FTZ’ine June 2021
June 2, 2021
FTZ’ine August 2021
August 3, 2021
What’s Bugging Washington?
Brood X (pronounced “Brood 10”) has taken over your Nation’s Capital. There are 15 broods of periodical cicadas in the United States, and this one is now in every corner of the city after 17 years of hibernation. Thinking of riding your motorcycle into DC for the July 4th celebration? The FTZine staff recommends a full face shield – these things are big!
The Biden Administration just completed a delicate deal on infrastructure spending and seems focused on getting that bill passed before considering other policy issues such as trade. For example, the President’s Trade Promotion Authority lapses today without any plans for reinstatement.
CBP issued a new Withhold Release Order on a major Chinese solar panel manufacturer, and Taiwan suggested it is ready to begin free-trade agreement negotiations with the United States. That means the Biden Administration may not be able to wait too much longer before trade relations with China must rise to the top of the President’s agenda. The Administration did help align the E.U. in that effort by reaching an agreement to end all subsidies and punitive tariffs associated with the Airbus dispute.
Check out the new section of the FTZine we have added this month. We are now compiling FTZ Board Staff Action in addition to Board Action for a complete reference on official foreign-trade zone activity here in Washington. Let us know what you think!
The FTZine staff hopes all our readers have a safe and enjoyable 4th of July.
Top Story: TPA Lapse A Sign Of Administration Priorities
The President’s Trade Promotion Authority (TPA) expires tonight after its latest three-year term runs out. The USMCA pact was the only agreement forged under this most recent round of TPA.
Only Congress has the Constitutional power to regulate commerce with foreign nations. TPA is a law that Congress enacts from time to time to enable the Executive Branch to negotiate free trade agreements, guaranteeing an up-or-down vote without amendments. That “no amendments” guarantee is meant to give negotiating partners confidence that any deal struck between negotiators will be final.
In the most recent TPA term, negotiations were initiated with Japan, the United Kingdom, Kenya, and the European Union.
The Biden Administration has not requested renewal of TPA, indicating that free trade agreement negotiations are not a near-term priority.
The Senate Finance Committee is the Congressional body with jurisdiction over U.S. international trade policy.
First adopted in the Trade Act of 1974, TPA streamlines legislative consideration of trade agreements negotiated by the executive branch. Since 1979, the U.S. has used TPA to implement 15 bilateral or regional free-trade agreements (FTAs) and one multilateral trade liberalization agreement.
Tech Tip
Ever wondered why goods that are entered for consumption from an FTZ must physically leave the zone within 5 days of the entry being filed?
The answer lies in 19 C.F.R. §146.71(c): “merchandise for which a Customs permit for transfer to Customs territory has been issued must be physically removed from the zone within 5 working days of issuance of that permit”. The regulation goes on to say that the Port Director may extend that period upon request, but the goods awaiting removal “will not be further manipulated or manufactured in the zone.” This is to ensure that entry is not performed at an intermediate step of the manufacturing process when the tariff might be at a lower amount than that of the approved finished good, thus reducing the amount collected by CBP.
Sound a little confusing? Just remember that any goods on which entry summary has been filed must enter U.S. commerce, unless you have received a waiver of this 5-day rule from CBP. Even if you do have a waiver of the time limit, you must still make sure the goods are not further processed while still in your FTZ.
This highlights the need to think of all your operations up front in the activation process, and how you will handle goods if an entry is filed, accidentally or on purpose, before physically leaving your zone.
If you have questions about the 5-Day Rule, obtaining waivers, or what to do if you need to file an entry on components to be used in production later, send them to us at Info@iscm.co .
UK On A Roll: TPP Up Next After Australia FTA
While the U.S. government is focused on internal spending at the moment to spur economic activity after the pandemic, the U.K. is more focused on trade as its path to recovery. Last month the Johnson administration announced a free-trade agreement with Australia, and then immediately confirmed talks are underway for the U.K. to join the former Trans-Pacific Partnership.
Under the new pact with the Australian government of Prime Minister Scott Morrison, some tariffs on food items will be eliminated immediately, with others phasing out over a 5-15 year period. The 5% tariff on British passenger vehicles will be eliminated as soon as the agreement comes into effect.
This marks Britain’s first new trade deal with another country since Brexit.
The agreement among Pacific nations is now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, and includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. a market of 500 million people. Britain applied to join the CPTPP partnership in February.
Unlike the E.U., from which the U.K. withdrew after 40 years, the CPTPP alliance does not have wider political goals such as integration or the creation of a single market or customs union.
E.U. And U.S. Finalize Airbus Deal, Lifting Tariffs
In June the U.S. and E.U. reached an agreement to end the long-running dispute over subsidies to aerospace manufacturers Boeing and Airbus, and will suspend billions in punitive tariffs. Parallel talks were successfully held between the U.S. and the U.K. to accomplish the same result.
