferral, collections, and the Automated Surety Interface (ASI) — were originally supposed to be deployed this past January.

FTZ User Tesla To Open Wholly-Owned Plant in China

Tesla has reached an agreement with the Chinese government in Shanghai to build a production facility in the city’s free-trade zone. Details of the deal, reported by the Wall Street Journal, are still being worked out but it is the first of its kind for a foreign car manufacturer – the deal is expected to exclude the kind of technology-sharing agreements that can deter innovative international companies from setting up shop in the world's second-largest economy.

Tesla has been pursuing a Chinese factory for years, and the Shanghai deal followed the announcement that Tesla had accepted a large investment from Tencent Holdings, a technology giant in China.

But Tesla’s progress in China faced a big hurdle – thanks in part to import duties. A Tesla sells for around 50% more in China than in the U.S. A plant in Shanghai’s free-trade zone would reduce labor and transportation costs (though the latter are generally a very small part of the total cost of goods). CEO Elon Musk said in 2015 that a factory in the country could cut the price of vehicles sold in China by a third.

The Journal writes, though, that cars produced under the new factory deal are still likely to be considered “imports” and face a 25% duty. In the past, foreign carmakers have only been able to avoid that tariff by forming joint ventures with local manufacturers, which often include technology-sharing provisions.

South Korea Agrees to Modify FTA Terms

President Trump’s threat of unilaterally terminating the Korean FTA appears to have worked. In early October South Korea finally agreed to renegotiate the five-year-old free trade agreement between the two countries.

Earlier this month, the American and South Korean delegations met in Washington for a second round of talks on the deal, known as the KORUS FTA. This change of stance is a small victory for the Trump administration because only a few months ago a South Korean trade ministry official told Reuters that South Korea wasn’t keen on renegotiating the deal.

“The two sides recognized the need to amend the FTA to enhance mutual benefits of the KORUS FTA,” South Korea’s trade minister, Kim Hyun-chong, who had been one the deal’s lead negotiators, said in a statement after the recent round of talks concluded.

Earlier this year, USTR issuing a statement outlining concerns that the U.S. goods deficit with South Korea had more than doubled from the 2012 implementation of the deal through 2016.

First Border Wall Prototypes Completed

CBP has built eight looming prototypes for a border wall with Mexico in the California desert, in keeping with President Trump’s desire for a "physically imposing" barrier between the U.S. and Mexico.

Any meaningful construction is still at least 10 months away,U.S. Customs and Border Protection officials said — and there's another issue: there's no money. This has the trade concerned that without proper allocations, money might be siphoned from other CBP programs to initiate the project while negotiations with Congress continue.

The border wall prototypes were made exactly to specification: Four from concrete and four others from non-concrete materials that could be used for stretches of barrier that can be seen through. First order of business? Letting the samples bake for 30 days as the concrete dries. Then evaluation of each design will begin.

U.S. Foreign-Trade Zones Board Activity

  • The North American Höganäs Company has submitted an application for Subzone status for its 3 sites in Johnstown, Hollsopple, and St. Mary's, Pennsylvania within FTZ 295. LEARN MORE
  • BGM America, Inc. submitted an application to produce  sailboats, cabin cruiser powerboats, and outboard motor boats within Subzone 127C in Marion, South Carolina. LEARN MORE
  • Fuling Plastic USA, Inc. submitted an application to produce disposable plastic and paper serviceware and kitchenware products in its facility in Allentown, Pennsylvania within Subzone 272C.  LEARN MORE
  •  MTD Consumer Group Inc. received approval to produce landscaping equipment and off-road utility vehicles in its facility within Subzone 283A, in Martin, Tennessee. LEARN MORE
  •  Bauer Manufacturing LLC dba NEORig, received approval to produce stationary oil/gas drilling rigs within Site 1 of FTZ 265, in Conroe, Texas.  LEARN MORE
  • LOOP LLC has received approval to expand FTZ Subzone 124D—Site 2 to include its adjacent 70.8 acres in St. James, Louisiana. LEARN MORE
  • Orgill, Inc. has submitted an application to expand Subzone 280B to add a 1.22 acre site in Coeur d'Alene, Idaho. LEARN MORE
  • Lockheed Martin Corporation Space Systems Company submitted an application to produce satellites and other spacecraft for space-based use in its facility in Littleton,Colorado. LEARN MORE
  • Plantronics, Inc. submitted an application of proposed production activity in its facility in San Diego, California, within Site 8 of FTZ 153. LEARN MORE
  • Vision Technologies Marine, Inc. has applied for production activity of ocean-going vessels in its facility within Site 6 of FTZ 92, in Pascagoula, Mississippi. LEARN MORE
  • Volkswagen Group of America submitted a application for proposed production activity for its facility in Chattanooga, Tennessee, within FTZ 134. LEARN MORE
  • WELCOME TO THE NEW FTZINE!
    We’ve redesigned our layout to make the FTZine easier to read than ever before.  Still the same piercing analysis of the top news affecting the Foreign-Trade Zone community, and a compendium of the month’s public notices issued by the U.S. Foreign-Trade Zones Board here in Washington.  Even better, you can now view current and past issues on the completely redesigned ISCM website: iscm.co/ft-zine/.

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