Dear valued clients and partners,
Hello from all of us at ITC Diligence International Inc.! I am excited to present our Q3 newsletter, filled with the latest updates, insights, and highlights from the world of international trade.
In this edition, we delve into the fascinating realm of customs brokerage, share industry updates, have a little fun with some facts, spotlight one of our valued clients, and sum up some learnings from G-TEC 2023.
International trade is constantly evolving, with new regulations, technological advancements, and market dynamics shaping the landscape. One of the key trends we've observed is the increasing importance of compliance in trade operations, highlighted by the recent implementation of the U.S. Uyghur Forced Labor Prevention Act. This development underscores the critical role of customs brokers in ensuring that businesses navigate these changes successfully. We cover this new Act in detail in our newsletter.
Our goal with this newsletter is to keep you updated on these trends and changes, and to share the knowledge and expertise of our team at ITC Diligence International Inc. We believe that staying informed and adaptable is key to maintaining a competitive edge in the trade landscape.
Thank you for your continued trust and partnership. We look forward to navigating the world of trade with you.
Best,
David Harlow President & CEO, ITC Diligence International Inc.
NAFTZ: Celebrating 50 Years as the Unified Voice of FTZs
By David Harlow, President & CEO
The National Association of Foreign Trade Zones (NAFTZ) reached another milestone this year celebrating 50 years as the unified voice of the Foreign Trade Zone (FTZ) Industry. ITC Diligence International, Inc., as always, was in attendance representing clients, vendors, and the supply chain network at the Annual NAFTZ Fall Conference. The event was held in Miami with beautiful weather and an abundance of humidity. Notably absent from the event was Hurricane Leo- a huge sigh of relief.
Ahead of the Annual NAFTZ Fall Conference, the industry saw changes in trade policy along with updates to ongoing advocacy issues. This created a sense of anticipation in Miami with the U.S. Customs and Border Protection (CBP) and the FTZ Board in attendance, in addition to FTZ Operators, Users, Software Providers, and Service Providers that traveled from all corners of the global industry. There are several key points of the Annual NAFTZ Fall Conference that highlight success in some respects and controversy in others:ure compliance, emphasizing the ethical and reputational stakes at play.
Section 321:
Section 321 is a program to support the growing volume of E-Commerce that is intended to streamline the import process, reduce duties and fees, and automate processes for the Trade and Customs. Unfortunately, an unintended consequence has cost jobs in the US and grown jobs across the border in Mexico and Canada. Furthermore, based on legacy regulations, FTZs are left out of the process which has deterred utilization of FTZs nationwide. The NAFTZ, ITC Diligence International, Inc., and many other leaders of the trade community participate in a coalition to change the negative impacts of the FTZ Program. There are strong lobbying efforts to combat this with slow but steady progress. There is strong optimism for success in the coming year. Additional updates were provided by the Coalition, NAFTZ, and CBP.
The Uyghur Forced Labor Prevention Act (UFLPA):
The UFLPA is an act to combat forced labor globally, specifically in the Uyghur region of China. For the past two years the FTZ Program has been a valuable tool to help supply chains navigate the review process with CBP determining whether companies are compliant or complicit with forced labor. On August 3rd, the utilization of FTZs was excluded, while the reasons for this are controversial there is a significant effort locally and nationally through the NAFTZ to retract this trade policy decision. Centralized Examination Station (CES), Container Freight Station (CFS), and Bonded Warehouse (BW) solutions are inadequate to navigate the process, which has created significant obstacles to the Trade and CBP. Recent updates from the NAFTZ, ITC Diligence International, Inc., and the balance of the trade community have moved forward with strong arguments to retract these policy changes. Recently, the Commercial Customs Operations Advisory Committee (COAC) has also strongly recommended that CBP reverse the Cargo Systems Messaging Service (CSMS) memo that caused this change. The conference created a stage for further updates and debates from both sides.
