NAFTZ has a full plate of government affairs issues active right now. We realize that we need to keep you – our NAFTZ members – informed of our efforts in this area. Here’s a detailed summary of what has been happening:
US International Trade Commission Investigation – Operations and Conditions of Competitiveness in US FTZs and Similar Programs in Canada and Mexico:
NAFTZ formed a Task Force comprised of member subject matter experts from key constituencies and industries, staff, Executive Committee and Board members in March. This group has been meeting weekly and has been supporting the USITC research team in a variety of ways to provide them with the FTZ knowledge, facts, and information that we believe is necessary for a complete and comprehensive report.
Most recently, NAFTZ appeared at the investigations public hearing on May 17th. A review of the USITC submission database shows only one organization that requested to appear at the hearing, the Coalition for a Prosperous America (CPA), is not aligned with either NAFTZ or the Ship Safe Coalition. NAFTZ also submitted a detailed 17-page response to questions raised by USITC Commissioners. There is still time for groups or organizations opposed to the FTZ program to submit comments, but the lack of opposition at the formal hearing bodes well for NAFTZ’s position.
At the hearing NAFTZ President Jeff Tafel presented testimony to the USITC Commissioners on behalf of the NAFTZ. Joining Mr. Tafel in supporting the FTZ program were NAFTZ members Sean Lydon, Chris Carney, and Dean Wood. Over the course of the nearly four-hour hearing, USITC Commissioners heard testimony from several individuals and firms in support of the FTZ program. Each commissioner also had opportunities to ask questions and seek further clarification about the role of FTZs and the impact various trade policies have on the program. Throughout the hearing Mr. Tafel assured the Commissioners that NAFTZ’s final written testimony would include specific examples of the benefits of FTZs and the problems and constraints the program faces because of current trade policies.
Although the public hearing is over, there are other significant parts of the investigation process continuing through the summer. Most notably the distribution of the USITC Investigation Questionnaire to approximately 400 different firms active in FTZs. The NAFTZ Task Force submitted it’s feedback and recommendations about the questionnaire this past Friday, June 3rd to the USITC. The Questionnaire is very detailed and is expected to take 20 hours or more to complete, and firms are legally required to complete the questionnaire if they receive one.
It is critical that as many FTZ constituents provide information to the USITC researchers that demonstrate the reality of USMCA/NAFTA (and other trade agreements or governmental requirements) that actually disincentivize the use of FTZs and/or have negative impacts on US jobs in FTZs. If any organization does not want to be identified, individual company information/experiences can be submitted anonymously through NAFTZ. For more information, please contact NAFTZ President Jeff Tafel at email@example.com or 202-846-1521.
Section 321 – de minimis and FTZs:
This issue was one of the most discussed at the NAFTZ annual Legislative Summit in Washington DC this past February and was a primary discussion with the virtual visits with legislators that followed. NAFTZ also increased its participation with the Ship Safe Coalition in an effort to get congressional support to allow FTZs the ability to use de minimis to ship from US FTZs.
NAFTZ in cooperation with the Ship Safe Coalition are asking that this issue be addressed in the conference between the US Senate and House that has been tasked with negotiating the differences between USICA and the America COMPETES Act.
As part of the overall advocacy strategy, two letters were distributed. The first letter was addressed to each of the 102 individual conferees. The letter included more detail on why Congress should allow FTZs to make de minimis shipments, including the benefits of increased security oversight. This letter was sent to trade staffers for each conferee from Jeff Tafel on behalf of Melissa Irmen, in her role as Chair of the Board, and himself in his role as President. The second letter was sent to NAFTZ members who operate in conferee districts and states as a grassroots effort to provide an avenue for each NAFTZ member to provide specific district/ state data. We’re pleased to report overwhelmingly positive response and feedback to the letter from NAFTZ membership. Additionally, NAFTZ and our Government Affairs Advisors at Smith Dawson & Andrews are working in collaboration with the Ship Safe Coalition scheduling meetings with staffers for conferees as formal negotiations continue in conference.
