Reductions to Sections 301, 232 Tariffs Should Apply to FTZ Goods, NAFTZ Tells Administration

The Office of the U.S. Trade Representatively should allow for goods that were subject to Section 301 tariffs at the time of entry to a foreign-trade zone to be tariffed at whatever rate is in effect when the goods are removed from the FTZ, the National Associations of Foreign-Trade Zones said in a recent letter to the USTR. The trade group offered support for the suspension on Section 301 duties that were related to digital services taxes, and said that "the notices confirm the application of Sec. 301 duty rates in effect at the time of Customs entry for subject merchandise admitted into a U.S. foreign-trade zone (FTZ) in mandated privileged-foreign (PF) status."

NAFTZ said the agency should "address any prior conflicts by issuing corrected notices stating that all reductions or suspensions of duties in Sec. 301 and other trade actions shall apply the duty rate in effect at the time of FTZ Customs consumption entry for subject merchandise previously admitted with mandated PF status in an FTZ."

The trade association continues to believe that, "whenever trade remedy duties are reduced or eliminated, including in the Sec. 301 action on large civil aircraft from the EU and UK earlier this year, the duty rate to be applied on mandated PF status merchandise in an FTZ should be the rate in effect at time of Customs entry from the FTZ, rather than the duty rate in effect at the time the merchandise was admitted into the FTZ," it said. "This policy is necessary to ensure that FTZ merchandise receives the same duty treatment as entered goods from outside an FTZ, including bonded warehouses."

Preparing for possible changes to the Section 232 tariffs, NAFTZ similarly believes that the tariffs shouldn't be required on goods that are entered after any reductions take effect, according to an email from Integrate Supply Chain Management. "The recent de-escalation of trade tensions between the E.U. and the U.S. has led to rumblings in D.C. that the U.S. may be contemplating reducing or eliminating the Section 232 tariffs imposed on steel and aluminum from Europe," the company said. "This has FTZ operators with such goods in their zone wondering what will happen when those goods are removed from the zone."

Industry is "looking for affected parties to sign onto a letter to the Department of Commerce to make the case to ensure FTZs are not treated unfairly when the tariffs are finally removed," the company said