FTZ’ine March 2022
March 1, 2022
FTZ’ine May 2022
May 3, 2022
No Foolin'
The US economy added over 430,000 jobs last month. That is not a misprint - the pace of recovery from the pandemic has been robust in the United States. The war in Ukraine has made it impossible for Europe to join in that economic growth, however, and despite signs that warfare may be abating, millions of homeless, unemployed refugees from yet another conflict are likely to stymie recovery efforts in Europe for quite some time.
As you can see above, flags at the Capitol were at half-staff last month after the passing of Madeleine Albright, the first woman to serve as Secretary of State of the United States. As Madam Secretary during the Clinton administration, she created and deployed American foreign policy in regional conflicts in Bosnia, Kosovo, Haiti, Northern Ireland and the Middle East. An accomplished linguist, she spoke Czech, Polish, French and Russian.
This year’s cherry blossoms persevered through wind and rain to put on an amazing show, and crowds were back in DC to enjoy them. Also persevering in March were Ukrainian forces, with the help of some sophisticated weapons from western allies. Their inspiring resolve has forced Russia to completely rethink its war strategy.
Top Story: US Economy Defying Ukraine’s Gravitational Pull – So Far
The US economy continues to create prodigious job numbers, but inflation and rising interest rates create uncertainty about the prospects for longer term economic growth. Adding to the opacity of economic forecasts, Europe is reeling from the impact of the war in Ukraine, and it seems almost certain that at least part of the continent will see recession soon.
Millions of Ukrainian refugees have arrived in western Europe on top of the Syrian ones that had already crossed the border into Poland, Hungary, Slovakia and Romania. Even if fighting ends soon, many Ukrainians will have no home to go back to. Further, wheat shortages and skyrocketing energy costs mean absorbing those economic shocks will take time.
It is not clear if the impact in Europe will be so bad that it drags the US economy into recession with it.
The US economy has recovered more than 90 percent of the 22 million jobs lost at the peak of the pandemic’s lockdowns in the spring of 2020 — a must faster rebound than most expected.
Consumer demand has remained strong, and the continued decline in coronavirus cases and health restrictions helped reduce the unemployment rate to 3.6 percent, down from 3.8 percent a month earlier.
U.S. employers added 431,000 jobs in March on a seasonally adjusted basis, the Labor Department said last Friday. The continued demand for workers in this country is a double-edged sword leading to strong wage growth and price increases. Inflation, the highest in decades, is being compounded by international events as well: Russia’s invasion of Ukraine is pushing up commodity prices, and Covid-19 outbreaks at key trade hubs in Asia are a fresh burden to supply chains.
Low-cost Ukrainian labor formed a part of the critical supply chain for many factories in Europe, and that loss will eventually be felt on this side of the Atlantic as well.
“By many measures, the labor market is extremely tight, significantly tighter than the very strong job market just before the pandemic,” Jerome H. Powell, the Fed chair, said in a recent speech. Mr. Powell has also called the current job market, in which there are 1.8 openings for every unemployed worker, tight to “an unhealthy level.”
It is not only the indirect impact of the shutdown of trade with Ukraine that will have a drawn-out impact on the US economy. The latest round of US attempts to punish Russia for the invasion includes bans on imports of seafood, alcohol and diamonds. The US is also stripping most favored nation (MFN) trading from Russia which will dramatically increase duty rates on items that can still be imported. Other nations around the world are taking similar steps.
Tech Tip: E214 Validation of MID Coming Soon!
Have you ever had an entry summary reject due to invalid MID and then been up against the clock to get your entry summary accepted? The process of getting the MID added to ACE in time for your Entry Summary to get validated by 10th day after your entry submission can be stressful, and so you may have wondered why the MID wasn’t caught as invalid when you used it when admitting the goods on an e214. Now it will.
CBP announced in CSMS #51376733 - Enhanced e214 MID validation to be deployed to production on 4/4/2022 that the MID will once again be validated on e214 submissions. Over the years, since the inception of the e214, MID validation has been turned on and off. Some FTZ management software provides ability to file 214s but not to create MIDs, as MID creations is sometimes offered only in full brokerage packages. If your zone is in this situation, having an invalid MID caught at the 214 filing will mean getting a broker to set up the MID so the 214 will be accepted.
If you are unsure if your software allows for MID creation, ask your provider.
If you have questions about MID validation on the 214, please email us at Info@iscm.co.
