FTZ’ine February 2024
January 31, 2024
FTZ’ine April 2024
April 3, 2024
The Name Is Bond
Customs Bond.
FTZ bonds are not usually a newsworthy subject, but this month they are. CBP published a “A Guide For The Public” on how FTZ Customs bond amounts will be set. The changes will be important for new and existing operators, and Grantees will want to take note because questions are sure to come up.
Well, primary season is over, and we didn’t even have very many. But wait you say, today is Super Tuesday! It is true that 15 states including California and Texas will cast their primary ballots over the next 12 hours, but Presidentially speaking it is not clear what anyone is voting for at this point. No serious threats have emerged to President Biden’s hold on the Democratic Party nomination. Nikki Haley did win the Republican primary in the District of Columbia, but lost every other contest so far, including the one last month in her home state of South Carolina.
So both leading candidates are focusing on the general election in November, with immigration and international trade flashpoints in the contest. Both candidates visited the southern border late last month, and we have seen changes in immigration posture from the Biden Administration in response to Republican criticism. Could changes in trade policy be next?
No federal budget yet. Congress claims to be ‘closer’ but needed to pass a(nother) series of continuing resolutions to keep the government at full power this week.
Top Story: UFLPA Comes For Autos
The Financial Times reported last month that thousands of new Volkswagen Group vehicles were subject to UFLPA detention, including Porsches, Audis, and Bentleys.
The vehicles themselves were not assembled in China, but at least one electronic component was, and it will need to be replaced under CBP supervision in each and every vehicle.
A letter from VW to waiting customers blamed “a small electronic component that is a part of a larger control unit, which will be replaced”, but did not specify the origin of the part.
The trend bodes poorly for importers of complex manufactured items if a single component can stymie delivery. And the circle appears to be getting wider for automakers; a Human Rights Watch report warned last month that car builders may be buying aluminum produced with forced labor.
In mid-January, VW discovered that some of its luxury cars bound for North America contained a part that did not meet UFLPA requirements, two people with knowledge of the matter said.
Volkswagen has a facility in Xinjiang’s capital city, Urumqi, that human rights advocates have raised concerns about regarding the use of forced labor.
The company said Wednesday that it is in discussions with its joint venture with Chinese automaker SAIC "about the future direction of business activities in Xinjiang province. Different scenarios are being considered intensively."
Congress weighed in on the issue. Representative Mike Gallagher, chairman of the House Committee on China, and Raja Krishnamoorthi, Ranking Democrat on the Committee wrote to VW CEO Oliver Blume raising "deep concern" about reports that VW Group had attempted to import products that "contained parts made by forced labor in" China.
Tech Tip: CBP Updates Bond Guide For First Time In 30+ Years
In mid-February CBP released "A Guide for the Public: How CBP Sets Bond Amounts", which announces changes to the official procedures for determining U.S. Customs bond amounts. There are significant changes for FTZs.
According to CSMS # 59402411, The Office of Trade worked since 2020 to update CBP's internal bond amount directive. Important changes in the new guidelines include:
• Continuous bond amounts will be set in increments of $10,000 up to $100,000 and then in increments of $100,000 for larger bonds (previously only applied to Activity Code 1 bonds).
• The minimum bond amount for C4 (FTZ Operator) bonds has been increased to $50,000 per FTZ activated location.
• Responsibility for setting FTZ Bond amounts has moved from the Office of Trade to the Director of the Office of Finance – Revenue Division (OF-RD).
This consolidates Importer and FTZ bond amount responsibility into CBP’s Revenue Division in Indianapolis, and opens the possibility of regular reviews of FTZ bond amounts, just as is done with Importer bond amounts. Bond amount reviews are currently rare for FTZ bonds once set. FTZ Operators with multiple locations, including 3PLs, could soon find their bond amount rising far faster than the unpaid duty amounts the bonds cover.
The guidelines further note that several different CBP offices can have input on an FTZ bond amount, making it harder for Operators to know who to contact when bond amount questions arise.
Questions related to the updated bond guidelines? Contact us at info@iscm.co.
Lunar New Year Drives West Coast Volume, And Wait Times
The latest figures from the Port of Long Beach show container volume rose 17.5% from January of 2023 to 674,015 TEU. The Port of Los Angeles likewise saw an 18% increase in TEU to its the second-best start to a year on record.
“Retailers stocked their warehouses in January ahead of the slower import activity we typically see during Lunar New Year celebrations,” said Port of Long Beach CEO Mario Cordero.
January POLB Imports increased 23.5% to 325,339 TEU and exports were down 18.1%. Empty containers moved through the port increased 28% to 262,151 TEU.
The strong start to 2024 marks the fifth consecutive monthly year-over-year increase following 13 months of declines in cargo movement from Long Beach.
