FTZ’ine November 2020
November 5, 2020
FTZ’ine January 2021
January 2, 2021
A Late Start
A late start to the transition to a new administration in Washington has left the town abuzz wondering who will fill the top posts affecting trade. This includes intrigue about who is in the running to be the next Secretary of Commerce and the United States Trade Representative. Palace gossip in “The Crown” has nothing on a good Washington DC Presidential transition.
You may have seen that FTZ user Pfizer is airlifting the first batches of COVID-19 vaccine to the United States to prepare for rollout. No vaccines have been approved for use in the United States however, so it is still illegal to import those drugs into the country. The vaccine can, however, be brought into and stored in an FTZ, a cold one, while the various vaccines await FDA approval to import and distribute them. The foreign-trade zones program is thereby playing a critical role right now so that those vaccines can be staged around the country and deployed to vaccination sites the instant approval is granted.
Top Story: Top Trade Picks Still Unclear For New Administration
President-elect Biden may soon announce his nominations for U.S. Trade Representative and Commerce Secretary. That would end weeks of speculation as to the leaders of the new trade team at a time when tensions around the globe remain high.
There has been no clear direction yet from the transition team on who might fill the trade-related posts important to FTZs.
We do know half of the Foreign-Trade Zones Board, the government body that votes on formal FTZ applications. Yesterday the President-elect formally announced that Janet Yellen, a former Federal Reserve chair, will be nominated to serve as the first woman ever to lead the Treasury Department.
Politico reported that a number of members of Congress have publicly supported House Ways and Means trade lawyer Katherine Tai for USTR. Earlier speculation on the USTR post centered on California Rep. Jimmy Gomez. Rahm Emaunel, White House chief of staff during the Clinton administration and most recently the Mayor of Chicago, is also said to be interested in the job.
The possibilities for the next Commerce Secretary are quite diverse and include former Democratic presidential candidates Andrew Yang, Pete Buttigieg and Tom Steyer and business leaders such as Ursula Burns, Indra Nooyi, Leo Hindery, Oscar Munoz, Mellody Hobson and Meg Whitman.
Managing Commerce is one of the more challenging assignments and requires oversight of functions including weather forecasting, managing ocean fisheries and setting international technology product standards.
The Department includes the National Oceanic and Atmospheric Administration, giving the incoming secretary an important role in any new climate change policy.
Commerce also contains both the National Telecommunications and Information Administration and the Bureau of Industry and Security. BIS, heavily involved in export security, was more active than ever during the Trump administration, with a number of actions taken against Chinese telecommunication companies Huawei and ZTE.
Commerce also played a key role in the development and imposition of additional tariffs on foreign steel and aluminum in an effort to bolster domestic production of the two metals. The next Secretary of Commerce is likely to play a key role in the future of the Section 232 tariffs, which have a significant impact on users of the FTZ program.
A Secret Worth Sharing
Have you heard? Our own Sean Lydon and Melissa Irmen are teaming up for a free webinar on FTZs: Trade’s Best Kept Secret! Want to share how importers and exporters are finding new ways FTZ status can add value in an environment of trade sanctions and supply chain disruption?
Grantees: Distribute this link to your email lists so they may register for the program from the National Association of Foreign-Trade Zones.
The webinar is live this Thursday, Dec 3, 2020 at 2:00 PM Eastern, and there is still time to sign up. Not a fit for your schedule? All who register will have access to the recording for on-demand viewing.
Participants will learn how operating an FTZ helps buffer companies against fast changes in supply, demand, trade policy, and tariffs:
If you have questions about this free webinar or about marketing your FTZ program, send them to our Sr. Vice President and Chairwoman of the National Association of Foreign-Trade Zones, Melissa Irmen at Melissa.Irmen@iscm.co.
From Brexit to Brinksmanship
Brexit is coming down to the wire . . . again. While many followers expect that some kind of deal will be struck at the last minute, Britain's government is now urging businesses to prepare for a new trading relationship with the EU starting on January 1st. The Johnson administration has established a new Border Operations Center to monitor trade that it says will help ease what it described as "short-term disruption" after Brexit.
