The document discusses foreign-trade zones (FTZs) and how they promote U.S. investment, manufacturing, and exports. FTZs allow companies to import goods without customs duties, provide duty elimination on exports and scrap, and offer duty reduction for manufacturing. This can result in significant cost savings for companies. Hypothetical examples show over $700,000 in potential first year savings for a company using an FTZ, primarily from duty deferral, duty elimination on exports/scrap, inverted tariff benefits, and reduced administrative costs. FTZs also offer benefits like improved inventory control and compliance.

1. Foreign‐Trade Zones g
Promote U.S. Investment,
Manufacturing and
Exports
Wednesday,
October 13
10:45 a.m. ‐ 12:00 p.m.

2. Foreign-Trade Zones
Promote U.S. Investment
Manufacturing & Exports
Presented By:Presented By:
Brandi Hanback
Managing Director
Rockefeller Group Foreign Trade Zone Services
Vice President of Trade & Logistics
Rockefeller Group Development Corporation
October 13, 2010
www.rgftz.com
bhanback@rockgrp.com

3. Agenda
Background on FTZsBackground on FTZs
Financial Benefits & Savings Analysis
Federal DesignationFederal Designation
Activation & Operation
Key Industries & UsesKey Industries & Uses
3

4. Background on FTZs

5. What is a Foreign-Trade Zone?
Physical location where U.S.-based companies
import and export
A Secure Area Located in or near a Customs Port of
EntryEntry
Legally Outside the U.S. Customs Territory
In a FTZ Merchandise may be: assembledIn a FTZ Merchandise may be: assembled,
exhibited, cleaned, manipulated, manufactured,
mixed, processed, relabeled, repackaged, repaired,
salvaged, sampled, stored, tested, displayed,
& destroyed
Retail Sale is Prohibited
5

6. Establishment of FTZs
Foreign-Trade Zones were created through federalForeign Trade Zones were created through federal
legislation in 1934 to:
Encourage and expedite U S participation in international tradeEncourage and expedite U.S. participation in international trade
Foster dealing in foreign goods imported not only for domestic
consumption but also for export after combining with domestic
goodsgoods
Defer payment of duties only until goods are entered into the
commerce of the U.S.
FTZ Designation obtained through application by Grantee tog g pp y
the U.S. Foreign-Trade Zones Board
FTZ Activation is achieved through application to local Port
Director of U.S. Customs & Border Protection
6

7. FTZ – A Trade Program
Concept unsuccessfully introduced in the U S Senate inConcept unsuccessfully introduced in the U.S. Senate in
1894
Successfully reintroduced in 1934 as part of The New Deal
H.R. 9322: “to provide for the establishment, operation,
and maintenance of FTZs in ports of entry of the United
States to expedite and encourage foreign commerce ”States, to expedite and encourage foreign commerce.
7

8. Types of FTZs
General Purpose ZoneGeneral Purpose Zone
Often an industrial park setting or port complex
Designed as multi-purpose or for use by multiple companies
1 GPZ b i d f lti l it1 GPZ may be comprised of multiple sites
Serves as the sponsoring zone for the subzone
Subzone
Normally single or specific purpose sites
Often isolated manufacturing locations or dedicated distribution
centerscenters
Operations cannot feasibly be moved to or accommodated in a
general purpose zone
8

9. Key Statistics
Approx $692 billion in merchandise is received atApprox. $692 billion in merchandise is received at
US FTZs annually (foreign and domestic)
Approx. 60% value received is domestic or foreignpp g
duty paid
Approx. $40 billion exported
Approx. 330,000 persons are employed by firms
operating under FTZ procedures
There are over 250 approved general purposeThere are over 250 approved general purpose
zones and over 450 approved subzones
9

10. The Public/Private Partnership:
GranteeGrantee
A public or private entity (port authorities, city/countyp p y (p , y y
economic developers)
Serves as the public representative of the zone
jproject
May operate the zone or contract the responsibility
to another partyto another party
Submits applications for zone modifications and
subzones to the Foreign-Trade Zones Board, asub o es to t e o e g ade o es oa d, a
federal independent agency housed within the U.S.
Department of Commerce
10