The UFF and RSP Programs:
The UFF and RSP Programs offer a private / public solution that has recently expanded to the FTZ Program. The UFF allows for fully funded CBP services by the Trade to give access to the FTZ Industry among others in areas where CBP support and enforcement can be difficult. The RSP Program provides similar solutions on an as needed basis only, rather than via continuous support. Each program has its limitations but offers signs for further support by CBP for a growing FTZ Program with no end in sight. The NAFTZ conference secured CBP HQ representation to highlight the programs and continue collaboration.
The Annual NAFTZ Fall Conference was extremely successful and brought the FTZ community together to vigorously debate the issues that affect us all. With an ever-changing global economy that continues to attract innovation, expansion, and obstacles, trade associations like the NAFTZ are imperative to navigate this growth. ITC Diligence International, Inc. is proud to be a member and represent our network of clients, vendors, and supply chain partners. We look forward to next years’ Annual NAFTZ Fall Conference in New Orleans, Louisiana.
G-TEC 2023: Navigating the Evolving Landscape of International Trade
By Jason Poyser, Director of FTZ Consulting
The Global Trade Educational Conference (G-TEC) is a premier event in the international trade industry, bringing together experts, professionals, and stakeholders to discuss the latest trends, challenges, and opportunities in global trade. Coinciding with the 234th anniversary of US Customs (July 31st), ITC Diligence International, Inc. attended G-TEC in Oklahoma City. G-TEC is an educational conference championed by the NCBFAA, one of many value-added benefits offered through membership. Among the many sessions, the following topics are important to note:
Forced Labor:
The topic of forced labor, more specifically the Withhold Release Orders (WROs), stood out. CBP has an interactive map for worldwide WROs. If an Importer receives a WRO from Customs, they have 90 days to provide evidence that the goods were not made using Forced Labor. The Uyghur Forced Labor Prevention Act (UFLPA) of June 2022 focuses on all goods coming from the XUAR region in China. All goods, in whole or in part, are subject to this Act. This has significant implications for industries relying on raw goods from this region, such as cotton, tomatoes, and polysilicon (i.e., solar panels). Importers of these goods have 30 days to provide clear evidence that forced labor was not used.
Drawback:
In the FTZ environment, the Admission date is the date referenced when the 5-year clock starts for filing a drawback claim; not the date of Entry from the FTZ. Drawback is a detailed and data-intensive process, with some filers submitting dozens of claims per day. Understanding Prior Disclosures and the role Brokers play in helping file them on behalf of Importers is crucial. CBP’s Basic Civil Penalty Statute provides information about penalties for fraud, gross negligence, and negligence. More details can be found in 19 CFR 111 for regulations pertaining to a Broker’s duties.
Looking Ahead:
The “Leveling the Playing Field 2.0 Act” introduces a new type of AD/CVD investigation called “successive investigation.” It would allow Commerce to impose CVD on subsidies provided by a foreign government to a company operating in a different country.
As the landscape of international trade continues to evolve, ITC Diligence International, Inc. remains at the forefront, equipped with the latest knowledge and insights. If you have questions or need assistance with trade regulations and FTZ compliance, our team of experts is here to help. Reach out to us today!
The Uyghur Act and EU Subsidies Regulation: Pivotal Changes in 2023's Trade Landscape
2023 has ushered in pivotal changes in international trade regulations. Two major updates have dominated headlines: the U.S. Uyghur Forced Labor Prevention Act and the European Union's regulation on non-EU subsidies.
U.S. Uyghur Forced Labor Prevention Act:
- Addresses human rights abuses in China's Xinjiang Uyghur Autonomous Region.
- Bans imports of goods produced with forced labor in Xinjiang.
- Companies with ties to China must conduct thorough supply chain audits.
- Emphasizes ethical and reputational stakes for businesses.
The U.S. Uyghur Forced Labor Prevention Act addresses human rights abuses in China's Xinjiang Uyghur Autonomous Region. This act bans imports of goods produced with forced labor in Xinjiang, impacting global supply chains. Companies with ties to China must now conduct thorough supply chain audits to ensure compliance, emphasizing the ethical and reputational stakes at play.