While British and European Union negotiators are making progress in intensive, round-the-clock talks in London, major issues remain unresolved that make any deal uncertain.
EU negotiators are trying to avoid talks running into next week to prevent an impact on preparations for a summit of EU leaders that starts on Dec. 10. That makes the next several days critical for the delicate negotiations.
The EU negotiating team is concerned that presenting leaders with anything other than a signed-and-sealed deal on the 10th would leave the agreement vulnerable to being henpecked into obscurity.
Commission President Ursula von der Leyen said that negotiations are “so tricky and so difficult” but they should reach a conclusion soon. The EU is “well prepared” for any outcome, “and we will see in the next days how things turn out,” she said.
The two biggest obstacles to a trade deal remain what access EU boats will have to British fishing waters and a level competitive playing field for business.
On fisheries, the U.K. is holding out for greater control over its stocks, something the government sees as a matter of sovereignty. An agreement on the issue is a precondition for any wider accord, but President Emmanuel Macron has warned that France won’t allow a deal that fails to respect its interests.
On the level playing field, the two sides are trying to establish a system in which U.K. environment and labor standards can evolve in a similar way to the EU’s but which allows the British government to have full control over them.
Britain’s own Office for Budget Responsibility (OBR) has painted a dim view of life after Brexit: a 4% drop in GDP. There will be a negative impact to manufacturing and finance, and tighter borders will lead to 270M customs declarations (as opposed to 55m now) and the need for 50,000 new customs agents. The new customs IT system will only go live on December 23rd, 7 days before it will face a significant test.
Digital Tax Notices Provoke Bipartisan Calls For Retaliation
Senator Ron Wyden (D-Ore.) said France has escalated its fight with the U.S. over taxing American technology companies doing business there by sending them tax bills late last month.
The top Democrat on the Senate Finance Committee said that he and his colleagues will use “every available tool” to defend U.S. tech companies against new digital services taxes if the French government doesn’t pump the brakes on implementing them.
The French finance ministry confirmed to POLITICO that "businesses subject to this tax have received a tax notice for the 2020 down payment.”
In the past, the Trump administration had threatened to hike tariffs on more French goods if the government there does not give up its plan to tax the likes of Google, Amazon and other Silicon Valley firms. Talks between the U.S. and EU on the issue have stalled, and President-elect Biden has not yet weighed in on a solution to the problem.
Massive China FTA Rekindles TPP Talk
Last week President-elect Joe Biden said the United States must align itself with other democracies so that those democracies write the rules governing global trade — and not China. That could be an opening argument for restarting discussions on U.S. participation in the Trans-Pacific Partnership.
Earlier this month China signed a major trade deal, the Regional Comprehensive Economic Partnership, or RCEP, with 14 other Asia-Pacific countries.
RCEP members' combined 2.2 billion people make up almost a third of the world's population, and a similar share of the global economy.
RCEP unites China, Japan and South Korea in a trade deal for the first time and includes 10 Southeast Asian countries plus Australia and New Zealand.
That leaves the U.S., the world’s largest economy, and India, the world’s largest democracy, on the sidelines of one of the world's biggest trading blocs.
The Peterson Institute for International Economics estimates the new deal could potentially grow the global economy by an annual $186 billion. The pact will facilitate investments and reduce tariffs among members over time, but it will only deliver modest benefits at the outset, according to Deborah Elms, founder and executive director of the Singapore-based Asian Trade Center. "Not everything will be cut. Not everything will go to zero. And the timelines are very long on some sensitive products," she says.
For example, Japan will maintain tariffs on rice, wheat, dairy products, sugar, and beef and pork to protect its farmers, Bloomberg reported. The deal could have been "more ambitious," Elms says, "but this is a very diverse group of 15," which mixes wealthy nations like Japan and Australia with poor ones like Laos and Cambodia.
US-Taiwan Trade Deal Isn’t Mending Any Fences With China
The US and Taiwan signed a five-year agreement pledging cooperation in health, technology and security.
The talks, held amid a contentious US presidential transition period and high regional tensions with China, did not advance Taiwan’s hopes for a trade deal with US, despite the two countries growing closer under President Trump.
