FTZ’ine September 2020
September 1, 2020
FTZ’ine November 2020
November 5, 2020
It’s Going To Be A Big Month
Trade was rising in the public eye as the 2020 election progressed. Then the death of Supreme Court Justice Ruth Bader Ginsburg and the release of President Donald Trump’s personal tax returns last month upended the election narrative in Washington. Action this month to confirm a new Supreme Court Justice and examination of those returns are sure to make October an impactful month in a most unusual year.
Tuesday’s Presidential debate had no segments dedicated to trade, which probably confirms that advancements in relations with key trading partners including China, Japan, India and the U.K. have been pushed off center stage for the coming months. It could also be a signal that views on trade are not that different between the candidates, and the current environment for international trade is likely to be stable well beyond election day.
Happy New Year to our readers who are federal employees! Happy new fiscal year that is. FTZ users, don’t forget that means that effective today the MPF minimum increases to $27.23 from $26.79 and the MPF maximum increases to $528.33 from $519.76.
This month’s FTZine banner honors the groundbreaking work of Justice Ruth Bader Ginsburg in the service of her country.
Top Story: Candidates Tip Their Hands On Trade
Tough talk on China is common to the platforms of both major candidates in this year’s presidential election. That makes it unlikely that a change in administration would bring a quick change, if any at all, in current U.S. trade policy.
President Trump’s views on China are well established at this point, and have only hardened since the COVID-19 pandemic.
A change in U.S. policy with respect to China though, would not likely accompany a change in the Oval Office. In Tuesday’s debate, former Vice President Biden said “China perfected the art of the steal.” Therefore the best plans for importers and FTZs would likely be based on current policy, including Section 301 tariffs, extending well past the election.
China is not the only area where the presidential contenders have drawn a hard line. “Any trade deal between the U.S. and U.K. must be contingent upon respect for the Agreement and preventing the return of a hard border. Period,” the former Vice President said in a tweet last month. He was referring to Brexit and a legislative proposal in the U.K. which appears to open the door to border controls between Ireland and Northern Ireland.
The current administration is likewise leery of entering into a trade agreement with Britain if the U.K. does not renounce the possibility of breaching its peace agreement with Northern Ireland by establishing any such hard border.
Therefore it does not appear that a free trade agreement with the U.K., which seemed so close just a few months ago, would be possible under either administration.
That is not to say the candidates are in lock step on trade matters.
The former Vice President would likely be more sympathetic to our European allies and the Section 232 tariffs imposed on their steel and aluminum exports.
His “Made in All of America” economic plan includes the use of carbon-based tariffs to punish countries failing to meet climate goals. That proposal raises the possibility that a change in administration next year could bring even more tariffs to the U.S. import picture.
Tech Tip
Since the e214 was released some 15 years ago, many FTZ administrators have taken the approach of isolating positive adjustments on a separate e214, as opposed to including their adjustments on a cumulative e214. This certainly works, and there are some organizational reasons why doing it this way can be useful. Further, some FTZ Management software forces “adjustment only” e214 filing, and automates the separation of adjustments from regular receipts.
If you do manage your positive inventory adjustments this way, be sure to remember that all e214s must be concurred, even those that contain only adjustments. When you have an e214 that contains at least one bill of lading, you get a reminder that you have not concurred in the form of a GO (the dreaded ‘General Order’) warning message. But if there are only “ADJ” bills of lading on an e214, there is no such GO trigger in ACE and no messages received.
CBP officers are able to identify un-concurred e214s, and it is much better for you to be making sure you are doing it rather than be notified by your local Port.
If you have questions about e214 concurrences, or about the new e214 procedures and messages, please send them to our Sr. Vice President and Vice Chair of the National Association of Foreign-Trade Zones, Melissa Irmen at Melissa.Irmen@iscm.co.
