FTZ’ine May 2024
May 2, 2024
FTZ’ine July 2024
June 27, 2024
China Front And Center
Developments, mostly negative ones, in the U.S. relationship with China continue to dominate the international trade conversation in Washington. The Biden administration announced increased tariff rates and broadened the list of items from China with punitive charges, including a 102% tariff on Chinese electric vehicles. At the same time, a barrage of Chinese entities were added to the list that are completely barred from importing into the United States. It may get worse if the polls continue to show a tight Presidential race.
Recent revelations on the origin of the COVID-19 virus in China are likely to inflame tensions even further this month.
The continued strength of the U.S. economy, combined with extended travel times through the Suez and Panama Canals have caused a shortage of container and ship capacity, raising ocean rates in a deja-vu moment for international traders.
The Port of Baltimore is getting close to resuming normal operations . It now has a 50 ft. deep channel and the Dali has been released from its confinement underneath the remains of the Francis Scott Key Bridge. The investigation into responsibility for the accident continues.
Top Story: UFLPA List Expanded By 26 Apparel & Textile Firms
In May, the Department of Homeland Security (DHS) added 26 Chinese cotton traders and warehouse facilities to its list of entities under the Uyghur Forced Labor Prevention Act (UFLPA). That represents a 65% increase in the number of companies explicitly barred from importing merchandise into the United States due to concerns of the use of forced labor.
Many of the cotton companies listed are based outside of the special Xinjiang region, but source their cotton there, DHS said in a statement.
A spokesperson for the Chinese embassy in Washington criticized the move.
“The so-called ‘Uyghur Forced Labor Prevention Act’ is just an instrument of a few US politicians to disrupt stability in Xinjiang and contain China’s development,” the spokesperson said. FTZ operators and users continue to look unsuccessfully for some sign of improvement in the U.S. relationship with the world’s #2 economy.
Washington has now restricted imports from 65 entities since the Uyghur Forced Labor Prevention Act Entity List law was passed in 2021, according to DHS.
A group of lawmakers in Washington continue to press for expansion of UFLPA enforcement action. “We enthusiastically endorse DHS’s action today to nearly double the Uyghur Forced Labor Prevention Act’s ‘Entity List’ — while recognizing that the current list remains only a fraction of the businesses complicit in forced labor,” Representative Chris Smith and Senator Jeff Merkley, chairs of the bipartisan Congressional-Executive Commission on China, said in a statement.
The group wants DHS to blacklist Chinese companies in the polysilicon, aluminum, PVC and rayon industries and any company in other parts of Asia making goods for the US market with inputs sourced from Xinjiang.
Tech Tip: List of Goods Subject to APHIS Filing Set To Expand
The U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) announced the implementation of Phase VII of the Lacey Act provisions. In this latest phase, declarations will be required for all remaining plant products that are not 100-percent composite materials.
This phase covers a broad range of products including resins, leather, travel goods, handbags, cork, footwear, vehicles, musical instruments, sporting goods, etc.
This means traders in plant-based products who may not yet have been subject to declarations may be required to do so very soon.
If an importer imports items that contain plant products, but do not currently file a Lacey Act declaration, they likely will need to file under Phase VII.
Phase VII enforcement is scheduled to begin on December 1, 2024.
Questions related to the new Lacey Act requirements from APHIS? Contact us at info@iscm.co.
Biden Administration Bumps China Tariffs . . . And Rhetoric
Last month President Biden announced that tariffs on $18 billion worth of imports of Chinese electric vehicles and other products would soar over the next two years.
This includes a 102% tariff on Chinese EVs.
For its part China has vowed to defend its interests in the face of the new US tariffs and warned that the trade barriers would affect the wider relationship between the two economic superpowers.
The White House said the measures were designed to protect American workers and businesses in the face of China’s unfair trade practices, including “flooding global markets with artificially low-priced exports.”
China “firmly opposes” the new tariffs, the country’s Commerce Ministry said in a statement.
EVs imported from China will see their tariffs more than quadrupled from 27.5% to 100% — a policy lever meant to challenge Beijing’s practice of encouraging aggressively low pricing by domestic EV manufacturers while levying a 40% tariff on US car imports.
