U.S. Foreign-Trade Zones: Current Issues

Congressional research reportJul 28, 1999

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U.S. Foreign-Trade Zones: Current Issues

July 28, 1999

Mary Jane Bolle

Specialist in International Trade

Foreign Affairs, Defense, and Trade Division

Congressional Research Service ˜ The Library of Congress

ABSTRACT

This report provides an overview of the U.S. foreign-trade zone system which has evolved

under the U.S. Foreign-Trade Zones Act of 1934 [P.L. 73-397, 19 U.S.C. 81(a)-81(u)]. The

report covers what zones are and how they function, the history of the U.S. zone system, how

the zone system has evolved from its original intent, and policy issues and legislative issues

relating to zones. Twelve tables and figures provide a list of zones and subzones by state, and

information on zone or subzone application, cost savings available to zone users, winners and

losers from zone use, and major zone legislation in the 105th and 106th Congresses. While this

report mentions specific bills, it is not intended as a bill-tracking device. It will be updated

periodically, as needed.

U.S. Foreign-Trade Zones: Current Issues

Summary

Foreign-trade zones are the U.S. version of free trade zones scattered around

the world. Free trade zones are geographic areas which primarily facilitate economic

development, and co-production — the joint production of a single good through the

efforts of workers in two or more countries. All zones are geographic areas which

are physically located inside the boundaries of the country, but treated as if they were

located outside the country for customs purposes. Thus, for goods or materials which

are imported, processed, and later re-exported, no tariffs are payable and customs

procedures are streamlined.

The 235 U.S. zones are among nearly 850 zones world-wide, but differ from

them in two major ways. First, two-thirds of the world’s zones are in developing

countries, producing primarily for export, while U.S. zones produce primarily for

import. Second, whereas many foreign zones are exempt from customs oversight,

taxes, and regulations, U.S. zones are subject to customs control as well as most other

federal, state and local laws and taxes.

Most goods enter the United States through customs at the port of entry, and

then travel to their ultimate destination. Imports which are not yet complete, needed,

or allowed to enter the United States (for quota reasons, for example) after being

unloaded at ports of entry, may be taken to a nearby foreign-trade general purpose

zone (for warehousing or further processing) or to a special purpose subzone (a

manufacturing site which is separate from but linked to a zone.)

The system of U.S. foreign-trade zones has evolved greatly over its 65-year

history since it was set up by the U.S. Foreign-Trade Zones (FTZ) Act in 1934 [P.L.

73-397, 19 U.S.C. 81(a)-81(u)]. Envisioned by some as an engine of export growth,

it has become largely a system for avoiding inverted tariff structures on imports

(higher duties on components than on finished products.)

Policy questions relating to zones today are similar to those of a decade ago;

however, the answers are different, largely because of the evolution of the U.S. and

world economies. Issues today are: Is the Act fulfilling its original intent? (No. The

intent has evolved.) Have U.S. foreign-trade zones helped or hurt U.S. workers?

(The question has been eclipsed by the perceived effects of NAFTA and other trade

influences). Do U.S. foreign-trade zones set U.S. trade policy by circumventing

Congress and U.S. trade negotiators?” (Perhaps, but the issue has dimmed as tariffs

and trade barriers decline, and since new regulations went into effect in 1991.)

Legislative issues pertaining to zones have moved from the macro to the micro

level. P.L. 106-36 (S. Report 106-2), approved June 25, 1999, provides that

commercial importation data for foreign-trade zones shall be included under the

National Customs Automation Program under construction. In addition, H.R. 975

(H.Report 106-52), which passed the House on March 17, 1999, provides for a

reduction in the volume of steel imports, and requires a steel notification certificate

for any steel entering through a foreign-trade zone. Other bills, instead of being

focused on how zones affect the U.S. economy, are now focused more on whether

zone policy should be used to help specific industries and specific localities.

Contents

U.S. Zones in a World Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Characteristics of U.S. Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

What Is An Inverted Tariff Structure? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

How To Achieve Zone Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

How Did the U.S. FTZ Program Begin? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Changes to the Foreign-Trade Zones Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1980s: The Zone System Began Expanding Rapidly . . . . . . . . . . . . . . . . . . . . . . 7

Congressional Oversight of Zone Growth . . . . . . . . . . . . . . . . . . . . . . . . . 8

The Zone System Today . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Zones Today are Functionally Import Rather Than Export Zones . . . . . . . 12

Zones Today are Primarily “Domestic-Trade” Rather than

“Foreign-Trade” Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Industry Concentrations in Zones Have Changed . . . . . . . . . . . . . . . . . . . 13

The Future of Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Policy Issues Relating to Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Is the Congressional Intent of the Foreign-Trade Zones Program

Being Met? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Have Foreign-Trade Zones Helped or Hurt U.S. Businesses and

Workers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Does the Zone System Set U.S. Trade Policy by Circumventing

Congress and U.S. Trade Negotiators? . . . . . . . . . . . . . . . . . . . . . . . 18

Legislation Relating to Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Technical Corrections Relating to Zones . . . . . . . . . . . . . . . . . . . . . . . . . 19

Legislation to Achieve Trade Objectives for Specific Industries . . . . . . . . 19

Legislation to Assist Zone Expansion or Promote Economic

Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

List of Figures

Figure 1. Growth in Number of and Employment in Zones, 1978-1997 . . . . . . 8

Figure 2. Concentrations of U.S. Foreign-Trade Zones and Subzones

Among States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Figure 3. Extent to Which Imports Entering Zones are Subsequently