11. The Public/Private Partnership:
OperatorOperator
May be a private corporation or the granteeMay be a private corporation or the grantee
Operations can include warehousing, storage,
transportation, distribution, and manufacturing
Operators provide day-to-day oversight of zone
activities that may include record keeping,
marketing and providing technical expertisemarketing, and providing technical expertise
A company may choose to be the Operator of its
own facility (Operator/User) orown facility (Operator/User) or
Contract out to a Third Party Logistics provider
(3PL)
FTZ Operator’s Bond holder 11

12. The Public/Private Partnership:
UserUser
Users (also known as tenants) are those persons orUsers (also known as tenants) are those persons or
firms using a zone or subzone for storage, handling,
or manufacturing
Users can also be operators
Users include large distribution operations,
manufacturers processing operations testing andmanufacturers, processing operations, testing and
repair facilities, repackaging operations, etc.
User is typically the Importer/ExporterUser is typically the Importer/Exporter
12

13. FTZ Program Key Organizations
Foreign-Trade Zones Board (FTZB)g ( )
Created by the FTZ Act of 1934
Issues grants of authority to establish, operate, and maintain FTZs
Members consist of the Secretaries of Commerce and Treasury
Secretary of CommerceSecretary of Commerce
Chairman of the FTZ Board
Appoints the Executive Secretary of the Board
Andrew McGilvray is the Executive Secretary
Secretary of Treasury
Customs carries out most duties of the Secretary of Treasury
Prepares and implements rules and regulations
Assigns necessary Customs officers to perform zone related workAssigns necessary Customs officers to perform zone related work
The Port Director oversees the zone as a representative of the Board
As of March 1, 2003, the U.S. Customs Service became the Bureau of Customs &
Border Protection under the U.S. Department of Homeland Security
13

14. Duties of the FTZ Board
Issues grants to establish, expand, operate, and maintainIssues grants to establish, expand, operate, and maintain
FTZs
Prescribes rules and regulations to establish and operate
zoneszones
Requires submission of reports regarding information related
to zone operations
Makes an Annual Report to Congress on the operation and
fiscal condition of each zone
Inspects and examines the premises, operations, orp p , p ,
accounts of zone grantees and operators
Revokes the grant of any zone for willful and repeated
violations of the FTZA after due notice and a hearingviolations of the FTZA after due notice and a hearing
14

15. Executive Secretary
Chief operating official of the Boardp g
Represents the Board in all administrative, regulatory, and
operational matters within its purview
Initiates recommendations to the Board for overallInitiates recommendations to the Board for overall
administration of the FTZA
Conduct direct monitoring of zone activity
Maintains custody of records files correspondence andMaintains custody of records, files, correspondence, and
official seal of the Board
Approves boundary modifications with concurrence of the
appropriate Port Directorappropriate Port Director
Accepts rate schedules and determines their sufficiency
under the regulations
15

16. Role of Customs
Principal Interests and ConcernsPrincipal Interests and Concerns
Controls merchandise moving to/from a zone
Ensures that all revenue is properly collected
Ensures adherence to the laws and regulations governing theEnsures adherence to the laws and regulations governing the
merchandise
Ensures that merchandise has not been overtly or clandestinely
removed from the zone without proper Customs permit
Port Director’s Role
Oversees the zone as the Board representative
Reviews port policy and comments on applications
Assesses penalties and liquidated damages
Initiates suspension, if necessary
Recommends revocation to FTZ Board, if necessary
16

17. Financial Benefits of
FTZsFTZs

18. FTZs: Reduce Costs/Move Trade
Duty Deferral
Duty Elimination on Exports & Scrap
Duty Reduction (inverted tariff relief) for
manufacturing zones onlymanufacturing zones only
Local Ad Valorem Tax Exemption on inventory
Administrative savings and expedited flow due toAdministrative savings and expedited flow due to
flexible Customs procedures, consolidated
reporting, reduced brokerage and government feep g g g
18