Potential changes in Section 301 duties
After Secretary of the Treasury Janet Yellen made public comments that the Biden Administration is re-examining carefully its trade strategy with respect to China to address inflation, NAFTZ requested of the Secretary that the U.S. Foreign-Trade Zone program not be negatively impacted by any artificial constraints. The normal approach that has gone into effect repeatedly when Trump-era Trade Remedies were put in place follows the standard used for Antidumping/Countervailing Duty (AD/CVD) rates that has been in effect since the 1980s, i.e., when material is released from U.S. Foreign-Trade Zones, Customs duties are assessed applying the current duty rate in effect at the date of withdrawal from the FTZ and transfer to the U.S. Customs territory. NAFTZ asked that this simple solution be put in place and that material currently held in U.S. Foreign-Trade Zones is not negatively impacted.
Section 232 Ukraine Steel tariffs & TRQ
In May, NAFTZ applauded the Department of Commerce’s announcement of a temporary 1-year suspension of Section 232 tariffs on Ukraine steel in order to support one of Ukraine’s most important industries at this critical time. NAFTZ urged the Department of Commerce to consider the special status of U.S. FTZs in the implementation of the suspension of Section 232 duties on Ukraine steel in a manner similar to its actions in other Section 232 matters in order not to disadvantage the companies using FTZs. The communication was delivered to Department of Commerce Deputy Assistant Secretary for Enforcement and Compliance Lisa Wang, Foreign Trade Zones Board Executive Secretary Andrew McGilvray, Department of Treasury Deputy Assistant Secretary Tim Skud, and CBP Director James Swanson.
Trade Remedy Letter
NAFTZ is working to express ongoing concerns regarding the negative impact compounding trade actions and policy implementations are having on the U.S. Foreign-Trade Zones Program and the US companies that participate in the program. NAFTZ Government Affairs Advisors at Smith Dawson & Andrews continue to seek a member of congress to take the lead on a ‘Dear Colleague’ letter and identify co-signers to the letter to be sent to both Assistant Commerce Secretary Lisa Wang and Ambassador Tai. Citing a number of specific examples, the communication addresses Section 301 tariffs, TRQs on steel and aluminum, USMCA duty deferral issues, and requests that FTZs not be overlooked and are carefully considered before trade actions are taken in the future.
Questions for USTR Ambassador Tai
In addition to the ‘Dear Colleague’ letter mentioned above, after Ambassador Tai testified before the House Ways and Means hearing at the end of March, we understand that questions for the record were submitted to the Ambassador by Members of the Committee concerning the FTZ program and specifically the application of 232 Tariff Rate Quotas on FTZs and allowing FTZs to accept de minimis shipments. We are closely monitoring the Committee’s website and will report any responses as soon as they are made public.
Monthly meetings with CBP leadership
The NAFTZ Executive Committee and President host monthly calls with CBP leadership. This open channel of communication between CBP and NAFTZ is a productive and effective effort to keep member concerns and issues in front of the Agency. Most recently, NAFTZ brought a number of port-specific issues that were identified at the User/Operator roundtable session at the NAFTZ Spring Seminar in Austin to CBP leadership. NAFTZ is able to raise these issues in such a way that CBP leadership can reach out to the specific ports to address member issues without embarrassing anyone and avoiding any possible backlash for companies in those ports. These monthly meetings will be very helpful as the Agency works through the changes as a result of Jim Swanson’s retirement in the coming weeks. Any members with CBP issues or questions that they would like addressed on these calls can contact NAFTZ President Jeff Tafel at firstname.lastname@example.org.
Quarterly meetings with US Department of Commerce Assistant Secretary Wang
As a result of efforts started at NAFTZ’s Legislative Summit in February, NAFTZ has arranged for quarterly meetings with US Department of Commerce Assistant Secretary Wang. The first was held in-person in March, a month after Ms. Wang addressed the attendees of the NAFTZ Legislative Summit in Washington, DC. Issues addressed in the initial meeting included trade remedies issues, 232 Steel TRQ, the USITC Study/Investigation, how NAFTZ can support Inter-agency communications and broaden knowledge of FTZs, and FTZ annual report data. Ms. Wang and her team committed to being a conduit for the voice of NAFTZ to those negotiating various trade issues and the Biden Administration. The next quarterly meeting will be held on June 21st.
Jeffrey J. Tafel, CAE