Exported 1978-1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Figure 4. Extent to Which Zone Exports are Consumed Domestically,

or Exported 1978-1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Figure 5. Source of Zone Inputs (Domestic or Foreign)

1978-1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Figure 6. Industry Concentrations of Imports into Zones,

1984 and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Tables

Table 1. Possible Cost Savings Available to U.S. Foreign-Trade Zone Users . . 4

Table 2. Potential Winners and Losers from Zone Use . . . . . . . . . . . . . . . . . . 17

Table 3. Major Zone Legislation in the 105th and 106th Congresses . . . . . . . . . 21

Appendix Table 4. Information Pertaining to Zone or Subzone Application . 22

Appendix Table 5. Data Supporting Figures 3,4, and 5 . . . . . . . . . . . . . . . . . 23

Appendix Table 6. List of Zones and Subzones by State . . . . . . . . . . . . . . . . 24

U.S. Foreign-Trade Zones: Current Issues

Foreign-trade zones are the U.S. version of free trade zones scattered around

the world. Free trade zones are geographic areas which primarily facilitate economic

development, and co-production — the joint production of a single good through the

efforts of workers in two or more countries. 1 In the United States, this means that

zones are places where some foreign components are typically mixed with U.S.

components in the manufacturing process.

Current policy issues reflect the impact of U.S. zones relative to other influences

on the U.S. economy. Many current legislative proposals tend to focus on finetuning the workings of the zone system or reflect the difference that zone status can

make in promoting economic development for a community and improving

competitiveness of a company in a specific industry.

First, however, this report examines what the U.S. zone system is, how it relates

to zones abroad, and how the U.S. foreign-trade zone program has changed from its

original intent. Tables detail trade zone legislation in the 105th and 106th Congresses,

provide information on application methods and requirements for zone status, and list

zones and subzones, by state.2

U.S. Zones in a World Context

Zones all over the world have an important characteristic in common: They are

geographic areas which are physically inside the boundaries of a country, but which

are treated as if they were located outside the country for customs purposes — that

is, zones are declared to be outside the customs territory of a country.

This separation from the country for customs purposes links world zones

together into a type of international “no-man’s-land,” which has two important traits.

First, no tariffs (taxes on imported goods), and in many cases, (including the United

States) no other taxes (sales, excise, or other) are payable on goods so long as they

remain in the zone system. Only when they leave the system and enter a country are

The difference between free trade zones and free trade areas is this: Free trade areas

involve agreement to reduce or eliminate certain trade barriers to all members of the group,

while each country is free to negotiate its own barriers with countries outside the group. Free

trade zones, on the other hand, do not affect a country’s trade barriers. Rather, they set up

secure locations (often fenced) which are inside the boundaries of the country but which are

considered to be outside the country for tariff purposes. Hence, the trade barriers do not apply

as long as the good is within the zone. When the good exits the zone, only if it then enters the

country in which the zone is located, do normal trade barriers apply.

While this report mentions a number of specific bills, it is not intended as a bill- tracking

device. It will be updated periodically as needed.

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tariffs payable on the imported value of the product and are sales taxes payable on

imported goods sold. If the goods are re-exported, no duties are payable.

Second, customs procedures are streamlined for all goods entering and leaving

the zone system. As a result, if buttons from Indonesia and fabric from India are sent

to a trade zone in the Philippines for assembly into a shirt, which is then exported to

the United States, no tariffs are payable in the Philippines, and all customs procedures

are streamlined until the completed shirt enters the United States for consumption.

At that time, tariffs are payable on the import value, and the shirt goes through normal

customs procedures.

The 235 U.S. zones are part of the world system of 850 zones.3 Two thirds of

these zones are in developing countries, which produce primarily for export. In these

countries, zones are often used as an economic development tool. Production takes

place in export processing zones which are typically islands of modernization, located

at ports, in countries which lack extensive infrastructure. Supplies which are

unloaded from container ships travel a short distance to be manufactured into

components or completed goods, which are then reloaded on ships for export.

Multinational corporations in developed countries may view these zones as low-cost

offshore production sites.

Characteristics of U.S. Zones

U.S. zones, in contrast with the export emphasis of zones in developing

countries, are primarily for warehousing or processing of imports prior to going

through customs at the port of entry.

U.S. zones differ from other zones around the world in other ways as well. U.S.

imports which are not complete, not yet needed, or not allowed to enter the United

States (for quota reasons, for example) after being unloaded at ports of entry, prior

to facing full customs procedures, may be taken to a nearby foreign-trade general

purpose zone for warehousing or further processing, or to a subzone — a unique

U.S. invention. The 235 zones include seaports, airports, and fenced industrial parks

with warehousing and processing facilities, which are run by public corporations as

if they were utilities — with published rates. Subzones, of which there are about 427,

are manufacturing operations which are administratively linked to a zone, but

physically separated from it. They are typically pre-existing operations which have

Zones around the world are called by at least 19 different names, depending on the country

in which they are located or the author or organization referring to them. Among these are the

following: Generically they are often called free trade zones. Those in the United States are

called foreign- trade zones. Those in developing countries producing specifically for export

are typically called export processing zones. They are also called maquiladoras in Mexico,

special economic zones in China, industrial free zones or export free zones in Ireland, free

zones in the United Arab Emirates, and duty free export processing zones in the Republic of

Korea. In addition they are called tax free zones or tax free trade zones by Walter H. and

Dorothy B. Diamond, authors of Tax-Free Trade Zones of the World. They have been called

free export processing zones by the Organization for Economic Cooperation and

Development. Source: International Labor Organisation. Economic and Social Effects of

Multinational Enterprises in Export Processing Zones. Geneva, 1988, p.5.