19. Duty Deferral
Customs duty and federal excise tax paid only whenCustoms duty and federal excise tax paid only when
merchandise is transferred from an FTZ to U.S.
Customs territory for consumptiony p
Deferral savings can be significant particularly inDeferral savings can be significant particularly in
First-In, First-Out inventory tracking environments
and when implemented up and down the supply
chain
19

20. Duty Deferral—Example 1
Zone to U.S. Commerce
Auto Parts
Dutiable at 2.5%
Admitted to FTZAdmitted to FTZ
Stored in
W h fWarehouse for
Unlimited Time
Withdrawn from FTZ for
Entry into U S CommerceEntry into U.S. Commerce
2.5% Duty Paid
Duty Deferral 20

21. Duty Deferral—Example 2
Zone-to-Zone Transfer
Auto Parts
Dutiable at 2.5%
Admitted to Zone 1
Stored in
Warehouse 1 forWarehouse 1 for
Unlimited Time
Transferred to Zone 2
In-Bond and Stored in Warehouse
Duty Paid Upon Removal fromy p
Zone 2 - Entry into U.S. Commerce
21

22. Duty Elimination
Goods may be exported from a zone free of dutyGoods may be exported from a zone free of duty
and federal excise tax
Goods may be destroyed in a zone without payment
of duty and federal excise taxof duty and federal excise tax
22

23. Duty Elimination/
Zone to Foreign MarketZone to Foreign Market
Auto Parts
Dutiable at 2.5%
Admitted to FTZAdmitted to FTZ
Stored in
W h fWarehouse for
Unlimited Time
Withdrawn from FTZ for
Export
No Duty Payment
23

24. Duty Elimination/Destruction
Pens
Dutiable at 0.8¢ each + 5.4%
Admitted to FTZ
Received at
warehouse andwarehouse and
determined to have
no commercial
valuevalue
Destroyed in the FTZ; no
entry into commerce/ No
Duty Paid
24

25. Duty Reduction (Inverted Tariff)
With approval from the Foreign-Trade Zones Board whenWith approval from the Foreign Trade Zones Board, when
merchandise is admitted into the zone, the importer may
elect a zone status that requires payment of the:
Duty rate applicable to either the materials as admitted,
OR
Duty rate applicable to the finished product as removed from theDuty rate applicable to the finished product as removed from the
zone, depending upon which is lower
25

26. Duty Reduction/Inverted Tariff
Wind Turbine Parts valued at
$10,000
Average Duty at 5%Average Duty at 5%
Without FTZ
$10,000 * 5% = $500 duty
owedowed
Manufactured intoManufactured into
Finished Wind
Turbine
Dutiable at 2 5%
Inverted Tariff: Value of
Dutiable at 2.5%
parts are multiplied by duty
rate of finished product to
determine duty
$10 000 * 2 5% $250 d t$10,000 * 2.5% = $250 duty
owed 26

27. B2B SEAMLESS TRANSACTIONS:
Reducing Supply Chain Cycle Timesg pp y y
Direct Delivery
Expedites arrival of goods
Eli i t /d lEliminates exams/delays
Weekly Entry
Expedites departure of goods
FTZ Activated Area:
Expedites departure of goods
Reduces
paperwork/recordkeeping
Reduces MPF
Reduces broker fees
Weekly Export
Expedites departure of goods
Reduces
paperwork/recordkeeping
Reduces broker fees
In Gate A:
Out Gate B:
Reduces broker fees
= Lower Inventory Levels
27

28. Hypothetical FTZHypothetical FTZ
Savings AnalysisSavings AnalysisSavings AnalysisSavings Analysis

29. Hypothetical FTZ Savings:
Annual Savings Include:Annual Savings Include:
Duty on Exports/Scrap
One-Time Duty Deferral on Average Foreign
Inventory On-Hand
I t t A F i I t O H dInterest on Average Foreign Inventory On-Hand
Inverted Tariff Savings
Ad i i t ti t d t li i ti fAdministrative costs due to elimination of
drawback, fewer entries, reduced merchandise
processing fees lower brokerage feesprocessing fees, lower brokerage fees
29