Goods leaving the San Pedro Bay Port complex by truck spent an average of 2.89 days at port terminals during January, a slight increase from the December average of 2.69 days. That is still only half the dwell time for rail moves which waited an average of 4.72 days at LA/LB terminals before departing.
Port of Los Angeles Executive Director Gene Seroka said: “Two factors are driving our strong start. First, cargo owners have been replenishing inventories and moving goods at a fast clip ahead of the Lunar New Year holiday, which will slow production in Asia.
“Second, consumer spending and mostly strong economic data continue to accelerate the American economy.”
Mexico Passes China As U.S. Largest Importer
After imports from China dropped last year, trade data shows that in 2023 the U.S. imported more goods from Mexico than from China.
It was the first time in 20 years that China was knocked from the top spot. The switch highlights how increased tensions between Washington and Beijing are impacting trade flows.
The United States’ trade deficit with China narrowed significantly last year after 2023 imports dropped 20%. Mexican exports to the United States were roughly the same as in 2022, at $475.6 billion.
America’s total trade deficit in goods and services narrowed 18.7%. Overall U.S. exports to the world increased slightly in 2023 from 2022, despite a strong dollar and a soft global economy.
Economists say the relative decrease in trade with China is clearly linked to the tariffs imposed by the Trump administration and then maintained by the Biden administration.
Research by Caroline Freund, the dean of the School of Global Policy and Strategy at the University of California, San Diego, showed that trade with China fell for products that have high tariffs, like screwdrivers and smoke detectors, while trade in products that do not have tariffs, like hair dryers and microwave ovens, continued to grow.
Ms. Freund said the two countries’ trade relationship was “definitely being attenuated, but not as much as the official statistics suggest.” That is because some multinationals have shifted portions of their manufacturing out of China and into other countries but continued sourcing some raw materials and parts from China. U.S. trade statistics do not record such products as coming from China, even though a significant portion of their value would have been created there.
Another economy surfing the rift between the United States and China has been South Korea. Like Mexico, South Korea is subject to lower tariffs because it has a free trade agreement (KORUS) with the United States. In December of last year, U.S. imports from South Korea were the highest on record.
As major manufacturers of electric vehicle batteries and components, South Korean firms have seized the opportunity to participate in newly expanding U.S. vehicle supply chains. One Korean battery manufacturer, SK On, has invested $2.6 billion in a factory in Georgia and is building new facilities in Georgia, Tennessee and Kentucky in partnership with Hyundai and Ford.
In December, Korean exports to the United States surpassed Korean exports to China for the first time in 20 years, driven by shipments of vehicles, electric batteries and other parts.
Recession Pushes Japan to #4
Data released last month showed that the Japanese economy contracted at the end of last year, pushing the country into a recession, and down into the #4 spot in the global economy.
A slowdown in consumer and business spending held Japan back at the end of last year, with the economy contracting for the second straight quarter.
Germany now ranks as the third largest economy in the world, behind China and the United States.
Japan’s unexpectedly weak economy in the fourth quarter was the result of a slowdown in spending by businesses and consumers who are grappling with a weak yen and climbing food prices.
On an annualized basis, gross domestic product fell 0.4% in October through December after a revised 3.3% decline in the previous three-month period. Economists had been forecasting fourth-quarter growth of around 1% percent.
The figures cloud the outlook for Japan’s economy. The two straight quarters of negative growth means that the economy is technically in recession, but the figures are preliminary. A large enough revision higher could nullify the recession label.
A major earthquake in January rocked western Japan — a region rich with manufacturing. That could further crimp output, and already-struggling consumer sentiment.
The German economy is also struggling, despite its new #3 status. Its decision to stop buying cheap Russian natural gas and oil following the Russian invasion of Ukraine has driven energy costs up sharply, even as the country has shifted to suppliers in the Mideast, the United States and elsewhere.
Japan will not easily hold onto its No. 4 spot, as its shrinking population will struggle to keep up with the economic growth of India, the world’s most populous country.
