FTZ Report Shows Program Under Utilized in New England

Last week the Foreign-Trade Zone Board released the 76th ANNUAL REPORT of the Foreign-Trade Zones Board to the Congress OF THE UNITED STATES.

Foreign-trade zones are secure areas under supervision of U.S. Customs and Border Protection (CBP) that are considered outside the customs territory of the United States for the purposes of duty payment. Located in or near customs ports of entry, they are the U.S. version of what are known internationally as free trade zones. Authority for establishing these facilities is granted by the Foreign-Trade Zones Board under the Foreign-Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u), and the Board’s regulations (15 C.F.R. Part 400). The Executive Secretariat of the Board is located within Enforcement and Compliance of the U.S. Department of Commerce in Washington, D.C.

During Fiscal Year 2015, the FTZ Board received and docketed 85 requests, and issued 87 decisions. The FTZ Board’s decisions included the establishment of four new foreign-trade zones, the reorganization or expansion of 22 zones under the alternative site framework (ASF), as well as decisions on 54 applications and notifications for new or expanded production authority. Under delegated authority, the FTZ Board Staff processed an additional 181 requests that included minor boundary modifications and scope determinations.

There were 186 FTZs active during the year, with a total of 324 active production operations. Over 420,000 persons were employed at some 2,900 firms that used FTZs during the year. The value of shipments into zones totaled nearly $660 billion, compared with $798 billion the previous year. About 63 percent 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.

Warehouse/distribution operations received nearly $228 billion in merchandise while production operations received over $431 billion (65 percent of zone activity). The largest industries accounting for zone production activity include the oil refining, automotive, electronics, pharmaceutical, and machinery/equipment sectors.

Exports (shipments to foreign countries) from facilities operating under FTZ procedures amounted to over $84 billion.

Main Foreign-Status Products Received in U.S. FTZs

WAREHOUSE/DISTRIBUTION OPERATORS	($ million)	PRODUCTION OPERATORS	($ million)
Vehicles	33,269	Oil/Petroleum	64,822
Consumer Products	12,781	Consumer Electronics	15,890
Consumer Electronics	11,153	Vehicle Parts	13,605
Electrical Machinery	10,954	Pharmaceuticals	6,416
Oil/Petroleum	9,665	Machinery/Equipment	6,104
Textiles/Footwear	8,907	Petrochemicals	2,606
Machinery/Equipment	7,731	Chemicals	1,498
Other Electronics	5,915	Other Electronics	1,316
Other Metals/Minerals	4,850	Plastic/Rubber	724
Pharmaceuticals	3,615	Aircraft/Spacecraft	722
Vehicle Parts	2,457	Other Metals/Minerals	513
Optical, Photographic and Medical Instruments	777	Consumer Products	448
Beverages/Spirits	733	Electrical Machinery	422
Plastic/Rubber	638	Optical, Photographic and Medical Instruments	314
Iron/Steel	479	Textiles/Footwear	209
Food Products	311	Advanced Fiber Materials	75
Tobacco Products	278	Fragrances/Cosmetics	67
Wood/Paper	175	Dyes/Pigments/Paints	67
Rail Cars, Parts & Equipment	153	Food Products	54
Stone/Plaster/Cement/Ceramics	126	Beverages/Spirits	54
Petrochemicals	118	Ships/Boats	45
Chemicals	103	Stone/Plaster/Cement/Ceramics	41
Fragrances/Cosmetics	95	Vehicles	39
Aircraft/Spacecraft	87	Iron/Steel	27
Advanced Fiber Materials	36	Arms/Ammunition	18
Arms/Ammunition	8	Wood/Paper	9
Dyes/Pigments/Paints	3	Rail Cars, Parts & Equipment	7
Ships/Boats	2

FTZ Procedures Under Utilized in New England

Connecticut

FTZ 71, WINDSOR LOCKS, no activity.

FTZ 76, BRIDGEPORT, no activity.

FTZ 162, NEW HAVEN, no activity.

Maine

FTZ 58, BANGOR, no activity.

FTZ 179, MADAWASKA:

• Production: Evergreen Trading Co. LLC (Fragrances/Cosmetics), $25-50 million.

FTZ 186, WATERVILLE, no activity.

• Flemish Master Weavers (Textiles/Footwear) was approved in 2016, but effectively limited to warehousing/distribution and production for export.

FTZ 263, AUBURN, no activity.

FTZ 282, BRUNSWICK, no activity.

Massachusetts

FTZ 27, BOSTON:

• Warehousing/Distribution: 14 companies, $500-750 million.
• Production: AstraZeneca (Pharmaceuticals), $1-5 million.
• Production: Claremont Flock was approved in late 2015 and actived in 2016.

FTZ 28, NEW BEDFORD:

• Warehousing/Distribution: 1 company, $100-250 million.
• Production: Acushnet Company (Textiles/Footwear), $70-100 million

FTZ 201, HOLYOKE, no activity.

New Hampshire

FTZ 81, PORTSMOUTH:

• Production: Millipore Corporation (Advanced Fiber Materials), $100-250 million.

Rhode Island

FTZ 105, PROVIDENCE & NORTH KINGSTOWN:

• Warehousing/Distribution: 1 company, $1-5 million.

Vermont

FTZ 55, BURLINGTON:

• Production: Wyeth Nutritionals, Inc (Food Product), $0-0.5 million.

FTZ 268, BRATTLEBORO, no activity.

FTZ 286, CALEDONIA, ESSEX AND ORLEANS COUNTIES, no activity.

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David Trumbull, Agathon Associates, has over twenty years of experience assisting U.S. manufacturing companies to save money through informed use of the U.S. Customs regulations. He has worked with companies to file Foreign Trade Zone applications. David has also testified as an expert witness at the Foreign Trade Zone Board in Washington, DC. He is a Licensed Customs Broker (Lic. No. 30179) and was, from 2007 to 2013, an official advisor on manufacturing trade policy to the administrations of presidents George W. Bush and Barack Obama.

Glenn Page, New England Global Advisors, spent over 30 years with U.S. Customs and Border Protection, (CBP). While assigned to the Portsmouth, NH office of CBP he managed oversight for U.S. Customs of Foreign Trade Zone 81, which included Millipore Corporation and Westinghouse Electric.

Glenn and David recently worked together with Claremont Flock in obtaining and utilizing Foreign Trade Zone procedures.

Glenn can be reached at 603-957-8247 or glenn@neglobaladvisors.com

David can be reached at 617-237-6008 or david@agathonassociates.com