In addition to EVs, increased tariffs will apply to imports of Chinese steel and aluminum, legacy semiconductors, battery components, critical minerals, solar cells, cranes and medical products.
Tariffs on solar cells and semiconductors will double to 50%, while the remainder of the targeted imports will attract tariffs of 25%.
hina’s global trade surplus in goods has soared in recent years and is now approaching $1 trillion, stoking tensions with the United States and Europe.
The Biden administration and European Union officials fear Beijing is trying to tackle a subsidy-fueled overcapacity problem in its decelerating economy by dumping excess products on global markets.
Newly targeted strategic sectors include critical minerals and medical supplies.
The announcement of the new tariffs follows the conclusion of USTR’s long-running review of the tariffs that were imposed on a range of Chinese-origin goods under President Donald Trump. Those tariffs were imposed under Section 301 of the Trade Act of 1974 which requires that trade conditions, and the continued need for the tariffs be reviewed every four years.
Some U.S. importers had speculated that the USTR review might yield targeted reduction of Section 301 rates or the elimination of certain tariff lines. Instead, all existing Section 301 tariffs have been either maintained at their current levels or increased, and certain products are now subject to Section 301 tariffs for the first time. No tariffs were reduced or eliminated.
FTZ operators and users will need to carefully assess the extent to which new and increased tariffs impact their operations, and monitor China’s reaction in case of retaliation.
A 2023 study from the U.S. International Trade Commission found that US importers “bore nearly the full cost” of the tariffs and costs largely did not get passed onto consumers. The study found tariffs imposed by former President Donald Trump did not meaningfully contribute to inflation.
Ocean Rates Spike On Demand Surge, Supply Constraints
A perfect storm in global trade is creating a shipping container capacity crunch, fueling an unwelcome spike in ocean freight rates.
The beginning of peak shipping season, coupled with the longer transits to avoid the Red Sea, and bad weather in Asia, have hit the flow of trade on key routes. Ocean carriers are skipping ports or decreasing their time at port, and not picking up empty containers, in an effort to keep vessels on track for delivery.
Is this starting to sound familiar yet?
The supply chain cost issues come at a time when consumer goods for back to school and the holidays are getting ready to be moved on the water, and ports from Oakland, Savannah, Los Angeles, Houston and Long Beach are already reporting strong increases in container throughput.
“From the Far East into the U.S. West Coast, it is likely spot rates will surpass the level seen at the height of the Red Sea crisis earlier this year, which demonstrates how dramatic the recent increases have been,” said Emily Stausbøll, senior shipping analyst at Xeneta.
Spot rates had fallen after the sharp rise triggered by Red Sea tensions in early 2024, but since the end of April they began spiking by as much as $1,500, on average, on routes to the U.S. coasts, and now some of the highest contract rates charged by shippers are over double the rates of just a month ago.
DHL had been warning about about a container crunch since January because of the longer routes needed to avoid the Red Sea since the Houthi attacks began. Containers are out on the water longer and as a result not available to be reloaded.
The availability of containers has been slowed even further by the bad weather impacting port operations in China, Malaysia, and Singapore.
Surging demand for empty containers is fueling the crisis.
The Port of Oakland reported a 17 per cent rise in TEU handling in April compared to 2023.
“It’s encouraging to see Oakland recover cargo volume as we focus on long-term growth,” said Bryan Brandes, Maritime Director at the Port of Oakland.
The Port of Los Angeles handled 770,337 TEU in April, reflecting a 12 per cent increase from the previous year.
“All our vital operational statistics at the Port of Los Angeles are at or better than pre-Covid levels,” stated Gene Seroka, Executive Director of the Port of Los Angeles, during a recent media briefing.
The Maritime Port Authority of Singapore (MPA) has seen considerable increases in container volumes and ‘bunching’ of container vessel arrivals in recent months.
The diversion of vessels around the Cape of Good Hope has interrupted vessel arrival timetables at key ports, resulting in off-schedule arrivals and a ‘vessels bunching’ effect.
Since the start of 2024, Singapore has experienced an 8.8 per cent increase in container volumes.
The increasing demand for container handling in Singapore is the consequence of numerous container lines discharging more containers in Singapore as they skip following voyages to make up for their upcoming schedules.