FTZ Staff Activity
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-13-2024) in FTZ 49 on behalf of Global Interactive Logistics, Secaucus, NJ on January 29, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-14-2024) in FTZ 18P on behalf of ISE Labs, Inc., Fremont & San Jose, CA on January 30, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-15-2024) in FTZ 22AF on behalf of Gotion Inc., Manteno, IL on January 31, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-16-2024) in FTZ 49 on behalf of LMD Integrated Logistics Services, Inc., Edison, NJ on February 2, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-17-2024) in FTZ 16 on behalf of Sault Ste. Marie Economic Development Corporation, Sault Ste. Marie, MI, on February 2, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-18-2024) in FTZ 125H on behalf of Grand Design RV, LLC, Middlebury, IN on February 2, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-19-2024) in FTZ 1 on behalf of Schenker Inc., Jamaica, NY on February 5, 2024
- FTZ Board Staff processed a Zone Restricted request (S-20-2024) in FTZ 124 on behalf of G. Scott & Associates, LLC, Lafayette, LA on February 8, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-21-2024) in FTZ 196 on behalf of Topgolf Callaway Brands Corp., Fort Worth, TX on February 6, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-22-2024) in FTZ 18M on behalf of Epoch International Enterprises, Inc., San Jose, CA on February 6, 2024
- FTZ Board Staff processed a Termination (S-23-2024) in FTZ 18I on behalf of Bloom Energy Corporation, Fremont, CA on February 7, 2024
- FTZ Board Staff processed a Traditional Subzone Expansion (S-24-2024) in FTZ 44P on behalf of Givaudan Fragrances Corporation, Flanders, NJ on February 8, 2024
- FTZ Board Staff processed a Termination (S-25-2024) in FTZ 18F on behalf of Lam Research Corporation, Livermore, CA on February 8, 2024
- FTZ Board Staff processed a Termination (S-26-2024) in FTZ 99I on behalf of Bloom Energy Corporation, Newark, DE on February 12, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-27-2024) in FTZ 104 on behalf of Plastic Express, Chatham County, GA on February 12, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-28-2024) in FTZ 106 on behalf of Canoo Inc., Oklahoma City, OK on February 12, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-29-2024) in FTZ 153 on behalf of Audio-Technica US Inc., San Diego, CA on February 13, 2024
- FTZ Board Staff processed a Termination (S-30-2024) in FTZ 18M on behalf of Epoch International Enterprises, San Jose, CA on February 14, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-31-2024) in FTZ 50 on behalf of JAJ Transportation, Ontario, CA on February 15, 2024
- FTZ Board Staff processed a Termination (S-32-2024) in FTZ 100 on behalf of FitFlop USA LLC, Brookville, OH on February 16, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-33-2024) in FTZ 241 on behalf of Almond Diamonds LTD LLC, Miramar, FL on February 20, 2024
- FTZ Board Staff processed a Minor Boundary Modification (S-34-2024) in FTZ 25 on behalf of Quirch LLC, Fort Lauderdale, FL on February 22, 2024
Foreign-Trade Zone Board Activity
- Helena Industries, LLC received authorization to operate its Cordele, Georgia facilities as Subzone 26X. MORE
- The Foreign-Trade Zones Boardb posted its final rule amending 15 CFR §400 effective March 11, 2024. MORE
- The Port of Iberia District submitted an application to establish a new Foreign-Trade Zone under the Alternative Site Framework in Iberia Parish, Louisiana MORE
- Oldach Associates, LLC submitted an application to expand Subzone 61Z by adding a new site in Bayamón, Puerto Rico. MORE
- Givaudan Fragrances Corporation submitted an application to expand Subzone 44P by adding a new site in Mount Olive, New Jersey. MORE
- Valbruna Slater Stainless Inc. submitted a notification of proposed production activity for metal ingots within Foreign-Trade Zone 182A in Fort Wayne, Indiana. MORE
- Helena Industries, LLC received authorization of production activity for insecticides within Foreign-Trade Zone 26X in Cordele, Georgia. MORE
- PR Five Vega Alta, LLC received authorization to operate its Vega Alta, Puerto Rico facilities as Subzone 61AD. MORE
- Valero Refining-New Orleans L.L.C. received authorization to expand Subzone 124A by adding a new site in St. Rose, Louisiana. MORE
- Trucast LLC received authorization of production activity for turbine wheels within Foreign-Trade Zone 127G in Newberry, South Carolina. MORE
- GMA Accessories DBA Capelli New York received authorization to operate its Pittston, Pennsylvania facilities as Subzone 24H. MORE
The Name Is Bond:
Customs Bond.
FTZ bonds are not usually a newsworthy subject, but this month they are. CBP published a “A Guide For The Public” on how FTZ Customs bond amounts will be set. The changes will be important for new and existing FTZ operators, and Grantees will want to take note because questions are sure to come up.
Well, primary season is over, and we didn’t even have very many. But wait you say, today is Super Tuesday! It is true that 15 states including California and Texas will cast their primary ballots over the next 12 hours, but Presidentially speaking it is not clear what anyone is voting for at this point. No serious threats have emerged to President Biden’s hold on the Democratic Party nomination. Nikki Haley did win the Republican primary in the District of Columbia, but lost every other contest so far, including the one last month in her home state of South Carolina.
So both leading candidates are focusing on the general election in November, with immigration and international trade flashpoints in the contest. Both candidates visited the southern border late last month, and we have seen changes in immigration posture from the Biden Administration in response to Republican criticism. Could changes in trade policy be next?
No federal budget yet. Congress claims to be ‘closer’ but needed to pass a(nother) series of continuing resolutions to keep the government at full power this week.