FTZ’ine September 2020

Follow The Fed, or The Street?

Wall Street set several records in August, yet the Fed remains very cautious about the near-term future of the U.S. economy. Who to believe? Mortgage rates are now low enough to make you put your mask on and march into your bank for a new mortgage, or a refinance of an existing one. People are using them to buy cars and homes. J.C. Penney, the 118 year-old American retailer, will close forever in the next ten days if a buyer cannot be found soon. 70,000 jobs would be lost in a flash. We highlight belowsome of the very different impacts the pandemic is having on the fortunes of the international trade industry.

The FTZine staff is mindful of the damage done, and those affected by Hurricane Laura, but thankful it was not as destructive in the same areas where Katrina is still not long enough ago.

Top Story: Transitioning U.S. Economy Adds Backdrop to Election

Layoff and furlough announcements last month will be a hurdle to economic recovery in the United States. American Airlines (AAL) and MGM Resorts (MGM) alone announced they would lay off or furlough more than 40,000 employees in the face of dramatic shifts in customer behavior.

Tech Tip

A recent CBP ruling on bonded moves has a direct impact on zones.

In headquarters ruling HQ H307742, CBP considered the question of whether bonded merchandise can be carried by non-bonded parties in instances where a bonded carrier does not take physical delivery of the merchandise, but simply obligates its bond to a non-bonded carrier. The request was filed on behalf of Ford Motor Company who, as outlined in the ruling request, transports vehicles manufactured in Canada to a U.S. FTZ in bond, and then later exports these vehicles from the FTZ in bond. Ford states they were approached by a third-party logistics provider proposing to consolidate the bonding of the movements for Ford by booking a rail carrier using the carrier bond of one of its strategic partners. The rail carrier’s bond would not be obligated for the movement. The company whose bond would be obligated would never take physical possession of the goods throughout the process.

CBP ruled that the goods in this scenario, when the goods being bonded were never in the physical possession of the entity whose bond is obligated for the movement, are NOT properly bonded. Analyzing the scenario, Office of International Trade, Regulations and Rulings wrote, “We find that the proposed transaction is not compliant with 19 CFR § 18.2(a)(1) as interpreted in prior Customs rulings because the subject merchandise would not be physically delivered to the bonded carrier and subsequently transferred to a non-bonded carrier for transportation.”

What does this mean for zones? This ruling still leaves open some questions about using the FTZ bond for transport, since the FTZ either has possession before export or will get possession of inbound cargo. What is clear is that if you are using the bond of a 3rd party logistics provider, you must make sure that the bond being used for your movements is that of a carrier that has possession of the goods in the process, not a partnered entity that does not get involved in the physical handling of the merchandise. You must be diligent in asking these questions because other 3rd party logistics providers may assume, as the one that approached Ford did, that as long as a valid carrier’s bond is obligated it doesn’t matter who is transporting the goods. Remember, if the carrier gave permission to file on their bond, ACE will allow the filing of an in-bond even it isn’t permissible activity, so you have to make sure it is correct before you file.

You can find the complete ruling at https://rulings.cbp.gov/ruling/H307742.

If you have questions on the new rules, please send them to us at Info@iscm.co.

Aluminum Tariffs Draw Swift Canadian Response, a Concern for FTZs

CBP Ready To Release ACE Updates To e214

CBP is updating the e214 this month - are you ready? Changes in this release will affect the FTZ admission process for all zones.

In a recent CSMS (CSMS #43782284 - Update: Modernizing e214 Online Admission Process – Phase 2, Release 2 Information Notice), CBP announced that the update to the e214 will go into production on September 26.

September 26th is a Saturday, the day on which CBP does major ACE production maintenance. Many of the changes in this release are new functionality to update or cancel things about previously filed e214s, so after this goes into production you’ll be able to do things such as this for e214’s filed before Sept 26:

Cancel a Permit to Transfer (PTT)
Post-Admission Correction (updating a previously filed admission without a delete and add)
Merchandise zone status changes reported using original admission data (this was not consistently being done before)

There is one new thing you can do on admissions filed after Sept 26:

Report multiple split air waybill parts on a single admission

CBP has also provided space for larger zone IDs on admission, but the corresponding availability isn’t on the entry summary, so CBP is asking that it not be used until an FRN can be published to make the update to filings other than the e214.