Baltimore Operations Set To Resume
The Dali containership has been removed from underneath the remains of the Francis Scott Key Bridge in Baltimore, after 55 days in captivity of the bridge’s wreckage.
According to NBC News, tugboats guided the Dali 2.5 miles to a local terminal at a speed of roughly 1 mile per hour.
With the Dali removed the Port of Baltimore now has three channels available around the clock, but with some restrictions. One of those channels is 50 feet deep, allowing the Port to once again accommodate the largest commercial container and RoRo vessels and support the return to normal operations.
The Hawkins Point Temporary Channel is open 24 hours daily to shallow commercial vessels needing less than 14 feet of depth.
The Sollers Point Channel is open 24 hours a day for recreational traffic capable of navigating in less than 11 feet of water.
The Fort McHenry Limited Access Channel is for commercial traffic and is now available 24 hours a day. This channel is 50 feet deep and 400 feet wide, with 214 feet of vertical clearance to the overhead power lines.
Deep draft vessels still require a Maryland State Pilot and two escort tug boats at the moment.
The 22 crew members of the Dali are finally free, after being stuck on board the ship ever since the collision occurred. The containership was had been under bridge destruction for more than eight weeks until crews in Baltimore released it with controlled explosions.
The National Transportation Safety Board (NTSB) revealed that the Dali containership experienced a loss of electrical power approximately 10 hours before the Francis Scott Key Bridge collision. The NTSB continues to investigate and its findings may impact liability for the costs of cleaning up Baltimore Harbor and replacing the bridge.
FTZ Staff Activity
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-75-2024) in FTZ 138 on behalf of Retail Brokerage Solutions, LLC, Columbus, OH on April 25, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-76-2024) in FTZ 110D on behalf of Maxeon Americas Manufacturing, LLC, Albuquerque, NM on April 30, 2024
- FTZ Board Staff processed a Termination (S-77-2024) in FTZ 84 on behalf of Pronto Shipping and Storage, Inc., Houston, TX on May 2, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-78-2024) in FTZ 21K on behalf of BMW Manufacturing Company, LLC, North Charleston, SC on May 7, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-79-2024) in FTZ 287 on behalf of Mullen Automotive, LLC, Tunica County, MS on May 8, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-80-2024) in FTZ 94 on behalf of Eduardo E. Lozano & Co., Inc., Laredo, TX, on May 8, 2024
- FTZ Board Staff processed a Traditional Site Framework Subzone Application (S-81-2024) in FTZ 160A on behalf of Marathon Petroleum Company LP, Kenai, AK on May 10, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-82-2024) in FTZ 71 on behalf of ebm-papst, Inc., Farmington, CT on May 13, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-83-2024) in FTZ 205 on behalf of BMW of North America, LLC, Oxnard, CA on May 15, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-84-2024) in FTZ 26Y on behalf of Dornier America Medtech, Inc., in Kennesaw & Cartersville, GA on May 14, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-85-2024) in FTZ 281 on behalf of Savino Del Bene USA, Inc., Doral, FL on May 14, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-86-2024) in FTZ 84 on behalf of Pronto Shipping and Storage Inc., Houston, TX on May 15, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-87-2024) in FTZ 104 on behalf of Matson Logistics Warehousing, Pooler, GA on May 23, 2024
- FTZ Board Staff processed a Termination (S-88-2024) in FTZ 32 on behalf of Carbel LLC, Triton Logistics, Inc., & Longo Customs Services Miami Corp., Miami, Doral, & Hialeah, FL on May 22, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-89-2024) in FTZ 202 on behalf of Geodis Logistics, LLC, Fontana, CA on May 22, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-90-2024) in FTZ 52 on behalf of Photonics Industries International, Inc., Town of Islip, NY on May 23, 2024
- FTZ Board Staff processed a Termination (S-91-2024) in FTZ 138 on behalf of UPS Supply Chain Solutions, Columbus, OH on May 23, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-92-2024) in FTZ 33F on behalf of Swagelok Company, Koppel, PA on May 29, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-93-2024) in FTZ 277 on behalf of Funko, LLC, Buckeye, AZ on May 30, 2024
