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Report Finds 24% Increase in Shipments Into Foreign-Trade Zones

Wednesday, January 18, 2012
Sandler, Travis & Rosenberg Trade Report

The total value of shipments into U.S. foreign-trade zones increased 24% in fiscal year 2010, the Foreign-Trade Zones Board’s latest annual report reveals. There were $81 billion worth of shipments into general-purpose zones, up from $75.9 billion in FY 2009, and $453.3 billion in shipments into subzones, compared to $354.7 billion the year before. The report notes that the 85% of zone activity taking place at subzone facilities is consistent with the pattern of the past 15 years.

FTZs are secure areas under U.S. Customs and Border Protection supervision that are considered outside the customs territory of the United States for the purposes of duty payment. A typical general-purpose zone provides leasable storage/distribution space to users in general warehouse-type buildings with access to all modes of transportation. Most zone projects include an industrial park site with lots on which zone users can construct their own facilities. Subzones are usually private plant sites authorized by the FTZ Board through zone grantees for operations that cannot be accommodated within an existing general-purpose zone.

Foreign and domestic merchandise may be moved into zones for operations involving storage, exhibition, assembly, manufacturing and processing. Under zone procedures, the usual formal customs entry procedure and payment of duties are not required on foreign merchandise unless and until it enters the U.S. customs territory for domestic consumption, in which case the importer normally has a choice of paying duties on the original foreign materials or the finished product. Domestic goods moved into a zone for export are considered exported upon entering the zone for purposes of excise tax rebates and drawback. All zone activity is subject to public interest review, and all manufacturing and processing activity requires a case-by-case review.

Highlights of the FY 2010 statistics in this report include the following.

• The FTZ Board issued 61 formal orders that created one new general-purpose zone and 16 new subzones, expanded 19 existing zones and reorganized 14 others under the alternative site framework, and authorized revisions to zone plans, three expansions of the scope of manufacturing activity and five approvals for new manufacturing activity in zones.

• The Board received and filed 77 formal applications that requested authority for one new general-purpose zone and 24 subzones as well as authorization for expansion, reorganization under the ASF, new manufacturing, and other changes at existing zone projects.

• There were 168 FTZ projects fully active during the year, with subzones in operation in more than 112 of them. The number of facilities using subzone status during the year was 263.

• Exports from facilities operating under FTZ procedures amounted to over $34.8 billion. These figures do not include certain indirect exports involving FTZ merchandise that undergoes further processing in the U.S. at non-FTZ sites prior to export.

• Approximately 320,000 persons were employed at some 2,400 firms that operated under FTZ procedures.

• The largest industries accounting for zone manufacturing activity include the oil refining, automotive, pharmaceutical and machinery/equipment sectors.

• About 58% of the shipments received at zones involved domestic status merchandise. The level of domestic status inputs used by FTZ operations indicates that FTZ activity tends to involve domestic operations that combine foreign inputs with significant domestic inputs.

• The main foreign-status products received in FTZs were vehicles, consumer electronics, petroleum products, other metals/minerals, vehicle parts, ships/boats, other electronics products/parts, textiles/footwear/leather, machinery/equipment, and other consumer products.

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