FTZ’ine December 2023
November 30, 2023
FTZ’ine February 2024
January 31, 2024
Welcome Back
Happy New Year! The FTZine staff hopes everyone had a safe and enjoyable holiday break.
We start the new year with some cleanup left over from 2023. There are still two wars to deal with, each with an expanding impact on ocean vessel traffic. Relations with China remain at a very low point with the possibility that a trade war with the world’s most populous country could expand into something even more serious.
Americans go to the polls later this year. Candidates in the Presidential race are now talking about trade, and that talk has near and long-term implications.
The U.S. still does not have a budget, and the current resolutions funding the government expire in about six weeks. Conservative Republicans in the House have signaled that they are expecting more from Speaker of the House Mike Johnson than a continuation of funding at current levels.
Adding to the pressure for changes in spending patterns are rising interest rates which compound required payments on the federal debt, and migrant surges at the southern border. A Presidential election year is a difficult time to try and implement new spending or tax priorities, so expect a bumpy ride in DC from now until mid-February.
Top Story: Trade Gets Unexpected Spotlight In Presidential Election
Republican candidate Donald J. Trump has announced he is planning an aggressive increase in tariffs on “most imported goods” if he is re-elected President in 2025. His lead in the polls for the Republican nomination may force other candidates to adopt similarly stringent trade policies. Even candidates in other parties may be tempted to ‘talk tougher’ on trade.
So even though the 2024 election is a toss-up at the moment, conversations about new tariffs for friends and foes alike have thrust trade into the spotlight.
“We will impose stiff penalties on China and all other nations as they abuse us,” Mr. Trump declared at a recent rally in Durham, N.H. just before the end of the year.
It is hard to imagine that such talk would alter policies of the current administration related to trade with allies by. However President Biden did keep China tariffs that Mr. Trump imposed while in office, and if support builds for the idea, even if not for Mr. Trump, a path to even tougher trade terms could be on the horizon.
Former President Trump said he would “enact aggressive new restrictions on Chinese ownership” of a broad range of assets in the United States, bar Americans from investing in China and phase in a complete ban on imports of key categories of Chinese-made goods like electronics, steel and pharmaceuticals.
“If all you chase is efficiency — if you think the person is better off on the unemployment line with a third 40-inch television than he is working with only two — then you’re not going to agree with me,” former United States Trade Representative Robert Lighthizer said. “There’s a group of people who think that consumption is the end. And my view is production is the end, and safe and happy communities are the end. You should be willing to pay a price for that.”
The Biden administration has also moved to impose greater restrictions on economic exchanges with China, but in a more narrowly tailored way. The federal government now bars the export of certain technology with military applications to China, and in August, President Biden signed an order banning new American investment in Chinese companies that are trying to develop things like semiconductors and quantum computers.
Mr. Trump is now proposing going even further, calling for revoking China’s “most favored nation” trade status, meaning repealing the permanent normal trade relations and lower tariffs the United States granted to China after it joined the World Trade Organization in 2001. Notably, a House committee last month unveiled a bipartisan report calling for taking that step, too.
Trade Tip: Watch The Gap In Section 301 Exclusions
Just before the end of the year, the United States Trade Representative (USTR) renewed the 429 product specific Section 301 exclusions still in effect (352 reinstated exclusions and 77 COVID-related exclusions) through May 31, 2024.
While this was welcome news for importers of the affected items, the announcement came too late for CBP to be ready to implement it on January 1st. The Automated Commercial Environment (ACE) functionality for the acceptance of the extended product exclusions became available this morning (January 4, 2024), as of 7 am eastern.
Imports which have been granted a Section 301 product exclusion are not subject to the FTZ provisions of the Section 301 Federal Register notices, but instead are subject to the FTZ provisions in 19 CFR part 146.
To request a refund of Section 301 duties paid on imports before 7am this morning, importers must file a Post Summary Correction (PSC). If the entry is beyond the PSC filing timeframe, importers may protest the liquidation if within the protest filing timeframe.
Questions about Section 301 duties and Foreign-Trade Zone filing? Contact us at info@iscm.co
U.S. Navy Repulses Attack on Maersk Vessel in Red Sea
This past weekend U.S. Navy helicopters returned fire and sank three small boats carrying Houthi militants in the Red Sea last weekend, after receiving a distress call from the 14,000 TEU Maersk Hangzhou.
This time the Maersk container ship issued a second distress call and said four small boats were attacking it.
Just 24 hours prior the US shot down two anti-ship ballistic missiles launched by Houthi rebels at the same ship.
This marks the 23rd attack by the Houthis on international shipping since Nov. 19. Nations including the US have formed a maritime task force to respond to the Red Sea attacks, but many carriers and shippers are now avoiding the area despite the impact to shipping costs and times.
Attacks by Iran-backed Houthi militants on ships in the Red Sea have already rocked global trade. And there could be more disruptions and price increases to come for shipments of goods and fuel.
MSC, Maersk, Hapag Lloyd, CMA CGM, Yang Ming Marine Transport and Evergreen have all said they will be diverting all scheduled journeys immediately to secure the safety of their seafarers and vessels. Collectively, these ocean carriers represent around 60% of global trade.
