FTZ’ine October 2019
October 1, 2019
FTZ’ine December 2019
December 3, 2019
Maybe We Should Talk Baseball Instead
The Washington Nationals Baseball Team surprised everyone this week with a stunning 6-2 victory over the Houston Astros in Game 7 to win the World Series. For at least 48 hours, the team changed the DC news feed to something positive. During the playoffs the Nationals went 5-0 in elimination games and were eight outs away from losing Game 7. The previous World Series games in Washington pre-dated the Foreign-Trade Zones Act of 1934! The last time Washington had a team in the World Series, the price of tickets ranged from $3.30 to $6.60 a seat, according to The Washington Post. This year’s win ended the second-longest drought in baseball history, behind only the 108-year wait for the Chicago Cubs between 1908-2016.
Um, now back to international trade. Once DC finishes sweeping up the confetti from the victory parade, impeachment talk is likely to retake center stage on Capitol Hill, which means November will probably produce as little progress on trade issues as October did. The Trump Administration does hope to sign some form of trade agreement with China, but the original meeting where the agreement was to be signed has been cancelled. Even if signed this month, the ‘Phase 1’ agreement will offer little substantial relief to the FTZ industry, based on the few details released so far. Despite the trade gridlock and bad news vibe in Washington, consumers are keeping the U.S. economy on a growth track which bodes well for FTZ retailers going into the holidays.
The FTZine staff wishes all our readers a safe and Happy Thanksgiving with friends and family.
Top Story: Economy Shakes Off Jitters, Wall Street Sets Record
The U.S. reported 128,000 new jobs were created in October and hiring figures for recent months were stronger than previously reported, suggesting the economy is holding up better than expected despite trade turbulence and a slowdown in global growth. Earlier this week the Commerce Department estimated the output of goods and services produced in the US rose by 1.9% from July to September. Economists had expected 1.5% growth, so the news was well received, even though GDP growth had been 2% in the previous quarter.
Also this week, the Federal Reserve approved an expected quarter-point interest rate cut but indicated future reductions are less likely. The central bank’s Federal Open Market Committee lowered its benchmark funds rate by 25 basis points to a range of 1.5% to 1.75%.
These moves were positive signs of the US economic outlook which spurred record highs on Wall Street.
The 1.9% growth rate announced by Commerce exceeded consensus forecasts, but made it unlikely that President Trump could fulfill his campaign pledge to bring US growth to or above 3% this year.
Strong consumer activity partially offset the effects of ongoing trade disputes among the world’s largest economies.
"The data continues to show signs of a bifurcated economy," said Michael Reynolds, the investment strategy officer at Glenmede. "The strong US consumer has continued to take the lead in driving this record-long domestic expansion forward, more than offsetting the headwinds from a slower manufacturing economy."
Consumer spending accounts for more than two-thirds of activity in the US economy. It grew at a strong 2.9% annual rate, as households remained one of the brightest spots in the US economy.
The data did show signs that companies continue to pull back on investment. Nonresidential fixed investment fell by 3% in the quarter.
"If businesses believe consumer spending is slowing they may slow their investments in plant and equipment, and eventually people," said Gregory Leo, the chief investment officer at IDB Bank in New York. "It could become a downward spiral and lead to a recession."
GDP was pulled down at least slightly by issues at Boeing, which has grounded its 737 Max after two fatal crashes earlier this year. A 40-day strike at General Motors also chipped away at economic activity. The strike is now over, but Boeing’s problems continue and the company is losing sales to FTZ participant Airbus. The government said today that the dispute put almost 50,000 people out of work, not including workers at parts suppliers not directly involved.
Employment might have grown by close to 200,000 last month absent the GM strike and the end of 20,000 temporary Census jobs. That would have been a very strong number. The unemployment rate, meanwhile, edged up to 3.6% from 3.5%, still hanging around the lowest level since 1969.
A key measure of inflation, the price index for personal consumption expenditure, rose by 1.5% from July to September, which caused the Fed to predict a pause in any future interest rate cuts.
Tech Tip
Are you admitting foreign-status merchandise from another zone in the same port? Having trouble filing an ePTT? That’s because ACE is systemically unable to process an ePTT without a foreign bill of lading.
The only way to submit an ePTT (intraport move) in ACE is to have a foreign Bill of Lading. Since a zone to zone shipment is a domestic movement, there is no foreign BOL in the system for ACE to validate the ePTT. If the zones are in different ports, you can do a QP/WP, which doesn’t require a foreign BOL.
Some ports work around this technical problem by issuing a “blanket ePTT”. This is an understanding between the transferring zones and the Port Director that goods can move from this zone to that zone, under an agreed upon bond, and with agreed upon liability terms. We have also seen this referred to as a “weekly ePTT”.
Having a means of electronically filing the ePTT is on the ACE “wish list” discussed with CBP for some time. In the meantime, some kind of agreement must be established with your Port Director if you would like to do this on a regular basis.
