FTZ’ine February 2023
January 31, 2023
FTZ’ine April 2023
April 4, 2023
It is Balloooon!
Not since the days of Fort Courage has a quasi-celestial object so entranced your nation’s capital. That first balloon was perhaps a fitting symbol of the wind-whipped drift of U.S.-China relations during the month.
Good news from our mates across the pond. Leadership of the United Kingdom and the European Union announced an agreement on a new Northern Ireland Protocol. That border has vexed trade relations between the two sides of the Channel since Brexit was first implemented. Resolution could unlock trade facilitation on multiple fronts, including with the United States.
After a rousing and welcome rally in January, stock markets pulled back in late February as economic data showed the U.S. economy returned to growth at a pace that is likely to push the Fed to keep raising interest rates.
Nope. Still no contract. But we do hear they’re talking to each other. Just not to the FTZ'ine.
Top Story: U.S. - China Tensions Balloon Out Of Control
If you’ve been waiting for trade tensions between the world’s two largest economies to ease, February wasn’t your month.
First a balloon of Chinese origin drifted completely across the United States. The purpose of the balloon launch was unclear, but what was clear was the swift degradation in relations between the superpowers. The transgression of American airspace forced cancellation of a meeting by Secretary of State Blinken that had been set up to try and ease tensions.
Instead, the two sides continue air and naval encounters in and over the Taiwan Strait. In addition to these direct confrontations, China signaled it is considering the transfer of military supplies to Russia on the one-year anniversary of the conflict in Ukraine.
Then just before month-end, the U.S. Energy Department released a surprising report that concluded that a lab leak in China probably caused the worldwide coronavirus pandemic.
That reignited a debate over China’s culpability for COVID-19 and its path of destruction, which China vehemently denies. All signs point toward more difficult relations ahead.
U.S. intelligence agencies haven’t reached a consensus about the origins of the COVID-19 virus, but Energy Department officials said last month that new (but so far unidentified) evidence caused the agency to identify the Wuhan Institute of Virology as the likely source of the coronavirus outbreak.
Tech Tip: Ocean House Bill Release Delayed – Again
You may be thinking that you are reading a reprint of a previous Tech Tip, but there is a new delay in the HBOL release functionality, and implementation has been pushed to June 4, 2023.
ISCM sent out an alert when we learned from CBP’s new Director of Cargo Security and Controls that there was going to be another delay in the release of the Ocean House Bill Release capability in ACE.
Since our announcement, CBP has published more information including an updated Trade User Information Notice about the impacts. Changes in the reply messages of filings and even the order of operations in obtaining release are still being developed.
One of the more recent developments is confirmation from CBP that until each house bill has its own authorized movement, the master bill will not be authorized for movement from the terminal. So, if your goods are on a shared master bill, release of your goods might be delayed. Now is a good time to be talking to your freight forwarders to find out how they will prevent this.
As you are preparing, if you have questions or comments on house bill release, please send them to us at Info@iscm.co.
EU And UK Announce Resolution to Northern Ireland Protocol
European Commission President Ursula von der Leyen and British Prime Minister Rishi Sunak announced a new deal on trade rules for Northern Ireland.
At a news conference in Windsor, England, Prime Minister Sunak said the two sides had agreed to remove "any sense of a border" between Britain and Northern Ireland - a possibility that had angered politicians on both sides of the English Channel, and even here in Washington.
President Biden, who often speaks with pride of his Irish heritage, had previously warned that any action which endangered peace in Ireland could harm the prospects of a U.S.-UK trade deal.
White House national security spokesman John Kirby said that the Biden administration was "grateful" that Britain and the EU had come to an agreement.
"I'm pleased to report that we have now made a decisive breakthrough," the Prime Minister said of his so-called "Windsor Framework". "This is the beginning of a new chapter in our relationship."
The issue of a hard border between Northern Ireland and Ireland has been one of Brexit's most contentious, and the Prime Minister immediately won plaudits from business groups who welcomed the easing of trade rules.
Northern Ireland is the only part of the U.K. that shares a border with an E.U. member, the Republic of Ireland. When the U.K. left the E.U. in 2020, the two sides agreed to keep the Irish border free of customs posts and other checks because an open border is a key pillar of Northern Ireland’s peace agreement.
Sunak said the new rules “removed any sense of a border in the Irish Sea” by eliminating checks and paperwork for the vast majority of goods entering Northern Ireland. Only those destined to travel onward to EU member Ireland will be checked.