30. Hypothetical FTZ Savings
ASSUMPTIONS:ASSUMPTIONS:
Value of Foreign Dutiable Purchases = $25,000,000
V l S bj t t I t d T iff $15 000 000Value Subject to Inverted Tariff = $15,000,000
Value Not Subject to Inverted Tariff = $10,000,000
Inventory Turnover = 4 per yearInventory Turnover = 4 per year
Valueless Scrap = 2%
Average Duty Rate of Imported Parts = 4%Average Duty Rate of Imported Parts 4%
Average Duty Rate of Finished Prod. = 2%
Foreign Inventory Re-exported = 10%Foreign Inventory Re exported 10%
30

31. Hypothetical FTZ Savings
Exports/Scrapp p
Duty Owed Without FTZ Benefits:Duty Owed Without FTZ Benefits:
$25,000,000 x 4% = $1,000,000
Duty Saved With FTZ Benefits:
$25,000,000 x 4% x 2% (scrap) = $20,000
$25,000,000 x 4% x 10% (re-export) = $100,000
31

32. Hypothetical FTZ Savings
One-Time Duty Deferraly
Average Inventory On-Hand:Average Inventory On Hand:
$25,000,000 ÷ 4 = $6,250,000
$$6,250,000 x 4% = $250,000
**No Duty Collected on Average On-Hand Inventory in FTZ;y g y ;
$250,000 applies to first year FTZ savings only
Y l I t t S iYearly Interest Savings:
$250,000 x 6% = $15,000
32

33. Inverted Tariff Savings
$15 000 000 x 4% = $600 000$15,000,000 x 4% = $600,000
Duty owed without inverted tariff
$15,000,000 x 2% = $300,000
Duty owed with inverted tariffDuty owed with inverted tariff
$600 000 - $300 000 = $300,000$600,000 $300,000 $300,000
33

34. Weekly Entry Savings Estimate
Estimated # Entries Filed Per Year: 300
Estimated Amt. of Annual Broker Fees Paid: $30,000
($100 per entry x 300 entries)
Estimated Amt. of Annual MPF Fees Paid: $52,200
( 21% f th l f t d h di f $485 t )(.21% of the value of entered merchandise or cap of $485 per entry)
Savings Analysis:
Weekly entry allows for 52 entries per year/facilityWeekly entry allows for 52 entries per year/facility
52 entries x $100 per entry: $ 5,200
Amount of MPF under weekly entry: $25,220Amount of MPF under weekly entry: $25,220
Potential Savings Annually Per Facility: $51,780
34

35. Total Estimated Savings
Exports $ 100,000p
Scrap $ 20,000
Duty Deferral/Avg Foreign Inventory On-Hand $ 250,000
Interest on Avg Foreign Inventory On-Hand $ 15,000g g y $ ,
Inverted Tariff Savings $ 300,000
Weekly Entry Savings $ 51,780
HYPOTHETICAL FIRST YEAR SAVINGS: $721,780*
HYPOTHETICAL FUTURE YEAR SAVINGS: $486,780*,
*Savings does not account for growth or zone-to-zone transfers
*Savings for brokerage fees and MPF based on one facility only
*Savings does not account for property tax savingsSavings does not account for property tax savings
35

36. Other Benefits
Production equipment may be admitted, assembled, stored,q p y , , ,
and tested without duty payment until use in production
begins
Commingling of foreign and domestic merchandise
Lower Administrative Costs
Lower Security and Insurance Costs
No Time Constraints on StorageNo Time Constraints on Storage
Improved Inventory Control through use of FIFO – Record
Keeping Identity vs. Specific Identity (Fungibility)
Improved SecurityImproved Security
Improved Compliance
Improved Business Processes
36