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applied for and been granted subzone status. However, businesses may also apply for

zone status before beginning construction on a new manufacturing operation.4

U.S. zones and subzones, like other zones around the world, are viewed, in part,

as an economic development tool. They allow businesses to save money on imports

through duty (tariff) deferral, duty exemption, elimination of the need for duty

drawback, and tax avoidance. They also allow U.S. businesses to save small amounts

through quota storage, zone-to-zone transfer, and customs and inventory efficiencies.

(See table 1 for details.) Most importantly, however, subzones in particular, allow

businesses to save money, in part because they are places where inverted tariff

structures can be changed to uniform rate structures (explained below). The ForeignTrade Zones Board estimates that slightly less than 50% of all foreign merchandise

entering through trade zones is being used in the inverted tariff situation.

What is an Inverted Tariff Structure?

An inverted tariff structure means that the tariff rate on a product used as a

component of a finished product is higher than the tariff rate on the finished good

containing the component. When imported components are combined with domestic

supplies in subzones, importers can effectively reduce the tariff rate on components

to the same level as those levied on a completed good.5

Thus, if a zone manufacturer applies for and is granted subzone status, he can

use his zone status to eliminate the adverse cost effect of the inverted tariff in the

industry in which he produces. This is because customs provisions allow zone users

to choose (when the component enters the zone) between paying, (when the

component leaves the zone system as part of a completed good) the tariff on the

component itself or the tariff on the component as if it were incorporated into the

completed good.6 Industries where there may be inverted tariffs include oil refining,

auto manufacturing, electronics, chemicals, food products, pharmaceuticals, apparel

Another difference is that many foreign zones allow companies to operate under special or

relaxed rules with respect to taxes and customs oversight. Certain foreign zones require

neither customs documentation or supervision of merchandise while materials are admitted,

stored, or processed in the zone. Some allow significant tax exemptions, including income and

property taxes. U.S. foreign-trade zones, on the other hand, are fully subject to all federal,

state and local laws and taxes, except for federal excise taxes and local inventory taxes. They

are also subject to full customs supervision throughout while materials are admitted,

processed, and shipped, and to customs penalties for failure to adhere to requirements, and to

customs penalties for failure to adhere to requirements. In addition, prohibited goods

(including illegal products) are not allowed into U.S. zones.

World Wide Shipping. Economic Impact Analysis, by Dennis Puccinelli, August, 1985, p.

71.

The procedure the zone manufacturer follows to change the tariff rate is as follows: When

the duty rate on the imported component is lower than that on the end product into which the

component is to be incorporated, the zone manufacturer must file a formal application for the

component to receive “privileged foreign status.” It such status is approved, the component,

when it leaves the zone, is dutied at its own rate -- typically that applicable to the product of

which it will make an integral part.

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and textiles, steel, and machinery. Not all zone applicants in these industries have

been granted zone status. The granting of zone status by the Foreign- Trade Zones

Board means that zone status has been deemed in the “public interest.” The

determination is based, in part, on the cause of the inverted tariff structure.

Inverted tariffs have arisen in the very extensive Harmonized Tariff Schedule in

two ways: inadvertently, and by design. When an industry has an inverted tariff by

design, it is generally to protect the component industry from import competition. In

such cases, application for zone status may be denied or limitation may be placed on

zone status. Inverted tariff structures are the major reason for zone application in the

United States, and the greatest source of benefit to users (with duty deferral second).

In recent years, tariff levels generally have been negotiated to very low levels, and

typically the differences between tariffs on components and tariffs on finished

products have become smaller and smaller.

Table 1. Possible Cost Savings Available to

U.S. Foreign-Trade Zone Users

Benefit

How Costs Can Be Saved

Duty Reduction

(on Inverted Tariff

Situations)

Zone users may choose the lower duty rate when a product is entered

into customs territory (for importation) in inverted tariff situations

(when the rate of the foreign inputs is higher than the rate applied to

the finished product produced in the zone. Zone status, however, is

granted by the FTZ Board when it determines that such status will

result in a public benefit (typically a net positive effect for U.S.

businesses and workers).

Duty Deferral

Cash flow savings can result because customs duties are paid only

when and if the goods are transferred from the zone to a U.S. customs

territory for import.

Duty Exemption

No duty is payable on goods which are exported from a zone, or

which are consumed, scrapped, or destroyed in a zone.

Drawback

Elimination

Zones eliminate the need for duty drawback. That is, the refunding of

duties previously paid on imported and then re-exported merchandise.

Tax Savings

Goods stored in zones and goods exported are not subject to state and

local ad valorem taxes, such as personal property and sales taxes.

Quota Storage

Cash flow savings and savings from buying in bulk can be made

because U.S. quota restrictions do not apply to merchandise admitted

to a zone until is entered into customs territory. When the quota

opens, the goods may be immediately entered into U.S. customs

territory for importation.

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Benefit

How Costs Can Be Saved

Zone to Zone

Transfer

Zones can transfer merchandise “in-bond” from one zone to another.

Customs duties may be deferred until the product’s eventual entry into

U.S. customs territory.