President Von der Leyen told a news conference it was “historic what we have achieved today.” After sealing the deal, Von der Leyen had tea with King Charles III at Windsor Castle.
War In Ukraine Hits One Year Mark
The end of February marked the first full year of Russia’s invasion of Ukraine. Russia’s action in Eastern Europe upended the global economy, causing widespread inflation and increases in energy prices, especially in Europe.
There does not seem to be an end to the trade impacts the war has had as the conflict drags on.
The Russian economy is expected to return to growth in 2023 as the country adapts to western sanctions and expands relationships with China, Iran, and India. In response, President Biden just signed proclamations to raise tariffs on more than 100 Russian metals, minerals, and chemical products worth approximately $2.8 billion.
These measures are designed to target key Russian commodities generating revenue for the war effort.
Russia’s G.D.P. declined 2% in 2022 in response to sanctions imposed by the coalition supporting Ukraine. Ukraine’s economy declined 30% in the same time period. The country was already suffering from Russia’s 2014 annexation of Crimea and the pandemic before the invasion added to those challenges.
China's Foreign Ministry spokesperson Wang Wenbin said that China is willing to play a constructive role in resolving issues between Ukraine and Russia, but did not provide concrete details on what that looks like. China suggested a peace proposal that neither side seemed willing to discuss.
Russian shelling continues across Ukraine's east and south, and security measures across the country have been increased. Should the Russian economy rebound as predicted, it will be difficult to see an end to the conflict.
Strong Price Growth Rekindles US Inflation Fears
The Fed’s last interest rate hike in the United States was .25%, half of the several that came before it. That gave U.S. investors a fleeting glimpse of the ‘soft landing’ they had been hoping for – getting inflation under control without putting the U.S. into a recession.
Then in the middle of February the federal government announced its closely watched consumer price index had surged 0.5% from December to January — five times the increase from November to December.
This latest inflation statistic could push the Fed to larger increases in interest rates, and to leave them in place for a longer period of time. After the market gained nearly 6.2% in January, stocks started giving up ground in late February as the realization that a recession later this year, with additional layoffs and business failures, is again a possibility.
Not helping the situation, the Congressional Budget Office forecasted last month that the U.S. government will add nearly $19 trillion to the national debt over the next 10 years — $3 trillion more than previously anticipated.
PNC Bank says the Fed’s significant increases in interest rates could lead to a recession later in 2023.
“The recession should be mild, however, given the current strength of the labor market, strong consumer balance sheets, and a well-balanced housing market,” said PNC Chief Economist Gus Faucher.
In January, the US economy added 517,000 jobs — employment growth that far exceeded economists’ expectations for a slowdown — and the unemployment rate fell to 3.4%, a level not seen since May of 1969.
PMA and ILWU Reach Agreement
But not on a contract.
Just on a statement about a contract.
Late last month the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) made a joint announcement that negotiations are ongoing. And that’s all they want to say until they are done.
January container volume at the Port of LA was down 13% from year-ago levels as the negotiations drag on.
Port of Los Angeles Executive Director Gene Seroka said in an interview on CNBC that the cost to unload a container from a ship on the west coast is more than double the comparable cost on the east coast. The longer the negotiations go on, the less likely it seems that there will be any improvement in that cost equation.
The ILWU and PMA declined to discuss any details of the talks but said "The parties have agreed not to discuss negotiations in the media as collective bargaining continues." "Negotiations are not open to the media or the public, and news articles purporting to know what is happening at the bargaining table are speculative at best."
The contract will eventually cover ILWU's 22,000 dockworker members at nearly 30 ports up and down the U.S. West Coast. The parties have already agreed on small elements of a deal, like health benefits.