Nervous On The Docks
The June deadline for a new labor deal on the west coast docks is looming larger every day. The International Longshore & Warehouse Union (ILWU) workers and its West Coast employers, led by the Pacific Maritime Association (PMA) have yet to even start negotiating, which is making importers uncomfortable.
Canadian Pacific rail workers in Canada are back at work after a brief stoppage that ended when both sides agreed to binding arbitration in their contract dispute. US importers are not so optimistic that negotiations with west coast longshoremen will progress as smoothly.
Jim McKenna, the chief executive of the PMA, which represents the shipping terminals said “The last four contracts ended up in some sort of disruption.”
That well worn history has importers thinking about contingency plans for merchandise expected this summer.
A potential seven-year contract for the 29 PMA locations covered under the master contract would cover more than 15,000 port and office workers in the ports of Los Angeles, Long Beach, Oakland, Portland, and Seattle/Tacoma, as well as other waterfront locations along the Pacific Coast.
Approximately 40 vessels were waiting to berth off the Ports of LA and Long Beach as of Friday. That number is again growing after declining during the Chinese New Year holiday break and the recent COVID-19 port lockdowns in China. The backlog only adds to the woes shippers would face in the event of a work stoppage.
In November the PMA requested a one-year contract extension to avoid negotiations amid the crush of current container volumes. ILWU rejected the offer and confirmed it wanted to begin negotiating a new contract.
Since then each of the largest publicly traded shipping companies announced they were on track to earn billions in record revenue and profits, as overseas shipping rates have doubled, tripled, and more. Maersk, the world’s second-largest shipping company, on Feb. 9 said 2021 was a record year buoyed by “exceptional market conditions which led to record-high growth and profitability.” Most US importers would add unprecedented detention and demurrage charges to the conditions enhancing steamship line profitability.
Transportation economist Paul Bingham told Transport Topics that besides salary and benefits, he expects the two sides could clash over the PMA’s desire to increase automated cargo handling, claiming it improves overall port efficiency and lowers shipping costs.
“The shippers look at the U.S. ports and say, you know, we would like to make capital investments that would make a difference here in terms of the productivity, which is normal for a business owner. And they’re very limited, you know, in part by what they can have the workforce do under the contract,” he said.
USMCA Faces Test Over Mexico Power Projects
Mexican and American officials met last week in a test of the dispute resolution protocol embedded in the US-Mexico-Canada Agreement (USMCA). The issue is a proposed measure in Mexico that seeks to limit foreign-built energy plants and grant a majority market share of energy sales to Mexico’s state-owned power utility.
Mexican President López Obrador has vowed to press ahead with the changes to the electrical power industry, despite U.S. concerns that they could close off the market to US developers, a probable violation of the massive free trade agreement between the countries.
USTR Katherine Tai told Senators that she was “deeply concerned with the legislative and regulatory developments in the Mexican energy industry that we have seen in recent months. My team and I at USTR, along with much of the US government, have expressed these concerns regularly and directly to our counterparts in the Mexican government.”
Ambassador Tai said energy companies and environmentalists “have been unified in expressing concerns with what is happening in Mexico, specifically with respect to the competitiveness of the North American energy market, as well as the competitiveness of Mexico’s own energy industry.”
The Mexican changes would favor a domestic company — the state-owned Federal Electricity Commission — over foreign electricity producers, something prohibited under the U.S.-Mexico-Canada free trade pact.
“I have informed Mexico and I assure you that we at USTR are looking at all available options under the USMCA to address these issues,” Tai said, “so that the USMCA can work for our stakeholders and protect our environment across all three countries.”
Oregon Democratic Senator Ron Wyden said Mexico is “considering laws to concentrate market power and regulatory authority in the hands of the state owned electric company. That result will mean a bigger focus on fossil fuels with limited opportunities for clean energy providers.”
“So Mexico’s new reforms are a one or two punch against environmental progress in America,” Wyden said. “Not only are they a setback in the fight against the climate crisis, but they are denying American companies in the Pacific Northwest, for example, a fair shake in the Mexican market.”
The bill submitted in October would cancel contracts under which 34 private plants sell power into the national grid. The plan would also declare “illegal” an additional 239 private plants that sell energy directly to corporate clients in Mexico. Almost all of those plants are run with renewable energy sources or natural gas.
Forced Labor Prevention Act Creeps Closer To Implementation
CBP issued a message to the trade describing the basic implementation of the Uyghur Forced Labor Prevention Act (UFLPA) signed into law by President Biden in December of last year.
Companies have until June 21st when the law takes effect to develop appropriate countermeasures for any exposure to forced labor use in their supply chains.