Customs and

Inventory

Efficiencies

Cost savings (especially cash-flow savings) can occur from zone

efficiencies affecting inventory control. These efficiencies include

customs procedures such as direct delivery and weekly entries.

Source of table data: U.S. Foreign-Trade Zones Board.

How to Achieve Zone Status

The primary constituent interest relating to zones is how to achieve zone status,

as quickly as possible. Appendix table 4, p 20, includes information on how to apply

for zone or subzone status and requirements for applications, together with telephone

and website contacts.7 While new zones are approved when the Board finds that

existing or authorized zones do not adequately serve the “convenience of

commerce,”8 subzones can be approved only when a “public benefit” —(i.e.,

increased employment without detrimental effects on other competitors) can be

clearly demonstrated.9

Zone or subzone status is achieved by applying to the U.S. Foreign-Trade Zones

Board in the Import Administration of the U.S. Department of Commerce in

Washington, D.C. (202) 482-2862. The Board is a committee of two, made up of

the Secretaries of Commerce and the Treasury, whose agencies each play a role in the

approval and oversight of foreign-trade zones.10

The U.S. Foreign-Trade Zones Board is supported by a professional staff of 11,

under the leadership of an executive director. It is responsible for reviewing

applications for zone approval and making recommendations to the Board.

Regulations covering zone application may be found at 15 CFR Part 400. The general

purpose zone applications process takes about 18 months, and the subzone

application process takes about 12 months. Zones are operated by public or public-

Most successful zone applicants use general purpose zones for storage, manipulation,

and manufacturing, and special purpose subzones for specific larger scale manufacturing.

However, some creative uses of zones are also emerging. The International Wildlife

Recovery Center has set up an operation in the Medford-Southern Oregon FTZ. The Center

specializes in the decontamination and rehabilitation of wildlife affected by oil and other

hazardous material spills around the world. By locating the center in a foreign-trade zone, in

a pollution event involving 250 birds, for example, the IWRC can save $500,000 in customs

duties associated with food imports for the animals.

Foreign-Trade Zones Act, P.L. 73-397, sec. 2(b).

Da Ponte, John J., Jr. United States Foreign-Trade Zones: Adapting to Time and Space.

The Maritime Lawyer, Fall, 1980, p. 211.

Authority is typically delegated to the Assistant Secretary of Commerce for Import

Administration, and the Deputy Assistant Secretary of the Treasury for Enforcement.

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type corporations, which may contract out operations. Zones are operated like

utilities, with published rates.

Day-to-day supervision of goods into and out of zones is the responsibility of the

U.S. Customs Service in the Treasury Department. Customs Service regulations

relating to zones are included at 19 CFR Part 146. Overhead costs for zones include

reimbursement to Customs for services rendered.

How Did the U.S. Foreign-Trade Zones Program Begin?

The Foreign-Trade Zones Board was created by the U.S. Foreign-Trade Zones

Act in 1934 [P.L. 73-397, 19 U.S.C. 81(a)-81(u)]11. It was given the power to

approve applications by public corporations for zone status. The act itself was fairly

short — less than six pages in length. It entitled each U.S. port of entry to at least

one zone, and prescribed physical conditions and standards for each zone,

requirements for operation, recordkeeping, and goods being moved into and out of

zones, activities permissible in zones, and the applicability of all U.S. laws to zones

When the U.S. foreign-trade zones program began in 1934, it was a program

designed to help accelerate U.S. trade in the wake of the restrictive impact of the

Smoot-Hawley Tariff bill of 1930, which raised U.S. tariffs on imported goods as high

as 53%.12 Some have argued that zones were designed originally to be way stations

where goods coming in from one foreign port could be transshipped (reloaded for

export to another foreign port) or re-exported (processed for subsequent export).13

The foreign-trade zones legislation was controversial, however, because there

was some fear that it would promote imports of cheaper components used in the

manufacturing process, and thereby put domestic components manufacturers at risk.

To make sure this would not happen, the Act prohibited manufacturing in zones.

Regulations issued by the U.S. Foreign-Trade Zones Board for establishing and maintaining

a foreign-trade zone can be found at 15 CFR 400.

Yarbrough, Beth V., and Robert M. The World Economy: Trade and Finance. Harcourt

Brace, 1991, p. 368.

U.S. General Accounting Office. Foreign-Trade Zone Growth Primarily Benefits Users

who Import For Domestic Commerce. GAO/GGD 84-52, March 2, 1984, p. 3, 5.

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Changes to the FTZ Act14

After the Foreign-Trade Zone Act was passed, it proved restrictive enough to

be very little used. It did not encourage U.S. exports, as some had expected. Even

sixteen years after the Act was passed, in 1950, there were still fewer than ten

zones.15 Intense lobbying by manufacturing trade groups to make the zone concept

more useful led Congress to permit manufacturing in zones. Many reasoned that

zones were too small for much manufacturing to occur there.

The Foreign-Trade Zones Board took the amendment one step further. This one

step led the zone system on a course which eventually made it successful in a way

that was very different from what some originally intended the program to be. Two

years after Congress passed the amendment permitting manufacturing in zones, the

Foreign-Trade Zones Board issued regulations creating the concept of subzones.

Those regulations declared that when a zone was of insufficient size to accommodate

manufacturing, an employer could apply for subzone status, and thereby have access

to full zone benefits without having to relocate.