Discussions were led by Taiwan’s deputy minister of economic affairs, Chen Chern-chyi, and US undersecretary of state, Keith Krach, and culminated in signing a five-year memorandum of understanding.
A US-Taiwan trade deal has bipartisan US support, but President-elect Joe Biden has not publicly announced his intentions for his China policy. Taiwan’s foreign minister Joseph Wu said it was “premature” to count out support from Biden’s team for a trade deal.
“I think the team is busy dealing with the transition,” he told media.
Taiwan's government is looking to the US for bilateral trade agreements in part because it isn’t a party to the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade deal signed last month by 15 Asia-Pacific countries including China.
China’s foreign ministry spokesman, Zhao Lijian warned the US to “fully grasp the high sensitivity of the Taiwan question” and demanded it immediately halt all official ties and interactions.
Taiwan’s agreement to open its market to American meat imports sparked a messy brawl on the floor of Taiwan’s parliament over the weekend, with members from the opposition Nationalist party throwing pig guts and punches at members of the majority Democratic Progressive Party.
FTZ Board Activity
- Sager Electronics received approval to operate its Carrollton, Texasfor facility as Subzone 29I. MORE
- Catalent Pharma Solutions received authorization of production activity for pharmaceutical products within FTZ 49 in Somerset, New Jersey. MORE
- Lam Research Corporation submitted an application for the expansion of Subzone 18F in Fremont, California. MORE
- Ricoh Electronics, Inc. received authorization of production activity for additional components of toner products, thermal paper and film within FTZ 26 in Lawrenceville and Buford, Georgia. MORE
- Deepwater Riser Services submitted a notification of proposed production activity for offshore drilling riser systems and equipment within FTZ 279 in Houma, Louisiana. MORE
- Ricoh Electronics, Inc. submitted a notification of proposed production activity for additional components of toner products, thermal paper, and thermal film within FTZ 26 in Lawrenceville and Buford, Georgia. MORE
- Eastern Shipbuilding Group, Inc. received approval for the expansion of subzone 65A in Panama City and Port St. Joe, Florida. MORE
- MANE USA submitted an application for subzone status for its facility within FTZ 44 in Wayne and Parsippany, New Jersey. MORE
- Gulfstream Aerospace Corporation submitted a notification of proposed production activity for additional components from disassembly of aircraft within FTZ 168 in Dallas, Texas. MORE
- Miraclon Corporation submitted a notification of proposed production activity for flexographic/aluminum printing plates and direct imaging/thermo lmaging layer film within FTZ 106 in Weatherford, Oklahoma. MORE
- Childers Guns, LLC received approval to operate its Fairmont, West Virginia facility as Subzone 229D. MORE
- Port Arthur LNG, LLC submitted an application for subzone status for its facility within FTZ 116 in Port Arthur and Jefferson County, Texas. MORE
- The Arizona Regional Economic Development Foundation has withdrawn its application to expand the service area of Foreign-Trade Zone 139 in Sierra Vista, Arizona. MORE
- Zinus USA Inc. submitted a notification of proposed production activity for foam bedding within FTZ 26 in McDonough, Georgia. MORE
- Lake Charles LNG Export Company, LLC received approval to operate its Lake Charles, Louisiana facility as Subzone 87H. MORE
- Automated Data Processing Machines received authorization of production activity for automated data processing machines within FTZ 183 in Austin, Texas. MORE
A Late Start
– A late start to the transition to a new administration in Washington has left the town abuzz wondering who will fill the top posts affecting trade. This includes intrigue about who is in the running to be the next Secretary of Commerce and the United States Trade Representative. Palace gossip in “The Crown” has nothing on a good Washington DC Presidential transition.
You may have seen that FTZ user Pfizer is airlifting the first batches of COVID-19 vaccine to the United States to prepare for rollout. No vaccines have been approved for use in the United States however, so it is still illegal to import those drugs into the country. The vaccine can, however, be brought into and stored in an FTZ, a cold one, while the various vaccines await FDA approval to import and distribute them. The foreign-trade zones program is thereby playing a critical role right now so that those vaccines can be staged around the country and deployed to vaccination sites the instant approval is granted.