Other resources for information regarding the new e214:
ISCM email
FRN “Modification of Test Program Regarding Electronic Foreign Trade Zone Admission Applications”
ACE Foreign Trade Zone E214 Business Process Document
Modernizing e214 Online Admission Process - Phase 2 Release 2 - Information Notice
Waiting For The Other Shoe To Drop
The bad news on U.S. – China relations just keeps coming.
At the end of last month China moved to create a blacklist of foreign companies seen as threatening its national security or acting against Chinese business interests.
This was in retaliation for the Trump administration’s decision to ban the Chinese-owned apps TikTok and WeChat from American app stores.
Along with banning TikTok and WeChat, the Trump administration has prevented dozens of Chinese companies from purchasing U.S. products and technology. The Commerce Department last year added the Chinese tech giant Huawei to its “entity list,” which curbed the company’s ability to use American-origin chips and software.
More recently, Commerce has written to American suppliers of China's biggest chip manufacturer, warning them of "unprecedented risks" that their products could be used by the Chinese military.
The letter reminds the firms they must apply for licenses to ship controlled items to Shanghai-based Semiconductor Manufacturing International Corporation (SMIC). This action is likely to be met with additional retaliation from China.
SMIC was founded in 2000, and has since become the most prominent chip-making foundry in mainland China.
However, its most advanced products are said to lag two generations behind what rival manufacturers - including Taiwan Semiconductor Manufacturing Company (TSMC) and South Korea's Samsung - are capable of, because SMIC cannot currently make transistors as small. This keeps SMIC, and China, out of the latest smartphones and advanced gadgets.
The reason for this is in part due to restrictions Washington has already imposed on the firm.
At present, the only way to make the most advanced logic chips is to use lithographic equipment made by a Dutch company, ASML.
SMIC ordered an advanced $150M lithography machine from ASML in 2018, but Reuters reported the White House convinced the Dutch government to block the export on security grounds.
Adding SMIC to the US Entity List would prevent the Chinese firm from sourcing hardware, software and chemical materials from suppliers doing business in the U.S.
This recent tension between Beijing and Washington has accelerated the downward spiral in economic and diplomatic relations, and the confrontation now encompasses trade and technology, as well as Taiwan, Hong Kong, human rights and other issues.
Lawsuit Tries To Invalidate List 3 & 4a Tariffs
Several importers of vinyl flooring filed a case at the U.S. Court of International Trade (CIT) challenging the way the Section 301 List 3 and 4a tariffs were implemented. Two-thousand-five-hundred companies then filed similar cases, including big box retailers Home Depot, Lowe’s, and Costco, and FTZ user Floor & Décor.
On September 10, HMTX Industries, Halstead New England Corporation, and Metroflor Corporation challenged both the substantive and procedural processes followed by the United States Trade Representative when instituting Section 301 Tariffs on imports from China under List 3.
It may no longer be possible to file a legal challenge to the List 3 tariffs, a potentially lengthy and expensive process, but the statute of limitations for the List 4a case won’t expire until next year.
There is a chance that all importers would be able to receive a refund from CBP if the Court strikes down the tariffs. However, no one would have an opportunity for any refunds if these firms had not stepped forward to challenge the tariff implementation.
Though CBP could extend benefits to all importers, filing a claim was the only way to ensure a benefit.
The US government is sure to vigorously contest the suit and is generally entitled to significant deference in such cases. Even if the plaintiffs succeed initially, the decision would likely be subject to multiple appeals and, therefore, any refunds are likely years away.
The List 4 tariffs could be similarly challenged in court but, because the relevant Federal Register notice imposing such tariffs was not issued until August 2019, parties have another year to evaluate whether to file a notice contesting those tariffs.
The National Law Review noted that, “The plaintiffs argue that the Section 301 law was not intended as a tool to engage in an ‘open-ended trade war,’ as opposed to an initial response to China’s intellectual property violations.
“The lawsuit asks the CIT to vacate the List 3 tariffs, order a refund (with interest) of any List 3 duties paid by the plaintiffs, permanently enjoin the U.S. government from applying List 3 duties against the plaintiffs, and award plaintiffs’ costs and reasonable attorney fees.”