Two administrative decisions by the U.S. Treasury Department served to make

zone status even more attractive for manufacturing operations. These decisions —

one in 1980 (U.S. Treasury decision 80-87) and another in 1982, modifying the first

decision, clarified that manufacturers need not pay duty either on value added or on

brokerage or transportation fees connected with imported goods.16

1980s: The Zone System Began Expanding Rapidly

Once the second Treasury decision was handed down in 1982, the zone

program began growing very rapidly and changing in nature, for a number of reasons.

Among these were that the world-wide technological support system

(communications, transportation, merchandise tracking, etc.) was at last ready to

handle the huge demands of expanded international trade. Second, increased

international price competition led U.S. businesses to seek new ways of shaving costs.

Historical material in this and the following two sections is taken from: U.S. General

Accounting Office. Foreign-Trade Zone Growth Primarily Benefits Users Who Import For

Domestic Commerce. GAO/GGD 84-52. March 2, 1984, and Foreign-Trade Zones

Program Needs Clarified Criteria. GAO/NSIAD 89-85; U.S. International Trade

Commission. The Implications of Foreign-Trade Zones for U.S. Industries and for

Competitive Conditions Between U.S. and Foreign Firms. USITC Publication 1496,

February, 1984, and The Implications of Foreign-Trade Zones for U.S. Industries and for

Competitive Conditions Between U.S. and Foreign Firms. USITC Publication 2059,

February, 1988.

In fact, even as recently as 1970, there were still fewer than ten cities with zones. All of

these were ocean or Great Lakes ports. Source: Da Ponte, John J., Jr. United States ForeignTrade Zones: Adapting to Time and Space. The Maritime Lawyer, Fall, 1980, p. 202.

GAO Report, 1984, op. cit., p. 12.

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In addition, the value of the

dollar was quite high in the 1980s,

making cheaper imports even more

attractive.17 On top of this, the Tariff

Schedule of the United States (TSUS,

replaced by the Harmonized Tariff

Schedule in 1989) contained a number

of inverted tariffs. Many inverted

tariffs were later reduced or eliminated

by the Uruguay Round of negotiations

under the General Agreement on

Tariffs and Trade (GATT) in 1994.

Figure 1. Growth in Number of and

Employment in Zones, 1978-1997

700

400

600

300

500

Employment in

Zones

400

200

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

300

Soon businesses figured out that,

200

if they could achieve zone status, they

100

Number of Zones

could import components in industries

100

and Subzones

with inverted tariff structures,

assemble them together with domestic

inputs in zones, and import from U.S.

zones products that were less

Source of data: U.S. Foreign Trade Zones Board

expensive to produce by the amount

saved in customs costs on each item

times the number of items. Word of how to take advantage of the inverted tariff

structure and other cost-saving means afforded by zones (reported in table 1) spread

through trade organizations. Zone use and zone employment accelerated

dramatically. (see figure 1.)

Congressional Oversight of Zone Growth

The House Ways and Means Committee, concerned about the potential impact

that zone status was having on U.S. industries (especially domestic components

industries), employment, communities, tariff and tax revenues, competitiveness

abroad, and the U.S. economy in general, asked both the General Accounting Office

(GAO) and the International Trade Commission (ITC) to examine the economic

impact of U.S. foreign-trade zones, in 1983 and again in 1987. Primary findings of

these agencies were that the zone program, while growing rapidly, was having only

a small (but difficult to measure) effect on U.S. revenue collection, employment, and

the economy in general, and a somewhat larger effect on the U.S. components

industry, particularly in the auto sector. Not only did the auto sector have an inverted

tariff, but application for zone status there was reportedly met with relatively little

objection from components manufacturers.18

U.S. Congress. House. Committee on Government Operations. Foreign-Trade Zones

(FTZ) Program Needs Restructuring. House Report 101-363. November 16, 1989, p. 11.

Quantitative findings included the following:

Effect of Zones on Tariff Revenues: International Trade Commission (ITC) reports

(referred to in footnote 13) found that the net effect of zone operations on customs revenue

was small — 0.04% of total customs duties collected in 1982 and 0.3% of the total customs

(continued...)

CRS-9

One of the most important ITC findings, however, was that the U.S. foreigntrade zones program was doing the opposite of what it was originally intended to do:

The International Trade Commission found that “While a stated intention of the 1934

Act was to increase the competitiveness of U.S. products in foreign markets, zone

status (particularly subzone status) is being used to maintain or improve the

competitive posture of firms in domestic markets (emphasis added).”19 The U.S.

Foreign-Trade Zones Board points out, however, that this statement is not entirely

correct. In fact, the Act itself stated as its purpose “to expedite and encourage

foreign commerce,” favoring neither exports nor imports over the other.20

In 1989, subsequent to the GAO and ITC studies, subcommittees of the House

Ways and Means Committee and the House Government Operations Committee held

hearings on foreign-trade zones.21 In addition, the House Government Operations

Committee issued an independent report on the Foreign-Trade Zones Program. Its

findings were compatible with those reported by GAO and ITC, but went a step

further. It found that the Foreign-Trade Zones Act and program were in need of

extensive revision for failing to carry out what it referred to as “the original intent of

the Act.” The committee report, like the GAO and ITC reports, criticized the

program for promoting instead of exports, domestic competitiveness and imports for

domestic consumption.