Evergreen also said it would temporarily stop accepting any Israel-bound cargo, suspending its shipping service to Israel. Orient Overseas Container Line (OOCL), which is a part of Chinese-owned COSCO Shipping Group, has also stopped accepting Israeli cargo, citing operational issues.
The attacks have already pushed ocean freight costs higher. Since the beginning of the Israel-Hamas war, the Asia-U.S. East Coast prices climbed 5% to $2,497 per 40-foot container, according to the Freightos. It could get even more expensive as major companies avoid the Suez Canal, which feeds into the Red Sea, and opt instead to go around Africa to get to the Indian Ocean.
Doing so adds up to 14 days to a shipping route, incurring higher fuel costs. And since ships take a longer time to get to their destinations, the workaround results in a perceived “vessel capacity crunch.” Delays in container and commodity deliveries are inevitable.
The route shifts will also likely hurt Egypt’s already-struggling economy, which has already suffered a hit to tourism due to the Israel-Hamas war. Egypt owns, operates and maintains the Suez Canal. The Suez Canal Authority said it had generated a record $9.4 billion during the 2022-23 fiscal year.
True Trade Nerd? Have You Tried Tradle?
Think you know global trade? Then you need to try Tradle.
Borrowing the basics from Wordle, the popular daily word puzzle, Tradle presents a colorful matrix — called a treemap — showing the breakdown of an unnamed country’s exports. You get six guesses, each one accompanied by hints about the geographic distance between your guess and the correct answer.
Which country’s exports are 38.9% gold, 28.7% raw cotton and 12.6% coconuts, brazil nuts and cashews?
The exercises are entertaining and educational. Tradle is produced by the Observatory of Economic Complexity (OEC). The OEC, which sells subscriptions to its platform (playing Tradle is free), is owned by Datawheel, a technology company based in Cambridge, Massachusetts.
Gilberto García-Vazquez, Datawheel’s chief economist, said Tradle was launched in March 2022 and initially saw more than 1 million page views a month. “The surge in our website traffic following Tradle’s launch surprised us, as it rapidly became one of the most popular sites we have developed,” he said.
“At some point, we run out of countries, right? We do have only 224 countries with trade data. If the economic disruptions of the past six years have taught the masses anything, they’ve “highlighted the value of a comprehensive understanding of global trade data,” García said. “Individuals and organizations, regardless of their trade expertise, have recognized the vital role of this trade data.”
FDA Seizure of Counterfeit Drugs Highlights Enforcement Challenge
The Food and Drug Administration is urging Ozempic users to confirm the origin of their medications because counterfeit versions of the popular diabetes drug have been sold through legitimate retail outlets.
The problem highlights the difficulty in enforcing intellectual property violations in the international supply chain for drugs. While some Ozempic is packaged in the United States, 100% of the active ingredient is imported. If pharmacies and other experienced drug handlers cannot easily detect counterfeit material, what chance can import officials have in identifying and intercepting such shipments?
The drugs have been linked to five reports of illness, but none of the cases were serious. The bogus drugs' ingredients, quality and safety are not yet known, the FDA said. Ozempic-maker Novo Nordisk and the FDA are testing the seized products, according to a notice. (more)
The illegitimate products come with pen labels, cartons, fact sheets and needles that are also counterfeit, the notice shows. The needles pose an infection risk to consumers because it remains unclear whether or not they are sterile, Novo Nordisk said in a statement.
Ozempic has been in short supply, and amid the supply chain challenges, illegitimate Ozempic-like products have made their way to pharmacies to fill the need. It remains unclear whether the fakes are authentic products that are being diverted from foreign markets or whether they are being produced by outright scammers.
Lithium Fire Stokes Shipping Fears
After lithium-ion batteries burned in a large cargo ship's hold for a number of days, the U.S. Coast Guard said this past weekend that the fire was out and directed the cargo ship to anchor in Alaska.
The fire started on Christmas Day in cargo hold No. 1, a spokesperson for ship owner Wisdom Marine Group said in a statement. The crew released carbon dioxide into the hold and sealed it over concerns of an explosion.
The 19 crew members of the ship, the Genius Star XI, were uninjured and a marine firefighting team remains onboard to ensure the fire doesn't return, according to a Coast Guard press release. (more)
The 410-foot Genius Star XI was shipping lithium-ion batteries from Vietnam to San Diego. The Coast Guard diverted the bulk cargo ship to Dutch Harbor, one of the nation’s busiest fishing ports located in Unalaska, an Aleutian Islands community about 800 miles southwest of Anchorage..
The owners said there has been no oil leaks associated with the incident.
The Coast Guard will investigate the cause of the fire.