Rumblings on USMCA Push Call To Action
The Chairman of the Democratic Congressional Campaign Committee, U.S. Representative Cheri Bustos, is advocating internally for Democrats to pass USMCA, without any of the revisions demanded by labor unions and environmentalists.
Bustos has argued to House Speaker Nancy Pelosi that vulnerable Democrats would be able to demonstrate to constituents that while they may be pursuing impeachment, they are also willing to work across party lines with the President. Inside the House caucus, the messaging is referred to as showing the ability to “walk and chew gum at the same time.”
There is a lot of pressure to schedule a vote. Former President Barack Obama’s commerce secretary, Gary Locke, is also working the halls of Congress to get House members to a yes. With the 2019 legislative calendar coming to a close, perhaps this new pressure will be enough to get the issue on to the House floor for a vote.
A number of NAFTA provisions problematic to FTZs are ready to be carried over into USMCA. In particular, U.S. tariffs will still apply to U.S. manufacturers, even when they produce goods that meet the USMCA rules of origin. Interested in lending your voice to the effort to amend USMCA to promote U.S. manufacturing? Contact Vice-Chairman of the National Association of Foreign-Trade Zones Melissa Irmen (Melissa.Irmen@iscm.co)
Top Republicans including Iowa Sen. Chuck Grassley are saying it is becoming less likely that the House Speaker will bring USMCA, also dubbed NAFTA 2.0, up for ratification this year.
The Senator, in calling what House Democrats are doing “stalling tactics”, adds: “President Trump has done his job. He's renegotiated a trade deal, which nearly everyone besides a few Democrats can agree is better than the predecessor we know as NAFTA.”
In recent weeks Mexican President Andrés Manuel López Obrador wrote Massachusetts Democrat Rep. Richard Neal, the chairman of the House Ways and Means Committee, saying that the enforcement for labor rights in the agreement are adequate and he will ensure that the increased minimum wage is adhered too.
Neal will also go to Ottawa in the coming weeks to talk with Canadian Prime Minister Justin Trudeau at the invitation of the Canadians. Hopefully this is a sign that Democratic leadership is doing due diligence on the measure in preparation for a vote.
The clock is ticking, however, and Congress only has a handful of working days left on the calendar this year.
Phase I Trade Deal With China Unlikely To Impress
The Office of the U.S. Trade Representative recently said the world’s two largest economies have made progress in trade discussions.
While a ‘Phase 1’ trade agreement may halt the tariff war, it doesn’t mean that current tariffs will be rolled back as the Chinese delegation has requested. This means FTZs, while perhaps appreciative that any agreement has been reached between the two countries, are unlikely to receive any relief in Phase 1.
Following a conversation that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin had with Chinese Vice Premier Liu He, the office said in a statement the two “made headway on specific issues and the two sides are close to finalizing some sections of the agreement.”
“Discussions will go on continuously at the deputy level, and the principals will have another call in the near future,” USTR added.
The news helped to send major U.S. stock indexes to new highs this week.
President Trump has said he aims to resolve longstanding concerns about Chinese theft of U.S. intellectual property and forced technology transfers, and secure more Chinese purchases of U.S. agricultural goods.
Derek Scissors, a resident scholar and China expert at the American Enterprise Institute in Washington, said the original goal of the early October talks was to finalize a text on intellectual property, agriculture and market access to pave the way for a postponement of new tariffs set to go into effect on December 15th.
“It’s odd that [the President] was so upbeat with [Chinese Vice-Premier] Liu He and yet we still don’t have the December 15 tariffs taken off the table,” Scissors said. US Treasury Secretary Steven Mnuchin said last week that no decisions were made about the December 15th tariffs, but added, “We’ll address that as we continue to have conversations.”
The trade dispute has already hit global growth. The International Monetary Fund said recently in its World Economic Outlook that it projects GDP growth of 3.0% in 2019, down from 3.2% in a July forecast.
Brexit Claims New Coin . . . And Maybe Another British Prime Minister
A commemorative coin produced to celebrate the UK's planned October 31 departure from the European Union is the latest high-profile government initiative to fall victim to yet another Brexit delay.
Britain's finance ministry confirmed that 50 pence pieces (worth about 63 cents) bearing the inscription "peace, prosperity and friendship with all nations" and the date October 31, 2019, will be "recycled" after the EU exit deadline was delayed to January 31, 2020.
It looks like Parliament itself will also be recycled as part of the continuing Brexit saga. British citizens will go back to the polls on Dec. 12th to elect a new Parliament that may, or may not, be able to settle on a Brexit plan. Prime Minister Boris Johnson won support for the election, which could very well make him the second Prime Minister to be forced out of office over the handling of Brexit details.
"We will still produce a coin to mark our departure from the European Union," a Treasury spokesman said.