The House Government Operations Committee report also criticized the

Foreign-Trade Zones Board, among other things, for poorly conceived and

inefficiently administered processes, for overly general regulations, which failed to list

and use a single set of criteria for granting zone or subzone status, for maintaining

regulations no longer consistent with Board practice, for relying on improperly

conducted economic analyses, for failing to set time limits for stages in the application

process, for failing to certify that operations continue to function in the public interest,

(...continued)

duties collected in 1986. (ITC Report 1984, p. xi) and (ITC Report 1988, p. xix-xx).

Per-auto savings by manufacturing in zones: In addition, in 1986, autos accounted

for 87% of all shipments from subzones, seven zones accounting for 76% of total zone

employment. (ITC Report 1988, p. xiv) and (ITC Report 1988, p. 5-2). For auto plants, the

average duty savings per car in 1986-87 was small — about $8.67, down from $9.91 in 1983

and up from $5.54 in 1985 (ITC Report 1988, p. xix).

Employment effect from zones, in the auto industry: Overall, the ITC found a 3.5%

decline in employment in the auto parts sector for new vehicles, and a 1.6% increase in

employment in the auto assembly industry, between 1983 and 1987. (ITC Report 1988, p. 87).

U.S. International Trade Commission. The Implications of Foreign-Trade Zones for U.S.

Industries and for Competitive Conditions Between U.S. and Foreign Firms. USITC

Publication 1496, February, 1984, p. viii.

Notes received from Dennis Puccinelli, Executive Director of the U.S. Foreign-Trade

Zones Board, July 16, 1999.

U.S. House. Committee on Ways and Means. Subcommittee on Trade. October 24, 1989.

Operation of the Foreign-Trade Zones Program of the United States and its Implications

for the U.S. Economy and U.S. International Trade. Serial 101-56. 442 p. and U.S. House.

Committee on Government Operations. Subcommittee on Commerce, Consumer, and

Monetary Affairs. March 7, 1989. Foreign-Trade Zones. 343 p.

CRS-10

and for failing to operate in a manner consistent with trade policy.22 The Committee

made a number of recommendations to address these perceived weaknesses.

Ultimately, in October 1991, in consultation with congressional committees, the

Board issued new regulations aimed at codifying its existing practice and meeting

congressional criticisms.

In addition to congressional requests to the GAO and the ITC, hearings, and the

report mentioned above, continuing periodic congressional interest in foreign-trade

zones has been part of a broader focus on trade issues. Zone issues have been

addressed by minor amendments to the Foreign-Trade Zones Act and been included

in a number of more inclusive hearings and trade laws over the years. Some of the

amendments have increased the benefits of zone imports and exports.

The Zone System Today

Today, as during the 1980s, zones are predominantly instruments for changing

inverted tariff structures into uniform rate structures. This is the case even though

subzone users may save money in a variety of other ways (listed in table 1) and even

though tariffs overall have declined considerably in the past 15 years, from an average

rate of 5.5% in 1984 to an average rate of 2.0% in 1998.23 Today, instead of being

places where relatively large tariff savings — (i.e., $5-10 per car, for example) can be

made on a few major components, zones are now more typically places where small

savings (i.e., $1-3 per car, using the same industry example, according to the ForeignTrade-Zones Board) can be made on a larger volume of components.24 While the

auto industry is still a prime beneficiary of zone status, the petroleum industry is the

primary user now, accounting for 64% of the value of all goods entering zones (see

figure 6), with motor vehicles accounting for another 23%. Some of the auto

production operations have moved offshore, and large numbers of petroleum

operations are still applying for zone status.

The importance of trade zones today is evidenced by the following statistics:

Since 1970, the total number of trade zones and subzones combined has grown from

10 to 662, and employment in them has increased from 7,000 to 367,000, as was

shown in figure 1. Nevertheless, zones (including subzones) represent only a small

part of the U.S. economy. The total zone employment accounts for only 0.2% of

total U.S. employment. In addition, all zone inputs (both domestic and foreign — a

total of $178 billion in 1997) represent only a small part — 2% of U.S. gross

domestic product ($8,111 billion in 1997). While the world-wide zone system plays

a large role in international trade, it should be noted that very few imported zone

inputs in these industries enter the U.S. zone system from other zones around the

Foreign-Trade Zones (FTZ) Program Needs Restructuring, p. 19-24.

Data for 1984 from U.S. Department of Commerce, Bureau of the Census. Highlights of

U.S. Export and Import Trade, FT990/December, 1984, Table 9, p. C-31. Data for 1998

from http://dataweb.usitc.gov.

Savings on a particular item may result from the rationalization of inverted tariffs together

with other savings of the types detailed in figure 1.

CRS-11

world. In addition, only a small part of all U.S. imports (6%) enter the United States

through zones in other countries.25

The map in figure 2 shows the states in which zone and subzone use is

concentrated (darker shading). Zone and subzone use is concentrated primarily in

traditionally heavy industrialized states where there is considerable auto

manufacturing and in coastal states where there is considerable oil importing.

Figure 2. Concentrations of U.S. Foreign-Trade

Zones and Subzones Among States

Source of data: U.S. Foreign-Trade Zones Board.

See appendix table 6 for listing of zones by state.

1-10 zones and subzones

10-20 zones and subzones

20-90 zones and subzones

Zone data are taken from U.S. Department of commerce. Foreign-Trade Zones Board. The

59 th Annual Report of the Foreign-Trade Zones Board. Employment data are taken from

U.S. Department of Labor. Employment and Earnings (any issue), table B-1. U.S. GDP data

are taken from Economic Report of the President, 1999, p. 342.

