May 2017

Top Story –Has Trade Dodged a Bullet in Budget Talks?

Congressional leaders have reached a deal on a $1 trillion spending bill that will fund the government at updated levels through the end of September. Congress must pass the 1,600 page bill before Friday evening to avert a shutdown, which is expected to happen easily. Since this is a spending bill and not a budget, there is no provision for a border adjustability tax which the import industry has been fighting strenuously.

The bipartisan deal struck Sunday night would increase defense spending but not allocate any new funding for a Southern border wall with Mexico. The Trump administration had been demanding that the bill include a down payment on the wall but settled for $1.5 billion in border security improvements. With a shutdown averted, the discussion over border adjustability tax could resume - it is not clear if the controversial tax is dead, or if it may still form a part of a tax reform package in the next budget which begins October 1st.

Canada Milking NAFTA Protections For All They're Worth

In an unusual twist, Canada has taken steps to thwart dairy exports from the United States that are permitted under NAFTA. This new trade dispute, which has gained the attention of the Governors of New York and Wisconsin, is based on a byproduct of the butter-making process known as ultrafiltered milk, a protein concentrate used to make cheese.

U.S. dairy farmers have been selling their ultrafiltered milk duty-free under NAFTA to Canadian cheese processors. Although most U.S. dairy products are restricted into Canada, ultrafiltered milk isn’t on the NAFTA list. Canada made changes to its pricing regulations which effectively ended imports from the U.S.

This was just the latest trade salvo with our northern neighbor. Commerce Secretary Wilbur Ross since announced 3 to 24 percent countervailing duties on Canadian softwood lumber into the United States. The forests used by the Canadian lumber industry are largely government-owned, and U.S. officials in the past have accused the Canadian government of subsidizing local outfits to undercut companies in America. Things sure seem to be getting hot up north.

NAFTA Safe . . . . For Today Anyway

The White House announced last week that the United States will not unilaterally withdraw from NAFTA. After calls with the Canadian prime minister and Mexican president, the White House said: “President Trump agreed not to terminate NAFTA at this time.”

The news came after reports just last week that the President was planning to sign an executive order that would trigger the process for the United States to withdraw from the deal. This may have simply been a tactic to negotiate more favorable trade terms with Canada and Mexico, as discussions between the three countries are expected to begin shortly.

Commerce Launches Investigation Into Steel Imports

April was a busy month for U.S. trade policy. The Trump administration has just launched an investigation into whether steel imports threaten national security, a move that could give the president broad legal power to block thousands of steel products from any country in the world.

Secretary of Commerce Wilbur Ross said a 19.6% increase in steel imports in the first quarter has had "a very serious impact on the domestic industry." He noted that Chinese steel now accounts for 26% of the U.S. market.

By making steel imports a national security issue, and not just a dumping or countervailing trade issue, the investigation could give the president the legal authority to place broad restrictions on steel imports into the United States — a move that could potentially have even bigger consequences than the administration's investigation into unfair trade practices.

Did You Know?

The Force is alive and well in Washington, D.C. In the 1980s, while the National Cathedral’s two west towers were under construction, the Cathedral held a design-a-carving competition. One of the winning submissions was a head of that fearful Star Wars villain Darth Vader. The imposing head was sculpted by Jay Hall Carpenter, carved by Patrick J. Plunkett, and placed high upon the northwest tower of the Cathedral, where you can still see it today. With binoculars.

U.S. Foreign-Trade Zones Board Activity

AGFA Corporation received approval for aluminum digital printing plate production within Subzone 44I in Branchburg, New Jersey (more)

PGTEX USA, Inc. received approval for Fiber Glass Fabric production with restrictions on glass fibers and polyester yarn within Site #3 of FTZ 68 in El Paso, Texas (more)

Westlake Chemical Corporation received approval for polyethylene and styrene production in Subzone 87F in Sulphur, Luoisiana (more)

Black & Decker (U.S.) Inc. received approval for power tool production within Subzone 38E in Fort Mill, South Carolina (more)

STIHL Incorporated received approval to expand Subzone 20E in Virginia Beach, Virginia (more)

Aceros de America, Inc. received approval to operate their San Juan, Puerto Rico location as Subzone 61S (more)

Westlake Chemical Corporation requested the expansion of Subzone 87F to add an two additional sites totaling 1,674 acres, including several pipelines in Sulphur, Louisiana (more)

Glovis America, Inc. requested approval to operate their 530 acre facility in Shreveport, Louisiana as a subzone of FTZ 145 (more)

SGL Automotive Fibers, LLC submitted a notification of proposed production activity requesting a change in its restriction on foreign-sourced fibers from export-only to privileged-foreign status in Site #3 of FTZ 203 in Moses Lake, Washington (more)

Polaris Industries, Inc. submitted a notification of proposed production activity to add spark-ignition internal combustion engines for on-road use and additionbal components within Subzone 176B in Osceola, Wisconsin (more)

AGRU America Charleston, LLC received approval for production of instrial pipes within Sites 5 of FTZ 21 in North Charleston, North Carolina (more)

Wacker Polysilicon North America LLC received approval to operate their Charleston, Tennessee facility as Subzone 134B (more)

The Baltimore Development Corporation Has applied to expand the ASF service area of FTZ 74 to include the Counties of Howard and Queen Anne in Maryland (more)

Danos & Curole Marine Contractors, LLC received approval to operate their Morgan City, Louisiana facility as Subzone 124Q (more)

Mead Johnson & Company, LLC submitted a notification of proposed production activity to add lactose to its list of foreign-status components. It already has a restriction requiring export of all foreign-status dairy products and sugar must be in domestic origin in Subzone 43B in Zeeland, Michigan (more)

Expeditors International of Washington, Inc. submitted an application to operate their 10 acre Inwood, New York (Nassau County) location as a Subzone of FTZ 37 (more)

Orgill, Inc. received approval to operate their Post Falls, Idaho facility as Subzone 280B (more)

Comments or suggestions on our publication? The editorial staff of the Foreign-Trade ‘Zine, the eMagazine of FTZ News would love to hear from you.

The wheels in Washington have started turning again, if slowly. A deal was reached this month on health care. There is no budget yet, but the federal government is now funded until this fiscal year ends in September. That should make for an eventful summer as Congress and the President continue to wrestle with tax reform, including the border adjustability tax, the renegotiation of NAFTA, and how to pay for a wall at the Mexican border.