UK Scores Trade Win With Japan Agreement
Like the U.S., the U.K. has found difficulty negotiating easy access to international markets these days. Britain did score one win last month when it agreed to a free trade deal with Japan.
Liz Truss, the British International Trade Secretary, said the agreement with Japan was a “historic moment” for both countries after signing off on a deal in principle with the Japanese foreign minister, Toshimitsu Motegi. Japan and Britain have been negotiating the deal since June.
Business leaders welcomed the Japan trade deal as an important signal of progress, but warned that a deal with the EU should still be the government’s top priority - Japan accounted for only about 1.9% of Britain’s exports last year.
The EU is the UK’s biggest single export market, accounting for 46% of UK goods exports. Including services trade, imports and exports between Britain and the EU were worth a total of $870B last year, more than 20 times the value of UK-Japan trade.
Adam Marshall, director general of the British Chambers of Commerce, a business lobby group, said: “Whilst this agreement is undoubtedly cause for celebration, securing a free trade agreement with the EU remains critical to the future of businesses in the UK. We urge ministers to redouble their efforts to reach a comprehensive partnership with our largest trading partner at a crucial time in the negotiations.”
FTZ Board Activity
- Xylem Water Systems USA LLC submitted a notification of proposed production activity for additional components of centrifugal and submersible pumps within FTZ 90 in Auburn, New York. MORE
- Eastern Shipbuilding Group, Inc. submitted an application for the expansion of subzone 65A of FTZ 65 in Panama City and Port St. Joe, Florida. MORE
- Amgen Manufacturing Limited received authorization of production activity for pharmaceuticals within FTZ 7 in Juncos, Puerto Rico. MORE
- Janssen Pharmaceuticals Inc. received authorization of production activity for pharmaceutical products within FTZ 26 in Athens, Georgia. MORE
- Schlumberger Technology Corporation, Reslink Product Center submitted a notification of proposed production activity for sand screens and related accessories within FTZ 84 in Baytown and Houston, Texas. MORE
- Golden Pass LNG Terminal LLC received approval for subzone status for its facility as subzone 116E in Port Arthur, Texas. MORE
- Rauch North America, Inc. received the authorization of production activity for non-alcoholic beverages within FTZ 277 in Waddell, Arizona. MORE
- Signature Express Transport, LLC received approval for subzone status for its facility as subzone 98F in Fairfield, Alabama. MORE
- Sager Electronics submitted an application for subzone status for its facility within FTZ 168 in Carrollton, Texas. MORE
- FN America, LLC received authorization of production activity for the disassembly of machine guns within FTZ 137 in Dulles, Virginia. MORE
- Volkswagen Group of America Chattanooga Operations, LLC submitted a notification of proposed production activity for additional components of passenger motor vehicles within FTZ 134 in Chattanooga, Tennessee. MORE
- OFS Fitel, LLC submitted a notification of proposed production activity for optical fiber products within FTZ 26 in Carrollton, Georgia. MORE
Trade was rising in the public eye as the 2020 election progressed. Then the death of Supreme Court Justice Ruth Bader Ginsburg and the release of President Donald Trump’s personal tax returns last month upended the election narrative in Washington. Action this month to confirm a new Supreme Court Justice and examination of those returns are sure to make October an impactful month in a most unusual year.
Tuesday’s Presidential debate had no segments dedicated to trade, which probably confirms that advancements in relations with key trading partners including China, Japan, India and the U.K. have been pushed off center stage for the coming months. It could also be a signal that views on trade are not that different between the candidates, and the current environment for international trade is likely to be stable well beyond election day.
Happy New Year to our readers who are federal employees! Happy new fiscal year that is. FTZ users, don’t forget that means that effective today the MPF minimum increases to $27.23 from $26.79 and the MPF maximum increases to $528.33 from $519.76.
This month’s FTZine banner honors the groundbreaking work of Justice Ruth Bader Ginsburg in the service of her country.