Foreign-Trade Zone Board Activity
- Samsung Austin Semiconductor, LLC received approval to expand Subzone 183B in Taylor, Texas. MORE
- Sediver USA, Inc. submitted an application to operate its West Memphis, Arkansas facilities as a Subzone of Foreign-Trade Zone 273. MORE
- Patheon API Inc. submitted a notification of proposed production activity for pharmaceutical products within Foreign-Trade Zone 21J in Florence, South Carolina. MORE
- PPC Broadband, Inc. submitted a notification of proposed production activity for fiber optic conduit within Foreign-Trade Zone 90C in East Syracuse, New York. MORE
- Volkswagen Group of America, Inc. received authorization of production activity for additional components of passenger motor vehicles within Foreign-Trade Zone 134 in Chattanooga, Tennessee. MORE
- Bentex Group Inc. received approval to operate its Piscataway, New Jersey facilities as Subzone 44Q. MORE
- Space Exploration Technologies Corp. (dba SpaceX) submitted a notification of proposed production activity for internet satellite dish kits within Foreign-Trade Zone 50 in Hawthorne, California. MORE
- BMW Manufacturing Co. LLC submitted a notification of proposed production activity for additional components of passenger motor vehicles within Foreign-Trade Zone 38A in Spartanburg, South Carolina. MORE
- Mercury Marine submitted a notification of proposed production activity for electric marine outboard and inboard motors within Foreign-Trade Zone 41H in Fond Du Lac, Wisconsin. MORE
- Jubilant HollisterStier, LLC received approval to operate its Spokane, Washington facilities as Subzone 224A. MORE
- Uni Ag Group, LLC submitted a notification of proposed production activity for export-only production of bulk sugar and chocolate premixes within Foreign-Trade Zone 12 in McAllen, Texas. MORE
- voestalpine High Performance Metals LLC submitted a notification of proposed production activity for wire rod within Foreign-Trade Zone 207E in South Boston, Virginia. MORE
- Port Arthur LNG, LLC received approval to expand Subzone 116F to include a new site in Port Arthur, Texas. MORE
- The Port of Port Angeles submitted an application to establish a new Foreign-Trade Zone under the Alternative Site Framework with a service area of Clallam County, Washington. MORE
- Oldach Associates, LLC received approval to expand Subzone 61Z to include a new site in Bayamon, Puerto Rico. MORE
- USA Big Mountain Paper Inc. submitted a notification of proposed production activity for disposable diapers/underwear/pads and wet wipes within Foreign-Trade Zone 64 in Jacksonville, Florida. MORE
- Stoltzfus Logistics International, LLC received approval to operate its Atglen, Pennsylvania facilities as Subzone 147H. MORE
- Gotion Inc. received authorization of production activity for lithium-ion battery packs and lithium battery Systems within Foreign-Trade Zone 22AF in Manteno, Illinois. MORE
- Swagelok Company received approval to expand Subzone 40I in Wickliffe, Ohio. MORE
- Lucid Motors USA, Inc. submitted a notification of proposed production activity for lithium-ion batteries within Foreign-Trade Zone 75N in Casa Grande and Tempe, Arizona. MORE
- J.J.C. International Distributors LLC dba Clar Company submitted a notification of proposed production activity for galvanized steel products within Foreign-Trade Zone 32 in Miami, Florida. MORE
China Front And Center:
Developments, mostly negative ones, in the U.S. relationship with China continue to dominate the international trade conversation in Washington. The Biden administration announced increased tariff rates and broadened the list of items from China with punitive charges, including a 102% tariff on Chinese electric vehicles. At the same time, a barrage of Chinese entities were added to the list that are completely barred from importing into the United States. It may get worse if the polls continue to show a tight Presidential race.
Recent revelations on the origin of the COVID-19 virus in China are likely to inflame tensions even further this month.
The continued strength of the U.S. economy, combined with extended travel times through the Suez and Panama Canals have caused a shortage of container and ship capacity, raising ocean rates in a deja-vu moment for international traders.
The Port of Baltimore is getting close to resuming normal operations . It now has a 50 ft. deep channel and the Dali has been released from its confinement underneath the remains of the Francis Scott Key Bridge. The investigation into responsibility for the accident continues.