37. State and Local Ad Valorem Tax
Exemptionp
Generally, tangible personal property (inventory) in FTZs isGenerally, tangible personal property (inventory) in FTZs is
exempt from state and local ad valorem taxes
Specifics of the exemption vary from state to state
FTZ Act (19 USC 81a as amended)FTZ Act (19 USC 81a, as amended)
Sec. 81o(e) Exemption from state and local ad valorem taxation of tangible personal
property. Tangible personal property imported from outside the United States and held
in a zone for the purpose of storage, sale, exhibition, repackaging, assembly,
distribution sorting grading cleaning mixing display manufacturing or processingdistribution, sorting, grading, cleaning, mixing, display, manufacturing, or processing,
and tangible personal property produced in the United States and held in a zone for
exportation, either in its original form or as altered by any of the above processes, shall
be exempt from State and local ad valorem taxation.
Principle Use of FTZ for Bona Fide Customs ReasonsPrinciple Use of FTZ for Bona Fide Customs Reasons
Overlay of Public Interest Principles
37

38. Benefits Summary
Duty DeferralDuty Deferral
Cost SavingsCost Savings
ll
Duty ReductionDuty Reduction
Duty EliminationDuty Elimination
Consolidated ReportingConsolidated Reporting
(Broker Fee & MPF Savings)(Broker Fee & MPF Savings)
Production Equipment SavingsProduction Equipment Savings
Direct Delivery/Weekly Entry & ExportDirect Delivery/Weekly Entry & Export
Time SavingsTime SavingsTime SavingsTime Savings
Flexible Inventory TrackingFlexible Inventory Tracking 38

39. Federal Designation

40. Type of Applications
New General Purpose Zone (multi-purpose)New General Purpose Zone (multi-purpose)
Expansion of existing GPZ (major change)
Boundary modification of existing GPZ (minorBoundary modification of existing GPZ (minor
change)
Subzone (specific purpose)Subzone (specific purpose)
TIM/PAM – existing zones/pre-approved activity
Alternative Site FrameworkAlternative Site Framework –
Reorganizations/Expansion of Existing GPZ
Depending on type of application involvedDepending on type of application involved
timeframe may be 1 month – 1 year for approval

41. Activation and OperationActivation and Operation

42. Activation Overview
Procedure for Activation (19 CFR 146.6)Procedure for Activation (19 CFR 146.6)
Operator’s Bond
Background CheckBackground Check
Procedures Manual
SecuritySecurity
Blueprint

43. Activation Process
Activation requirements and procedures:
Written application to Port Director of CBPpp
Blueprint of area to be activated
Zone procedures manual (inventory control)
Written concurrence from the GranteeWritten concurrence from the Grantee
Grantee/Operator Agreement & Fees
Background investigations
S it i tiSecurity inspection
FTZ Operator’s Bond
FTZ signageg g
Other agency reporting

44. Activation Application
Zone Operator or Grantee makes written application toZone Operator or Grantee makes written application to
the Customs Port Director where zone is located
The area to be activated may be all or any portion of the
zone boundaries approved by the FTZB

45. Activation Application
RequirementsRequirements
The application must include:The application must include:
A description of all the Zone sites covered by thep y
application
Any operation to be conducted therein
A statement of the general character of the
merchandise to be admitted

46. Supporting Documents
The application must be accompanied by the following:pp p y g
A blueprint of the area approved by the Board to be
activated
Procedures manual describing the inventory control
d d k i t ( )and record keeping system(s)
The written concurrence of the Grantee
Grantee/Operator AgreementGrantee/Operator Agreement
Zone Schedule
Annual Fee

47. Meeting with Customs
Purposes of the meeting:
Introductions
Familiarize Customs with the zone project
Allows Customs to explain their role and any local
li i d dpolicies and procedures
May include a preliminary security check
May initiate background checksMay initiate background checks
May involve preliminary discussions relating to
establishing the Operator’s Bond amountg p

48. Additional Activation Procedures
The Port Director shall promptly notify the applicant inThe Port Director shall promptly notify the applicant in
writing of the decision to approve or deny the application
Prior to any manufacture, manipulation or destruction, the
operator must file an application on Customs Form 216
with the Port Director
The Grantee and/or Operator shall make writtenThe Grantee and/or Operator shall make written
application to the Port Director for deactivation of the zone
site

49. Activation Approval
Upon receipt of U S Customs & Border ProtectionUpon receipt of U.S. Customs & Border Protection
Port Director’s written approval of the application
and acceptance of the executed bond, the zonep ,
will be activated and merchandise may be admitted
to the zone non duty paid
Must also obtain signed permit for activity – C.F.
216 prior to initiating operations
Establish inventory starting balances