The coin is just one of a number of Brexit initiatives that have had to be rolled back this week after UK Prime Minister Boris Johnson officially accepted the EU's offer of an extension -- after saying previously he would "rather be dead in a ditch" than ask for one.
The UK Cabinet Office confirmed to CNN Tuesday that it has paused its "Get Ready For Brexit" advertising campaign.
The UK government also confirmed that its no-deal Brexit contingency plan, known as "Operation Yellowhammer," has also been suspended.
In September, the government released the Yellowhammer planning document, which warned of medicine shortages, severe delays at the Dover-Calais crossing and an increase in food prices.
This all comes after the EU granted the British government's request to delay Brexit for three months beyond its scheduled Oct. 31 date.
It is not all clear that the December election will settle the Brexit question. Johnson and the Conservatives would need to win a majority in Parliament to implement a Brexit plan by the EU's deadline of Jan. 31, 2020. British voters could also deliver a Parliament that is still gridlocked on the issue.
Prime Minister Johnson hopes the election will give him a fresh mandate for his Brexit deal and break the current Parliamentary deadlock, which has led to the UK's exit being further delayed to 31 January.
Liberal Democratic party leader Jo Swinson said neither Mr Johnson nor Labour Party leader Mr Corbyn "was fit to be prime minister" and it was not inconceivable that her party could form the next government.
"I am standing as a candidate to be the next prime minister and in these volatile political times that is absolutely possible," she told Sky News. The Brexit situation is difficult for US businesses to predict or plan for and appears likely to stay that way.
FTZ Board Activity
- Panasonic Solar North America submitted a Notification of Proposed Production Activity for crystalline silicon photovoltaic solar panels/modules and cells within FTZ 23 in Buffalo, New York. MORE
- Caterpillar, Inc. submitted a Notification of Proposed Production Activity for tractors and forestry machines within FTZ 155 in Victoria, Texas. MORE
- Eastman Kodak Company submitted a Notification of Proposed Production Activity for one-time use cameras within FTZ 141 in Rochester, New York. MORE
- Teijin Carbon Fibers, Inc. received authorization of limited production activity for polyacrylonitrile-based carbon fiber within FTZ 38 in Spartanburg County, South Carolina. MORE
- Arbor Foods Inc. submitted an Application for Production Authority for blended syrup within FTZ 8 in Toledo, Ohio. MORE
- Steelite International USA, Inc. submitted a Notification of Proposed Production Activity for hospitality industry serveware within FTZ 33 in Pittsburgh, Pennsylvania. MORE
- Ricoh Electronics, Inc. submitted a Notification of Proposed Production Activity for thermal paper and film within FTZ 26 in Atlanta, Georgia. MORE
- Flemish Master Weavers submitted an application for the expansion of Subzone 186A in Waterville, Maine. MORE
- Whirlpool Corporation received authorization of limited production activity for small appliances within FTZ 100 in Dayton, Ohio. MORE
- Staal & Plast USA, Inc. received authorization of production activity for irrigation trays within FTZ 176 in Rockford, Illinois. MORE
- Vision Technologies Marine, Inc. received authorization of production activity for ocean going-vessels: compensators within FTZ 92 in Gulfport, Mississippi. MORE
- Cheniere Energy, Inc. submitted a Notification of Proposed Production Activity for liquified natural gas processing within FTZ 122 in Corpus Christi, Texas. MORE
- Kubota North America Corporation submitted a Notification of Proposed Production Activity for agricultural and specialty vehicles within FTZ 26 in Atlanta, Georgia. MORE
- Waterfront Enterprises, LLC received approval to operate its facility in New Haven, Connecticut as Subzone 162B. MORE
Maybe We Should Talk Baseball Instead
The Washington Nationals Baseball Team surprised everyone this week with a stunning 6-2 victory over the Houston Astros in Game 7 to win the World Series. For at least 48 hours, the team changed the DC news feed to something positive. During the playoffs the Nationals went 5-0 in elimination games and were eight outs away from losing Game 7. The previous World Series games in Washington pre-dated the Foreign-Trade Zones Act of 1934! The last time Washington had a team in the World Series, the price of tickets ranged from $3.30 to $6.60 a seat, according to The Washington Post. This year’s win ended the second-longest drought in baseball history, behind only the 108-year wait for the Chicago Cubs between 1908-2016.
Um, now back to international trade. Once DC finishes sweeping up the confetti from the victory parade, impeachment talk is likely to retake center stage on Capitol Hill, which means November will probably produce as little progress on trade issues as October did. The Trump Administration does hope to sign some form of trade agreement with China, but the original meeting where the agreement was to be signed has been cancelled. Even if signed this month, the ‘Phase 1’ agreement will offer little substantial relief to the FTZ industry, based on the few details released so far. Despite the trade gridlock and bad news vibe in Washington, consumers are keeping the U.S. economy on a growth track which bodes well for FTZ retailers going into the holidays.
The FTZine staff wishes all our readers a safe and Happy Thanksgiving with friends and family.