Beyond the direct impact on the economies of both groups, the agreement will let the two sides resume their $933 billion in two-way trade and focus on the common economic threat presented by China.
Some trade disagreements remain unresolved; President Biden kept in place the Section 232 duties on European steel and aluminum.
The dispute over aircraft affected companies that had nothing to do with aircraft production, from French winemakers and German cookie bakers in Europe to alcohol producers in the United States.
“For about 20 years, we have been at each other’s throat,” U.S. Trade Representative Katherine Tai said. “We have been too busy fighting each other.’’
In March, weeks after President Biden took office, the two sides agreed to suspend the tariffs for four months. The new agreement will officially take effect July 11 and will put the tariffs on hold for five years.
The deal might help solidify the duopoly of Airbus and Boeing, which together dominate the global market for airline jets. Both companies have struggled recently with declining orders and deliveries at a time when the pandemic devastated air travel and led airlines to cancel or delay purchases.
Tuesday’s agreement made clear that the United States and the E.U. recognize that Boeing and Airbus face an external threat far bigger than each other: As part of its aggressive drive to become the world’s dominant industrial power, China is intent on developing its own plane-making industry with heavy government support.
Richard Aboulafia, an aerospace analyst with Teal Group, suggested that the agreement will help the U.S. and Europe present a united front against China. He noted that Chinese airlines delayed deliveries from Boeing and Airbus during the pandemic but continued to take deliveries from China’s own aircraft manufacturer, COMAC.
“The Chinese want to close their market and go their own way, and the biggest export market on the planet for Airbus and Boeing just goes away,” Aboulafia said.
The U.S.-EU agreement won’t stop China from doing that, he predicted, “but at least they can prevent a scenario where China divides the West and plays the U.S. and its allies off against each other.”
Following the U.S.- E.U. aerospace agreement, British International Trade Secretary Liz Truss and the U.S. Trade Representative (USTR) Katherine Tai agreed to halt retaliatory tariffs between those countries for five years as well.
“Today’s deal draws a line under an incredibly damaging issue and means we can focus on taking our trading relationship with the U.S. to the next level, including working more closely to challenge unfair practices by nations like China and using the power of free trade to build back better from the pandemic,” Truss said.
Tai said the agreement, in which both sides also agreed to form a working group on the civil aviation industry, can be built upon to “ensure fair competition and address common challenges from China and other non-market economies.”
Under the agreement, the U.K. will suspend for five years the 25% tariffs on U.S. rum, brandy and vodka. American whiskeys though will continue to face a 25% tariff in the U.K. that were imposed in connection with the Section 232 steel and aluminum dispute.
Next: Withold Release Orders Hit Solar Industry
Customs and Border Protection (CBP) ordered a ban on U.S. imports of solar panel materials from Hoshine Silicon Industry in China over forced labor allegations. Hoshine is one of the biggest global suppliers of polysilicon, the most popular material used to make solar panels.
The Department of Commerce separately restricted exports to Hoshine, three other Chinese companies, and the paramilitary Xinjiang Production and Construction Corps (XPCC), saying they were involved with the forced labor of Uyghurs and other Muslim minority groups in Xinjiang.
The three other companies added to the U.S. economic blacklist include Xinjiang Daqo New Energy, a unit of Daqo New Energy; Xinjiang East Hope Nonferrous Metals, a subsidiary of Shanghai-based manufacturing giant East Hope Group; and Xinjiang GCL New Energy Material, part of GCL New Energy Holdings.
The Commerce Department said the companies and XPCC “have been implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, forced labor and high-technology surveillance against Uyghurs, Kazakhs, and other members of Muslim minority groups in” Xinjiang.
Taiwan Ready To Negotiate U.S. Trade Agreement
Last month Taiwan's chief trade negotiator said he "expressed to the U.S. that Taiwan hopes to sign a trade agreement. We believe that if we continue to work hard we will achieve our goal one day."
The U.S. and Taiwan held scheduled talks on the Trade and Investment Framework Agreement, or TIFA, virtually. John Deng of Taiwan told reporters after the sessions that he had directly raised the issue of a free trade deal during the eight hours of talks.
A statement issued by USTR Katherine Tai pledged deeper U.S. collaboration with Taiwan on trade and investment but stopped well short of committing to negotiations on a full-fledged free trade deal.
"U.S. officials emphasized the importance of the U.S.-Taiwan trade and investment relationship and expressed a desire for stronger and more consistent engagement going forward," USTR said.
The two sides discussed cooperation on combatting climate change, wildlife tracking and forced labor, agreeing to form a new labor working group under TIFA.
Any such agreement with Taiwan would be frowned upon by Beijing, which says the island is Chinese territory and does not have the right to state-to-state relations.