FTZ Staff Activity
- FTZ Board Staff processed a Minor Boundary Modification (S-16-2023) in FTZ 281 on behalf of Big E Logistics, LLC, Medley, FL on January 20, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-17-2023) in FTZ 138I on behalf of Intel Corporation, New Albany, OH on January 23, 2023
- FTZ Board Staff processed a Termination (S-18-2023) in FTZ 2I on behalf of Phillips 66 Company, Belle Chasse, LA on January 24, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-19-2023) in FTZ 21 on behalf of Robert Bosch, LLC, Summerville, SC on January 25, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-20-2023) in FTZ 241 on behalf of Athena Brands, LLC, Jacksonville, FL on January 30, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-21-2023) in FTZ 38H on behalf of adidas America, Inc., Spartanburg, SC on February 1, 2023
- FTZ Board Staff processed a Termination (S-22-2023) in FTZ 75 on behalf of Metso Outotec USA, Inc., Phoenix, AZ on February 2, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-23-2023) in FTZ 185 on behalf of Kontoor US, LLC, Luray, VA on February 3, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-24-2023) in FTZ 138 on behalf of Specialized Bicycle Components, Columbus, OH on February 2, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-25-2023) in FTZ 64 on behalf of Gildan Charleston, Inc., Jacksonville, FL on February 7, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-26-2023) in FTZ 104H on behalf of Hyosung USA, Inc., Savannah, GA on February 8, 2023
- FTZ Board Staff processed a Termination (S-27-2023) in FTZ 123 on behalf of Multiple on February 8, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-28-2023) in FTZ 70 on behalf of Metro International Trade Services LLC, Detroit, MI on February 10, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-29-2023) in FTZ 22 on behalf of Weida Freight System, Inc., Elk Grove Village, IL on February 13, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-30-2023) in FTZ 135B on behalf of Conglom Florida, LLC, Jupiter, FL on February 13, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-31-2023) in FTZ 70 on behalf of L.S. Wholesale, Inc., Troy, MI on February 15, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-32-2023) in FTZ 25 on behalf of Charter Brokerage, LLC, Davie, FL on February 15, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-33-2023) in FTZ 22 on behalf of Apex Logistics International, Inc., Bensenville, IL on February 15, 2023
- FTZ Board Staff processed a Termination (S-34-2023) in FTZ 74 on behalf of Under Armour, Inc., Sparrows Point, MD on February 16, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-35-2023) in FTZ 38 on behalf of EVE Energy North America Corp., Taylors, SC on February 17, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-36-2023) in FTZ 119K on behalf of Red Wing Shoe Company, Inc., Red Wing, MN on February 17, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-37-2023) in FTZ 18H on behalf of RK Logistics Group, Inc., Fremont, CA on February 21, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-38-2023) in FTZ 84K on behalf of Dril-Quip, Inc., Houston, TX on February 22, 2023
- FTZ Board Staff processed a Minor Boundary Modification (S-39-2023) in FTZ 26 on behalf of Corporate Storage, LLC, Gainesville, GA on February 22, 2023
- FTZ Board Staff processed a Termination (S-40-2023) in FTZ 28F on behalf of Acushnet Company, North Dartmouth, MA on February 23, 2023
FTZ Board Activity
- CAN-ONE (USA), INC. submitted a notification of proposed production activity for aluminum beverage cans within Foreign-Trade Zone 81 in Nashua, New Hampshire. MORE
- Tesla, Inc. received approval for the expansion of Subzone 18G within Foreign-Trade Zone 18 in Oakland, California. MORE
- Curia Global, Inc. submitted a notification of proposed production activity for pharmaceutical chemicals production within Foreign-Trade Zone 121 in Rensselaer, New York. MORE
- CoLinx, LLC submitted a notification of proposed production activity for wheel hub-bearing assemblies within Foreign-Trade Zone 148 in Crossville, Tennessee. MORE
- Patheon Pharmaceuticals Inc. submitted a notification of proposed production activity for additional components of pharmaceutical products within Foreign-Trade Zone 46 in Cincinnati, Ohio. MORE
- Mercury Marine received authorization of production activity for marine service, repair, winterization, or replacement kits within Foreign-Trade Zone 72 in Brownsburg, Indiana. MORE
It is Balloooon!
Not since the days of Fort Courage has a quasi-celestial object so entranced your nation’s capital. That first balloon was perhaps a fitting symbol of the wind-whipped drift of U.S.-China relations during the month.
Good news from our mates across the pond. Leadership of the United Kingdom and the European Union announced an agreement on a new Northern Ireland Protocol. That border has vexed trade relations between the two sides of the Channel since Brexit was first implemented. Resolution could unlock trade facilitation on multiple fronts, including with the United States.
After a rousing and welcome rally in January, stock markets pulled back in late February as economic data showed the U.S. economy returned to growth at a pace that is likely to push the Fed to keep raising interest rates.
Nope. Still no contract. But we do hear they’re talking to each other. Just not to the FTZ’ine.