FTZ Staff Activity
- FTZ Board Staff processed a Traditional Minor Boundary Modification (S-219-2023) in FTZ 18G on behalf of Tesla, Inc., San Jose, CA on November 15, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-220-2023) in FTZ 42A on behalf of Mitsubishi Power Americas, Inc., Orlando, FL on November 21, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-221-2023) in FTZ 277 on behalf of KORE Power, Inc., Buckeye, AZ on November 22, 2023
- FTZ Board Staff processed a Termination (S-222-2023) in FTZ 18I on behalf of Bloom Energy Corporation, Fremont, CA on November 22, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-223-2023) in FTZ 50 on behalf of 3PL Business, Inc., Rialto, CA on November 27, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-224-2023) in FTZ 50 on behalf of Link Trans Logistics USA, Rancho Cucamonga, CA on November 27, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-225-2023) in FTZ 47 on behalf of Levi Strauss & Co., Hebron/Erlanger, KY on November 27, 2023
- FTZ Board Staff processed a Retail Trade Determination (S-226-2023) in FTZ 135B on behalf of Conglom Florida LLC, Jupiter, FL on November 27, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-227-2023) in FTZ 94 on behalf of Coordinadora Inc., Laredo, TX on November 30, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-228-2023) in FTZ 181 on behalf of bROK Products LLC, Akron, OH on December 5, 2023
- FTZ Board Staff processed a Traditional Minor Boundary Modification (S-229-2023) in FTZ 68 on behalf of Pegasus Logistics Group, El Paso, TX on December 6, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-230-2023) in FTZ 21 on behalf of BMW Manufacturing Company LLC, Berkeley County, SC on December 7, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-231-2023) in FTZ 281D on behalf of IP Trading Florida LLC, Miami, FL on December 7, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-232-2023) in FTZ 86I on behalf of Ikea Distribution Services, Inc., Spanaway, WA on December 7, 2023
- FTZ Board Staff initiated a Subzone (S-233-2023) in FTZ 24 on behalf of GMA Accessories DBA Capelli New York, Pittston, PA in December 8, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-234-2023) in FTZ 21 on behalf of Ray-Mont Logistics Charleston, Inc., North Charleston, SC on December 11, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-235-2023) in FTZ 281 on behalf of Top Shipping System Corp, Miami, FL on December 11, 2023
- FTZ Board Staff processed a 'Other' staff action (S-236-2023) in FTZ 50 on behalf of LinkTrans Logistics USA, Inc., Rancho Cucamonga, CA on December 11, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-237-2023) in FTZ 238 on behalf of Duncan Imports, Inc., Christiansburg, VA on December 11, 2023
- FTZ Board Staff processed a processed a Termination (S-238-2023) in FTZ 32 on behalf of Electricas BC Corp, Miami, FL on December 13, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-239-2023) in FTZ 49 on behalf of Accem Warehouse, Livingston, NJ on December 14, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-240-2023) in FTZ 18I on behalf of Bloom Energy Corporation, San Jose, CA on December 14, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-241-2023) in FTZ 32 on behalf of Hidalgo Group, Medley, FL on December 14, 2023
- FTZ Board Staff processed a processed a Termination (S-242-2023) in FTZ 18G on behalf of Tesla, Inc., Lathrop, CA on December 18, 2023
Foreign-Trade Zone Board Activity
- Mohawk Carpet Distribution, LLC submitted a notification of proposed production activity for machine-made woven and tufted rugs of polypropylene within Foreign-Trade Zone 26 in Calhoun and Sugar Valley, Georgia. MORE
- Flextronics America, LLC submitted a notification of proposed production activity for additional components of automatic data processing machines within Foreign-Trade Zone 183C in Austin, Texas. MORE
- Vallourec Star, LP received authorization of production activity for semi-finished steel casing within Foreign-Trade Zone 164A in Muskogee, Oklahoma. MORE
- GMA Accessories DBA Capelli New York submitted an application to operate its Pittston, Pennsylvania facilities as a subzone of FTZ 24. MORE
- Panasonic Energy Corporation of North America submitted a notification of proposed production activity for lithium-ion battery cells within Foreign-Trade Zone 17 in De Soto, Kansas. MORE
- Millipore Corporation received authorization of production activity for additional components of beverage filtration and purification devices within Foreign-Trade Zone 81D in Jaffrey, New Hampshire. MORE
- PREH INC. submitted a notification of proposed production activity for automotive display assemblies within Foreign-Trade Zone 94 in Laredo, Texas. MORE
- Orgill, Inc. received authorization to expand Subzone 144C in Tifton, Georgia MORE
Welcome Back:
Happy New Year! The FTZine staff hopes everyone had a safe and enjoyable holiday break.
We start the new year with some cleanup left over from 2023. There are still two wars to deal with, each with an expanding impact on ocean vessel traffic. Relations with China remain at a very low point with the possibility that a trade war with the world’s most populous country could expand into something even more serious.
Americans go to the polls later this year. Candidates in the Presidential race are now talking about trade, and that talk has near and long-term implications.
The U.S. still does not have a budget, and the current resolutions funding the government expire in about six weeks. Conservative Republicans in the House have signaled that they are expecting more from Speaker of the House Mike Johnson than a continuation of funding at current levels.
Adding to the pressure for changes in spending patterns are rising interest rates which compound required payments on the federal debt, and migrant surges at the southern border. A Presidential election year is a difficult time to try and implement new spending or tax priorities, so expect a bumpy ride in DC from now until mid-February.