Excerpts

62nd Annual Report of the
Foreign-Trade Zones Board


for the fiscal year ended
September 30, 1999

During fiscal 1999, the Foreign-Trade Zones (FTZ) Board issued 58 formal orders. The decisions included approvals for 6 new general-purpose zones and 19 new subzones. Authority was also granted for the expansion of 24 existing general-purpose zones and 3 subzones. Other actions involved the granting of authority for revisions to zone plans, as well as approvals for new manufacturing activity.¹ At the same time, 1 application was withdrawn by the applicant based on Customs issues.

There were 142 FTZ projects fully active during the year, with subzones in operation in over 86 of them. The number of facilities using subzone status increased to 210, with 17 new ones initiating the use of FTZ procedures and 11 discontinuing.

The combined value of shipments into general-purpose zones and subzones totaled $173.6 billion compared to $157.1 billion last year and an average of 142.7 billion for the previous five years (Figure 1 and Appendix D). General-purpose sites received $24.5 billion in merchandise. Total shipments received at subzone sites amounted to $149.0 billion. Some 87 percent of zone activity took place at subzone facilities, which is consistent with the pattern of the past 15 years.2

1. Appendix A contains a list with a summary of each Board Order. Zone authority for manufacturing/processing activity was granted on a restricted basis in 17 cases, and activation limits were adopted in another 12. The main products covered by restrictions included crude oil, steel, chemicals and food products.
2. Appendices B and C contain figures on shipments into and out of general-purpose zones and subzones. Appendix D contains comparative statistics for the past 5 years. The figures represent the latest statistical data available from grantees. Some are still under review. Adjustments normally amount to less than one percent of aggregate shipments and would be reflected in next year’s report.

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Some 340,000 persons were employed at facilities operating under FTZ status during the year compared with 350,000 persons last year. Zones were used by over 2,820 firms during the year, the same level as last year. The main foreign-origin products received at zones are listed in Appendix E.

Industry sectors that continued to account for most zone manufacturing activity were oil refining/petrochemicals, autos, pharmaceuticals and electronic/information technology products. An estimated 67 percent of the shipments received at zones for use in manufacturing activity involved domestic status merchandise. The level of domestic status inputs used by such FTZ operations indicates that FTZ activity tends to involve domestic operations that combine foreign inputs with significant domestic inputs. This reflects the fact that FTZ procedures serve as a means of rationalizing Customs treatment to assist domestic plants in their efforts to be internationally competitive.

The Board received and filed 58 formal applications during the fiscal year. These proposals requested authority for 5 new general-purpose zones and 27 subzones, as well as authorization for expansion and new manufacturing at existing zone projects (Appendix F). In addition, over 60 cases were processed under the Board’s less formal administrative procedures (Appendix G). The latter cases involved routine, non-controversial changes to zone projects such as boundary modifications and scope decisions. Some proposals were processed under the Board’s "fast track" procedure, which is used when there are recent precedents for the contemplated activity or when only exports are involved.

Last year, exports (shipments to foreign countries) from facilities operating under FTZ procedures amounted to $16.8 billion (Figure 2). This figure continues a level volume of exports over the past several years. These figures do not include indirect exports involving FTZ merchandise which undergoes further processing in the U.S. at non-FTZ sites prior to export.

	1995	1996	1997	1998	1999
Merchandise Received
GP Zones	13.67	15.11	16.92	20.62	24.59
Subzones	129.85	153.51	160.92	136.47	148.99
Total	143.51	168.62	177.85	157.09	173.58
% Subzones	90%	91%	90%	87%	86%

Domestic Status Inputs*
GP Zones	4.14	5.28	6.32	8.54	11.11
Subzones	110.23	120.40	114.83	96.30	104.47
Total	114.37	125.68	121.16	104.84	115.58

Domestic Status Inputs Ratio

GP Zones .........	30%	35%	37%	41%	45%
Subzones	85%	78%	71%	71%	70%
Average	80%	75%	68%	67%	67%

Foreign Status Inputs
GP Zones	9.53	9.82	10.60	12.08	13.48
Subzones	19.62	33.11	46.09	40.17	44.53
Total	29.14	42.94	56.69	52.25	58.00

Exports**
GP Zones ...............	3.77	4.04	4.23	6.64	6.52
Subzones	13.17	13.05	12.70	10.33	10.32
Total	16.94	17.09	16.93	16.97	16.84

Exports/Foreign Status Inputs Ratio (%)

GP Zones ...........	40%	41%	40%	55%	48%
Subzones	67%	39%	28%	26%	23%
Average	58%	40%	30%	32%	29%

    
        Approved FTZ Projects	                203           211          219           226         232

  
        Active FTZ Projects***                  134          134          141            145         142 
        GP Zones                                        107          110          118           123         121
        Subzones                                         159          179          201           204         210





*  Domestic status merchandise is mainly merchandise of domestic origin but includes some 
foreign-origin goods on which Customs entry and duty payments have been made prior to their 
entering FTZs.

** Export figures are based on material inputs and do not include value added.

** Active projects have at least one site (including subzones) in operation.