The UFLPA will then replace the existing case-by-case implementation of Withhold Release Orders (WROs) on companies suspected of using forced labor, with a broad U.S. import ban of items sourced from any company in the Xinjiang region of China.
In addition, the US Forced Labor Enforcement Task Force will seek to identify companies using forced labor in other regions of China, and identify companies inside and outside of China using components and raw materials sourced from Xinjiang. Such companies would also be banned from importing into the US.
In 2019, Xinjiang was responsible for 84% of China's cotton production. Most of the cotton grown in Xinjiang is high quality extra-long staple length cotton. This makes it hard to imagine that implementation of the UFLPA won’t have a dramatic impact on the volume of apparel and other cotton goods that can be sourced from China.
In the UFLPA, Congress directed CBP to outline a process for establishing that targeted goods are not the product of forced labor. Lack of such guidance is a source of frustration with the current WRO process.
The UFLPA promulgates a 'rebuttable presumption' that the importation of any merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China, or produced by certain entities, are not entitled to entry to the United States.
The presumption applies unless the Commissioner of Customs and Border Protection determines that the importer of record has complied with specified conditions and, by clear and convincing evidence, that the goods, wares, articles, or merchandise were not produced using forced labor.
Evergreen Line Spreading Cost Of Grounded Vessel To Importers
The container ship the Ever Forward has run aground in Chesapeake Bay, following in the footsteps of its sister vessel the Ever Given that infamously got stuck in the Suez Canal for six days last year.
The 12,000 TEU Ever Forward became stuck after leaving Baltimore en route to Norfolk, Virginia.
Evergreen has declared General Average for Ever Forward after two attempts to refloat the stranded ship failed. This will distribute the costs of recovering the ship and its cargo on the cargo owners.
The 1,096-foot ship was travelling through the Craighill Channel, which is about 15-metres deep.
A US Coast Guard spokesman said the ship travelled outside the channel into shallower water which was only 7.5-metres deep.
Dredging work around the vessel began last month and the rescue team has made two attempts to refloat it so far.
There were no reports of injuries or damage and no indication of fuel leakage. The Maryland Port Administration said it is not currently affecting transit through the US port, but nearby ships have been asked to reduce their speeds and travel in one-way traffic as they pass the beached vessel.
Another refloat attempt is scheduled for this week after unloading the vessel.
TRQ Handling Implemented For Japanese Steel, UK On Deck
US Customs issued a message last month confirming that effective last Friday, April 1st, steel products from Japan may enter the US free of any Section 232 duty. as long as quantity remains available in a Tariff Rate Quota (TRQ) scheme similar to one negotiated with the EU last year.
Imports of steel derivatives from Japan are no longer subject to additional Section 232 duties under the terms of the Presidential Proclamation. Section 232 duties remain in place for aluminum from Japan.
The UK just struck a similar deal with the US to remove tariffs on British steel, though a broader trade agreement between the two countries does not appear imminent. That deal goes into effect June 1st, and also eliminates the retaliatory tariffs on American Levi’s jeans, bourbon whiskey and Harley Davidson motorcycles.
Quantitative limitations on imports of Japanese iron or steel products are calculated on a quarterly basis.
In order for shipments to be processed for quota on the same day, the entry summary must be filed, the entry summary payment date must be on file or scheduled for a future statement, and the conveyance arrived by 4:30 pm in the port of unlading’s local time zone.
Members of the trade community can track quota status by viewing the weekly quota commodity status report posted on the CBP website.
The companion agreement with the UK ended months of tensions that have stood in the way of a broader bilateral trade agreement between the countries, but US Trade Representative Katherine Tai dealt a blow to any such hopes of the UK government.
Speaking after a meeting in Baltimore, Tai described FTAs as “a very 20th-century” tool and it might not be worth “blood sweat and tears” to agree. “I just want to say we are finding in trade that one size does not fit all,” Tai said, according to Politico.
The US-UK steel deal included a provision requiring Chinese-controlled companies in the UK to be audited annually to ensure they were not breaching restrictions on Chinese steel exports. In practice, the main target of the provision will be British Steel, owned by China’s Jingye.