The Flourishing FTZ Program: A Look at the Numbers
The Foreign Trade Zone (FTZ) program has long been a cornerstone of U.S. international trade policy, offering businesses a competitive edge in the global marketplace. As we review the third quarter of 2023, it's essential to reflect on the program's growth and its increasing significance in the trade landscape. Let's dive into the numbers that showcase the FTZ program's evolution and impact:
A Steady Rise in Active FTZs
1970 vs. 2022: From only 10 active FTZs in 1970 to a staggering 197 in 2022, the FTZ program has showcased a spectacular trajectory of growth in the US. The growth from only a few limited zones to now nearly 400 subzones and over 230 FTZ projects is a testament to the program’s robust framework.
Employment Boost
FTZ Workforce: From 2020 to 2022, the FTZ program exhibited a notable surge in employment, growing from over 470,000 to over 500,000 employees, representing approximately a 6% increase. This growth underscores the FTZ program's pivotal role in enhancing employment opportunities throughout the United States.
Merchandise Dynamics
Growth Over the Years: In 1997, the value of foreign and domestic merchandise received into FTZs stood at $180 billion. Fast forward to 2022, and this figure skyrocketed to an impressive $1.011 trillion.
Exports on the Rise
1997 vs. 2022: From 1997’s $18 billion to 2022’s impressive $162 billion, FTZ exports have experienced substantial growth. Today, FTZs notably contribute to about 5% of all U.S. exports, reflecting their pivotal role in the nation's trade sector.
The numbers speak for themselves. The FTZ program's growth over the years is a testament to its effectiveness in promoting trade, boosting employment, and fostering economic development. As businesses continue to navigate the complexities of international trade, the FTZ program stands as a beacon of opportunity and growth.
Customs Broker Fun Fact
Did You Know that the pass rate for the Licensed Customs Broker (LCB) exam is less than the bar exam for law?!
This highlights the complexity and depth of knowledge required to become a customs broker.
These professionals are truly international trade experts, equipped with a thorough understanding in:
- All entry procedures
- Admissibility requirements
- Classifications
- Valuations
- The duties and taxes imposed on imported goods
This simple fact underscores the expertise and dedication of customs brokers, including our team at ITC Diligence International Inc.
Logistics and Trade Industry Updates
Evolving Logistics Trends: Logistics trends in 2023 are expected to evolve more to cope with global economic and technological advancements. The rapid growth of e-commerce and advancements in supply chain management are projected to further grow the logistics market at a CAGR of 5.6%. The industry is also seeing an increase in the use of automation and robotics, which can streamline and optimize logistics processes, making the industry more efficient and competitive.
New Regulations: The implementation of new regulations like the U.S. Uyghur Forced Labor Prevention Act has placed additional responsibilities on customs brokers, highlighting the importance of compliance in international trade. In addition, the EU has adopted a regulation addressing the potentially distortive effects on the EU market of subsidies from non-EU countries. We discuss this in more detail further below in our newsletter.
Technological Advancements: The logistics industry is set to see an increase in the use of automation and robotics in 2023. Automation can streamline and optimize logistics processes, making the industry more efficient and competitive. The use of digital platforms like the Automated Commercial Environment (ACE) has become commonplace, allowing for more efficient and accurate processing of imports and exports.
Client Spotlight: Athena Brands
Athena Brands, known in the industry as Convoy Beverage Alliance, stands as a beacon in the warehousing and transportation sector, specifically catering to the alcoholic beverage industry. With a strategic presence in both California and Florida, Athena Brands has carved a niche for itself, especially with its two Foreign Trade Zones (FTZs) located in Jacksonville and Medley (Miami), FL.
ITC Diligence International, Inc. Proudly Collaborates with Athena Brands
ITC Diligence International, Inc. takes immense pride in its partnership with Athena Brands, a leader in warehousing and transportation. Leveraging the FTZ program, Athena Brands has achieved significant operational efficiencies. As Athena Brands' trusted customs broker, ITC Diligence International, Inc. ensures that trade operations within the FTZs run smoothly and compliantly. This collaboration highlights what having a knowledgeable partner like ITC Diligence International Inc. can accomplish. Athena Brands now confidently concentrates on its core business, secure in the knowledge that its customs and FTZ requirements are expertly managed.