CRS-12

Zones Today are Functionally Import Rather Than Export Zones

Figure 3. Extent to Which Imports

Entering Zones are Subsequently

Re-Exported, 1978-1997

Exports/Imports

100

U.S. Zones as Export Zones

U.S. Zones as Import Zones

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

Zones today are primarily

import zones, rather than

export zones as some observers

believe Congress originally

anticipated. They are import

zones in terms of both zone

inputs and zone outputs, even

though both the Act itself and

the Foreign-Trade Zones Board

are currently neutral on this

issue. In addition, the fact that

most

U.S.

zones

are

functionally import zones

reflects both the economic

maturity (in comparison to

developing countries) and the

relative strength of the U.S.

economy.

Source of data: U.S. Foreign Trade Zones Board, Annual Reports, various years.

In terms of zone inputs, today’s zones have lately become “import” zones in

that, in recent years, more goods entering the zones have been subsequently imported

into the United States than exported. In figure 3, export years (1981-95) are those

in which the thick black line remains above the 50% line. Import years (1978-91 and

1996-97) are represented where the line dips below the 50% line. (See appendix table

6 for data supporting figures 3, 4, and 5.)

In terms of zone outputs,

today’s zones are import zones

rather than export zones in that

the majority of zone output is

imported into the United States,

and very little is exported.

Figure 2 shows that since 1984,

the proportion of total zone

output that is exported has

averaged about 10-15%.

Exports/total zone inputs

100

Zone output that is consumed

domestically

Zone output that is exported

1997

1996

1995

1994

1993

1992

1991

Source of data: U.S. Foreign Trade Zones Board,

Annual Reports, various years.

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

Figures 3 and 4 both show

that 1982 is the year when zones

reached their pinnacle as export

zones.

Figure 4. Extent to Which Total Zone Output

is Consumed Domestically

or Exported 1978-1997

CRS-13

Zones Today are Primarily “Domestic-Trade” Rather Than

“Foreign-Trade” Zones

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

Zones can also be

Figure 5. Source of Zone Inputs (Domestic

classified today as being

or Foreign) 1978-1997

functionally “domestic-trade”

zones rather than “foreignDomestic Inputs/

trade” zones. This is because

Total Inputs

most of the inputs into the

100

zones are of domestic origin,

Inputs are Primarily

even though the gains to be

Domestic

made from zone status stem

from imports. (See table 1 for a

listing of the type of gains to be

made from zone status.) Since

1983, zone inputs sourced

domestically have accounted for

20 Inputs are

Primarily

more than half, and since 1985

Foreign

they have accounted for about

75-80% of all zone inputs. (See

figure 5). The fact that the

Source of data: U.S. Foreign Trade Zones Board,

Annual Reports, various years.

percentage of domestically

sourced zone inputs has

declined somewhat in the last few years reflects a greater presence in zones of oil

refining, which uses primarily imported crude, compared to auto assembly, which uses

mostly domestic components.

Calling zones “import” zones rather than “export” zones, and “domestic” zones

rather than “foreign” zones is another way of reiterating what the ITC found in the

1980s: Instead of increasing the competitiveness of U.S. products in foreign markets,

zone status is still being used

(with the support of the Act) to

maintain or improve the Figure 6. Industry Concentrations of Imports

in Zones, 1984 and 1997

competitive posture of firms in

domestic markets.

Percent of all zone input

accounted for by named industry

Industry Concentrations

in Zones Have Changed

1984

1997

23% 25%

10%

1% 2% 1% 0.4% 5%

Source of data: 46th and 59th Annual Reports of the

Foreign Trade Zones Board.

Other

Food Products

Chemicals

Electronics

Motor Vehicles

Petroleum Refining

& Storage

Industry concentrations in

zones have changed since the

mid-1980s, as mentioned

previously. Figure 6 shows

that in 1984, motor vehicle

assembly plants accounted for

60% of all imports into zones,

and electronics companies were

64% 60%

CRS-14

the second greatest users of zones. By 1997, many electronics and auto assembly

plants had relocated abroad, and petroleum refining had become the dominant zone

user. Today, the two industries account for 87 % of all zone inputs.

The Future of Zones

Overall, most tariffs have continued to be reduced to very low levels in the

United States, through numerous trade agreements or establishment of free-trade

areas. This would arguably point to an accompanying reduction in the use of trade

zones. Inverted tariffs will lose their significance when all duties are near the same

level. In addition, the nominal cost savings of duty deferral in a country with low

tariff rates, like the United States, would make zone status an unnecessary

administrative burden in addition to its reduced effect as a protectionist device.26

Similarly, the gradual phasing out of quotas will also diminish demand for zone use.

However, at the same time, computers are facilitating zone use by making it

easier for corporations to search through tariffs on all imported parts that potentially

go into making a certain item, in order to identify those that represent an inverted

tariff structure. Computers also make it easier to keep track of quota fulfillment and

to calculate final tariffs owed on a large and diverse array of small imported

components. Thus, smaller savings from zone use, including logistical and

administrative savings, may be relatively more important than they once were.