A study conducted by the U.S. International Trade Commission in 2002 concluded that a U.S. Taiwan FTA would substantially benefit U.S. exports of motor vehicles, rice, fish and other food, but would have a small impact on the U.S. economy overall. China has recently overtaken the United States as Taiwan’s largest export market.
Taiwan is the 14th largest importer of U.S. goods. In 2019, the U.S. imported $54.25 billion from Taiwan and exported $31.2 billion in goods to Taiwan. Top export categories included computer and electronic products, non-electrical machinery, oil and gas, and transportation equipment. The U.S. is Taiwan’s sixth largest trading partner and a key destination for Taiwanese investors. Taiwan affiliated firms invested $25.59 billion in the U.S. in 2015.
FTZ Staff Activity
FTZ Board Activity
- Caddo-Bossier Parishes Port Commission submitted an application to reorganize FTZ 145 under the Alternative Site Framework in Shreveport, Louisiana. MORE
- XPO Logistics received authorization of production activity for wearable electronic communication/data device kitting within FTZ 72 in Clayton, Indiana. MORE
- Teijin Carbon Fibers, Inc. has extended the rebuttal comment period for its authorization for production authority within FTZ 38 in Spartanburg, South Carolina. MORE
- Bosch Security Systems, LLC received authorization of production activity for surveillance, detection, evacuation, and management systems within FTZ 38 in Greer, South Carolina. MORE
- Celgene Corporation received authorization of production activity for biopharmaceuticals within FTZ 49 in Warren and Summit, New Jersey. MORE
- Eastman Chemical Company received authorization of production activity for plastics within FTZ 204 in Kingsport, Tennessee. MORE
- Juno Therapeutics, Inc. received authorization of production activity for biopharmaceuticals within FTZ 5 in Bothell, Washington. MORE
- Mercedes-Benz U.S. International, Inc. submitted a notification of proposed production activity for electric motor vehicles and battery assemblies within FTZ 33 in Vance and Woodstock, Alabama. MORE
- Enovix Corporation received authorization of production activity for lithium-ion metal batteries within FTZ 18 in Fremont, California. MORE
- Intel Corporation submitted a notification of proposed production activity for kitting, assembly and packaging of computer electronics within FTZ 281 in Miami, Florida. MORE
- Wacker Polysilicon North America, LLC received authorization of production activity for hydrophilic fumed silica within FTZ 134 in Charleston, Tennessee. MORE
- Lam Research Corporation received approval for the expansion of subzone 18F in Newark, California. MORE
- Bauer Manufacturing LLC, d/b/a NEORig received authorization of production activity for additional components of water well drilling rigs within FTZ 265 in Conroe, Texas. MORE
- Pepperl+Fuchs, Inc. received approval to operate its facility in Katy, Texas as Subzone 84AC. MORE
- AbbVie, Inc. received authorization of production activity for pharmaceutical products within FTZ 22 in North Chicago and Lake County, Illinois. MORE
- Pensacola-Escambia County Promotion & Development Commission submitted an application to reorganize FTZ 249 under the Alternative Site Framework in Pensacola, Florida. MORE
- Airbus OneWeb Satellites North America LLC submitted a notification of proposed production activity for satellites and satellite systems within FTZ 136 in Merritt Island, Florida. MORE
- The City of Amarillo, Texas submitted an application to reorganize FTZ 252 under the Alternative Site Framework in Amarillo, Texas. MORE
- Merck & Co., Inc. received authorization of production activity for additional components of pharmaceutical products within FTZ 24 in Riverside, Pennslyvania. MORE
What’s Bugging Washington?
Brood X (pronounced “Brood 10”) has taken over your Nation’s Capital. There are 15 broods of periodical cicadas in the United States, and this one is now in every corner of the city after 17 years of hibernation. Thinking of riding your motorcycle into DC for the July 4th celebration? The FTZine staff recommends a full face shield – these things are big!
The Biden Administration just completed a delicate deal on infrastructure spending and seems focused on getting that bill passed before considering other policy issues such as trade. For example, the President’s Trade Promotion Authority lapses today without any plans for reinstatement.
CBP issued a new Withhold Release Order on a major Chinese solar panel manufacturer, and Taiwan suggested it is ready to begin free-trade agreement negotiations with the United States. That means the Biden Administration may not be able to wait too much longer before trade relations with China must rise to the top of the President’s agenda. The Administration did help align the E.U. in that effort by reaching an agreement to end all subsidies and punitive tariffs associated with the Airbus dispute.
Check out the new section of the FTZine we have added this month. We are now compiling FTZ Board Staff Action in addition to Board Action for a complete reference on official foreign-trade zone activity here in Washington. Let us know what you think! The FTZine staff hopes all our readers have a safe and enjoyable 4th of July.