There are still a lot of open questions about how all of this will work, including for how long it will be possible to update a 214, how that will sync with zone status changes required by proclamations and tariff actions, and how getting officer approval of these changes will work. CBP has promised a FTZ Business Rules Document to be published before Sept 26.

When we know more, we’ll be sure to share. In the meantime, if you have questions or feedback on the new e214, please send them to us at Info@iscm.co.

Apparel Retailer Agrees to $118M Fine For Undervaluing Imports

Pandemic Has Disparate Impact on Trade Segments, Including FTZs

US Land Borders Remain Closed to Non-Essential Traffic

FTZ Board Activity

Teijin Carbon Fibers, Inc. submitted an application for production authority for polyacrylonitrile-based carbon fiber within FTZ 38 in Greenwood, South Carolina. MORE
Ipswich Shellfish Company, Inc. received approval for subzone status for its facility as subzone 27Q in Ipswich, Massachusettes. MORE
Pacific Industrial Development Corporation received the authorization of production activity for zeolites, specialty alumina products, rare earth powders, and aqueous solutions within FTZ 70 in Ann Arbor, Michigan. MORE
Childers Guns, LLC submitted an application for subzone status for its facility within FTZ 229 in Fairmont, West Virginia. MORE
BLU Products, Inc. received the authorization of production activity for cellular phones, accessories, and components within FTZ 32 in Doral, Florida. MORE
Catalent Pharma Solutions submitted a notification of proposed production activity for pharmaceutical products within FTZ 49 in Somerset, New Jersey. MORE
Flextronics America, LLC submitted a notification of proposed production activity for automated data processing machines within FTZ 183 in Austin, Texas. MORE
ProAmpac Holdings, Inc. submitted a notification of proposed production activity for flexible packaging applications within FTZ 201 in Westfield, Massachusetts. MORE
Black & Decker (U.S.), Inc. received restricted approval for production authority for lithium-ion battery assembly for cordless power tools within FTZ 12 in Mission, Texas. MORE
Louisville & Jefferson County Riverport Authority submitted an application for the expansion of FTZ 29 under the alternative site framework in Louisville, Kentucky. MORE
Lake Charles LNG Export Company, LLC submitted an application for subzone status for its facility within FTZ 87 in Lake Charles, Louisiana. MORE
Hyster-Yale Group, Inc. submitted an application for the expansion of subzone 29I of FTZ 29 in Berea, Kentucky. MORE
Lam Research Corporation submitted an application for the expansion of subzone 18F of FTZ 18 in Fremont, Livermore, and Tracy, California. MORE
Lilly del Caribe, Inc. received the authorization of production activity for pharmaceutical products within FTZ 7 in Carolina, Puerto Rico. MORE
Aker Solutions, Inc. submitted a notification of proposed production activity for subsea oil and gas systems within FTZ 82 in Mobile, Alabama. MORE
World Trade Center Savannah, LLC received approval to expand the service area of FTZ 104 under the alternative site framework in Savannah, Georgia. MORE
Airbus OneWeb Satellites North America LLC submitted a notification of proposed production activity for satellites and satellite systems within FTZ 136 in Merritt Island, Florida. MORE
Golden Pass LNG Terminal, LLC received the authorization of production activity for liquified natural gas processing within FTZ 116 in Port Arthur, Texas. MORE
LiCAP Technologies, Inc. received the authorization of production activity for electrodes within FTZ 143 in Sacramento, California. MORE
Wacker Polysilicon North America, LLC received approval for production authority within FTZ in Charleston, Tennessee. MORE

Follow The Fed or The Street?

Wall Street set several records in August, yet the Fed remains very cautious about the near-term future of the U.S. economy. Who to believe? Mortgage rates are now low enough to make you put your mask on and march into your bank for a new mortgage, or a refinance of an existing one. People are using them to buy cars and homes. J.C. Penney, the 118 year-old American retailer, will close forever in the next ten days if a buyer cannot be found soon. 70,000 jobs would be lost in a flash. We highlight below some of the very different impacts the pandemic is having on the fortunes of the international trade industry.

CBP is releasing updates to the e214 process this month. Even though the ACE modifications are very modest, and don’t address direct delivery or PGA filing, FTZs need to take note and make sure they are ready for the changes. The FTZine staff is mindful of the damage done, and those affected by Hurricane Laura, but thankful it was not as destructive in the same areas where Katrina is still not long enough ago.