50. FTZ Operator’s Bond
Assurance provided by a Surety Company that
assessments against the bond will be paid to Customs
(liquidated damages)
Minimum bond amount is $50 000Minimum bond amount is $50,000
Bond amount is set by Customs based on nature of
merchandise, value, volume, duty ratemerchandise, value, volume, duty rate
This bond is in addition to the importer’s bond for
operator/users

51. Background Investigations
Key employeesy p y
May take several months to complete
Begin as early as possible

52. Procedures Manual
Document detailing operational procedures and systems
related to the handling of zone status merchandise within
the zone
Includes receipt storage handling and withdrawalIncludes receipt, storage, handling and withdrawal
procedures including reporting requirements
Serves as an audit guideServes as an audit guide

53. Security Standards
Security measures may include:
Physical measures (i e walls doors locks signage)Physical measures (i.e. walls, doors, locks, signage)
Electronic surveillance and monitoring systems
(cameras and alarms)(cameras and alarms)
Guards and/or access control systems
(key card, visitors log)( y g)
C-TPAT (Customs-Trade Partnership Against
Terrorism) FTZ procedures will complement C-TPAT
program
FTZs have been recognized by CBP as C-TPAT best
practicepractice

54. Sample Signage
WARNING
THIS IS A U.S. FOREIGN TRADE ZONE. WHOEVER MALICIOUSLY ENTERS
WITH INTENT TO REMOVE THEREFROM ANY MERCHANDISE ORWITH INTENT TO REMOVE THEREFROM ANY MERCHANDISE, OR
UNLAWFULLY REMOVES MERCHANDISE FROM THE CUSTOMS & BORDER
PROTECTION CUSTODY OR CONTROL SHALL BE GUILTY OF A FEDERAL
CRIME AND FINED UP TO $250,000, IMPRISONED NOT MORE THAN 10
YEARS, OR BOTH. (18 U.S.C. 549, 3571, 659).

55. Inventory Control Requirements
Accounts for all merchandiseAccounts for all merchandise
Produces accurate and timely reports
Identifies overages and shortagesIdentifies overages and shortages
Provides entry information
Provides audit trailProvides audit trail

56. Inventory Methods
Most commonly used method:
Unique Identifier Number (UIN)
First-In, First-Out (FIFO)
Alternative methodsAlternative methods
Foreign First (FOFI)
Lot systemLot system

57. Inventory Methods
Unique Identifier Number (UIN)q ( )
Controls zone merchandise by tracking through record
identity rather than physical identity
Inventory layers are created and decremented using
FIFO, FOFI, or other approved methodology
Merchandise need not be physically segregatedMerchandise need not be physically segregated

58. First-In First-Out (FIFO)
Merchandise withdrawn from oldest inventory layerMerchandise withdrawn from oldest inventory layer
first
Each UIN receipt is a layerEach UIN receipt is a layer
Operator is responsible for ensuring that FIFO
principles are followedprinciples are followed
History file shall be maintained to provide necessary
details for spot checks and auditsp
Pickers are not restricted to particular lot/shipment

59. Inventory Methods
Lot Number
Number must be assigned to shipments upon admission
Number must be marked on packages so that
merchandise can be traced to a particular
admission/shipment
Lots are physically segregated to distinguish oneLots are physically segregated to distinguish one
shipment from another
Pickers must draw from specified lot

60. Foreign First (FOFI)
Zone withdrawals from mixed foreign and domesticZone withdrawals from mixed foreign and domestic
inventory are relieved from the foreign inventory
layers until the foreign layers are exhausted
Once foreign layers are exhausted, zone
withdrawals are relieved from domestic inventory
layerslayers
Typically used by high percentage exporters

61. Record Retention Requirements
Records must be retained for 5 years after removalRecords must be retained for 5 years after removal
of merchandise from the zone
Readily accessibleReadily accessible