FTZ Staff Activity
- FTZ Board Staff processed a Minor Boundary Modification (S-26-2022) in FTZ 18G on behalf of Tesla, Inc., in Stockton, CA, on February 25, 2022
- FTZ Board Staff processed a Termination (S-27-2022) in FTZ 32 in Miami, FL, on February 28, 2022
- FTZ Board Staff processed a Minor Boundary Modification (S-28-2022) in FTZ 151F on behalf of Supreme Resources, Inc., in Lima, OH, on February 28, 2022
- FTZ Board Staff processed a Minor Boundary Modification (S-29-2022) in FTZ 8 on behalf of TEC Wiring International, in Perrysburg, OH, on March 1, 2022
- FTZ Board Staff processed a Minor Boundary Modification (S-30-2022) in FTZ 163I on behalf of Destileria Serralles, in Ponce, PR, on March 2, 2022
- FTZ Board Staff processed a Minor Boundary Modification (S-31-2022) in FTZ 26P on behalf of Kubota North America Corporation, in Conley, GA, on March 9, 2022
- FTZ Board Staff processed a Minor Boundary Modification (S-32-2022) in FTZ 25F on behalf of South Florida Materials Corporation, dba Vecenergy, in Hollywood, FL, on March 10, 2022
- FTZ Board Staff processed a Minor Boundary Modification (S-33-2022) in FTZ 202 on behalf of lnterport Logistics, LLC, in Commerce, CA, on March 10, 2022
FTZ Board Activity
- Fluvitex USA, Inc. received authorization of limited production activity for quilts, comforters and cushions within FTZ 138 in Groveport, Ohio. MORE
- Plaquemines Port, Harbor & Terminal District submitted an application for a new foreign-trade zone under the alternative site framework in Plaquemines Parish, Louisiana. MORE
- Pfizer, Inc. submitted a notification of proposed production activity for lipid active pharmaceutical ingredients within FTZ 43 in Kalamazoo, Michigan. MORE
- Gulf Coast Growth Ventures LLC received authorization of production activity for ethylene, polyethylene, monoethylene glycol and related co-products within FTZ 122 in San Patricio County, Texas. MORE
- Innovusion, Inc. received authorization of production activity for light detection and ranging systems within FTZ 18 in Sunnyvale, California. MORE
- Lam Research Corporation received authorization of production activity for additional components of wafer fabrication equipment, subassemblies, and related parts within FTZ 18 in Fremont, Hayward, Livermore, Newark, and Tracy, California. MORE
- Avaya, Inc. received authorization of production activity for kitting of audio/video conferencing equipment within FTZ 262 in Olive Branch, Mississippi. MORE
- GXO Logistics received authorization of production activity for thermal transfer printers, data transmission devices and accessories kitting within FTZ 41 in Kenosha, Wisconsin. MORE
- Sunlit Arizona LLC submitted a notification of proposed production activity for specialty chemicals for microchip production within FTZ 75 in Phoenix, Arizona. MORE
- BrightView Technologies, Inc. received authorization of production activity for plastic film within FTZ 93 in Durham, North Carolina. MORE
- Swafford Warehousing, Inc. received authorization of production activity for medical kits within FTZ 38 in Greer, South Carolina. MORE
- Aker Solutions, Inc. received authorization of production activity for subsea oil and gas systems within FTZ 82 in Mobile, Alabama. MORE
- Pfizer, Inc. submitted a notification of proposed production activity for nirmatrelvir active pharmaceutical ingredient (API) for COVID-19 treatment within FTZ 43 in Kalamazoo, Michigan. MORE
- GHSP Inc. submitted an application for subzone status for its facility within FTZ 189 in Grand Haven, Hart and Holland, Michigan. MORE
- The Greater Kansas City Foreign-Trade Zone, Inc. received approval for the reorganization and expansion of the service area and new magnet site of FTZ 15 under ASF in Kansas City, Missouri. MORE
No Foolin’ –
The US economy added over 430,000 jobs last month. That is not a misprint – the pace of recovery from the pandemic has been robust in the United States. The war in Ukraine has made it impossible for Europe to join in that economic growth, however, and despite signs that warfare may be abating, millions of homeless, unemployed refugees from yet another conflict are likely to stymie recovery efforts in Europe for quite some time.
As you can see above, flags at the Capitol were at half-staff last month after the passing of Madeleine Albright, the first woman to serve as Secretary of State of the United States. As Madam Secretary during the Clinton administration, she created and deployed American foreign policy in regional conflicts in Bosnia, Kosovo, Haiti, Northern Ireland and the Middle East. An accomplished linguist, she spoke Czech, Polish, French and Russian.
This year’s cherry blossoms persevered through wind and rain to put on an amazing show, and crowds were back in DC to enjoy them. Also persevering in March were Ukrainian forces, with the help of some sophisticated weapons from western allies. Their inspiring resolve has forced Russia to completely rethink its war strategy.