62. Zone Reports
CBPF 214 Admission
CBPF 216 Manipulation
CBPF 3461/7501 Entry (Withdrawal)
CBPF 7512 for IT, T&E and Zone to Zone
Census Reporting
Quarterly Harbor Maintenance Fee Reporting
Foreign-Trade Zones Board Annual Report
C t A l R ili ti R tCustoms Annual Reconciliation Report
Other Agency Reporting

63. Public Policy Objectives
Creation and maintenance of employment through theCreation and maintenance of employment through the
encouragement of operations in the United States, which for
Customs reasons, might otherwise have been carried on
abroadabroad
The objective is furthered particularly when zones assist
exporters and reexporters, and usually when goods arrivep p , y g
from abroad in an unfinished condition for processing here
rather than overseas
Source: Preamble to FTZB Regulations, 1991
63

64. Key Industries and Usesy

65. Key Industries
Top industries that utilize zones:p
Consumer goods distribution: footwear, leather,g
cosmetics, housewares, appliances, electronics, office
supplies, watches, bicycles, textiles and apparel
Manufacturing: petroleum, electronics, machinery,
chemicals, pharmaceuticals, appliances, automotive, p , pp ,
Parts distribution: automotive, electronics, machinery, etc.
65

66. Textiles and Apparel in FTZs
Textile and apparel quota phase-out expanded the possibility of
ffeffective distribution through FTZs
Without quota restrictions, textile and apparel products can be
distributed from FTZs under weekly entry procedures and no longer
require “live” Customs entriesrequire live Customs entries
Some safeguard measures still exist but expansion of benefits to this
industry is significant
Recent apparel activity in the FTZ program:pp y p g
adidas Sales, Inc.
Wolverine World Wide, Inc.
Abercrombie & FitchAbercrombie & Fitch
VF Corporation

67. National Export Initiative
March 11, 2010 President Obama signed Executive Order
ti NEIcreating NEI
To enhance and coordinate federal efforts to facilitate job
creation through export promotiong p p
A critical component of stimulating economic growth is
ensuring US businesses can actively participate in
international markets by increasing their exportsinternational markets by increasing their exports
Improved export performance is designed to create “good
high-paying jobs”
D bl t t 5Double exports over next 5 years

68. Trade & Economic Development
C i t t d th i k t b• Companies export to expand their market base
Companies that export tend to be multinationals and payCompanies that export tend to be multinationals and pay
on average 7% higher wages than companies that do
not export
Exports Support American Jobs and accounted for
12.7% of GDP in 2008

69. Trade & Economic Development
Companies that export must often import to be priceCompanies that export must often import to be price
competitive in the global market
I ti l id f i t th t t bImporting can also provide a source of inputs that may not be
available in the U.S. or is only available in limited supply
Companies that use FTZs tend to import and export
E ports from FTZs ha e do bled o er 5 earsExports from FTZs have doubled over 5 years

70. Percentage Growth Trend in Exports
(2004 – 2008)
During the period from 2004 - 2008:
FTZ exports grew from 19.2 billion to 40.5 billion dollars.
General exports grew from 814.9 billion to 1287.4 billion dollars. 70

71. U.S.-Based Companies Get In the
Zone: Savings=CompetitivenessZone: Savings=Competitiveness
CBP Report “Import Trade Trends”CBP Report, Import Trade Trends
Fiscal Year 2009 Year End Report published March
20102010
“The value of shipments leaving FTZs have
increased in value over the last few years,
competing with imports via truck.”

72. Sample FTZs Users
Shell
VOLVO CONSTRUCTION EQUIPMENT.

73. COMMUNITY BENEFITS
Retain existing jobs and attract new jobs
Company investment in the local community
Local improvements to infrastructure
Increased local purchases of goods and
services
73

74. NATIONAL BENEFITS
Improved balance of trade resulting from
increased exportsincreased exports
Stronger economy through lower unemployment
rates, higher use of U.S. products, andrates, higher use of U.S. products, and
reinvestment in the United States
Enhanced development and retention of
technology due to production in the United States
74

75. The FTZ Program Represents A
Public/Private Partnership to
Maintain & Attract U.S.-basedMaintain & Attract U.S. based
International Trade Activity
75

76. Questions & AnswersQuestions & Answers