Applications for zone or subzone status are still being approved. In 1997, the

U.S. Foreign-Trade Zones Board approved 8 new general-purpose zones and 37 new

subzones — consistent with the rate over the past several years — increasing the total

number of zones by 3.5% and subzones by 9.5%

Thus, even though businesses may be reaping smaller savings per imported item

used in zones, they may be able, in some cases to expand the number of items on

which they save money. In addition, international competition has become sufficiently

great in recent years that even very small savings from zone status, through duty

reduction, deferred duty payment, duty exemption, tax savings, quota storage, or

other means outlined in table 1 can make important contributions to U.S.

competitiveness.

Policy Issues Relating to Zones

Many of the zone-related policy issues that were prominent ten years ago are

less important today, because the circumstances that surround them have changed:27

Kanellis, William G. Reining in the Foreign-Trade Zones Board: Making ForeignTrade Zone Decisions Reflect the Legislative Intent of the Foreign-Trade Zones Act of 1934.

Northwestern Journal of International Law and Business, Spring, 1995, p. 635.

The major issues of the late 1980s were documented in the GAO and ITC reports

(continued...)

CRS-15

In the 10 years since the GAO, ITC, and congressional studies were conducted,

foreign-trade zones have become much less an issue of congressional focus than they

were. This has occurred, in part because congressional interest has shifted from the

employment and competitive effects of zone status to increased importation of

manufactured goods and the effect this is having on U.S. jobs and the U.S. economy

in the long run. Economists argue that with increased trade, everybody wins;

however, dislocation of workers in various sectors has become an important

congressional concern.

Is the Congressional Intent of the Foreign-Trade Zones Program

Being Met?

The answer to a question on whether the congressional intent on zones is being

met depends on whether one judges congressional intent at the time of passage of the

U.S. Foreign-Trade Zones Act, or as it has evolved over the past 65 years.

Some of the pre-passage debate suggested hope that the zones would boost

exports rather than imports. In addition, while the preamble of the act emphasized the

promotion of trade without reference to either exports or imports, section 3 of the

Act did strictly prohibit manufacturing in zones (sec. 3). This language is consistent

with arguments that manufacturing was prohibited in order to discourage the

importation of cheaper components which would compete with domestically

produced components.

Amendments to the Act over the years, however, have reflected a gradual shift

in congressional intent toward greater acceptance of zones for handling imports. The

1950 amendment permitted manufacturing in zones, thus reversing the original

exclusion. In addition, certain other amendments, including a 1990s amendment

providing for evaluation of products upon importation from a zone, make specific

reference to imports (sec. 81c, of title 19 of the U.S. Code)28.

Therefore, one could conclude that the congressional intent as it has evolved

over the years is being met. In addition, the shifting of congressional focus on the

zone issue from major oversight and evaluation to minor tinkering reflects an apparent

acceptance of the U.S. zone system as it stands today.

(...continued)

previously mentioned, and also in U.S. Library of Congress. Foreign-Trade Zones and the

U.S. Automobile Industry, by Gwenell L. Bass, and Lenore Sek. CRS Report 88-659E,

October 14, 1988.

Any program that specifically promoted exports to the detriment of imports could violate

WTO rules against export subsidies.

CRS-16

Have Foreign-Trade Zones Helped or Hurt U.S. Workers and

Businesses?

The question about whether zones have helped or hurt U.S. workers is seen

differently in the 1990s than in the 1980s. Some employment effects from trade with

Mexico and Canada since the North American Free Trade Agreement (NAFTA) went

into effect and from trade with developing countries generally and under the General

System of Preferences (GSP),29 have shifted the perspective on the effects of trade

zones on U.S. jobs.

By way of comparison, in the 1980s, there was some alarm that increased use

of U.S. foreign-trade zones was leading to the loss of U.S. jobs. The International

Trade Commission estimated that for the four-year period 1983-1987, trade zones

reduced overall employment in the auto industry by a net 1.9%. This represents a

gain in the auto assembly sector and a loss in the auto parts sector.30 Concern over

the effect of zones on employment, however, has been eclipsed in recent years by

concern over the effect of trade agreements [especially the North American Free

Trade Agreement (NAFTA)] on employment. A difference in the order of magnitude

on a particular industry is shown in the following example: In the 1990s, over a five

and one-half year time period after NAFTA went into effect, increased trade with

Mexico and Canada led to a 5.3% job loss in the apparel sector.31

Thus, small benefits from avoiding the higher tariff rates in industries with

inverted tariffs (differentials which are continually shrinking) may seem less important

today than they did a decade ago. In addition, in the 1980s, trade zones were viewed

as a way of encouraging U.S. manufacturing plants to remain in the United States

rather than relocate abroad. Today, the potential cost savings from using zone status

to avoid the penalties of an inverted tariff (which may be only a percent or two) seem

small compared to the potential cost savings which some businesses can obtain by

relocating a labor-intensive plant to Mexico or some other country with a preferential

system (i.e., GSP, CBERA, or Andean), and thus saving large amounts from wage

differentials.32

The General System of Preferences provides duty-free treatment under specific conditions

for 142 developing countries.

A FTZ Board letter to the file documenting a March 3, 1988 meeting with the ITC

economist who developed the economic model which was the basis for the ITC findings

indicates that the model was meant to provide estimates rather than definitive numbers on jobs

gained or lost as a result of zone procedures.

For 1983-87 data for the motor vehicle transportation sector (SIC 37), see ITC Report,

1988, p. 8-7, and U.S. Department of Labor, Bureau of Labor Statistics. Employment,

Hours, and Earnings United States 1981-93, bulletin 2429. For data on the apparel sector

(SIC 23), see NAFTA: Estimates of Job Effects and Industry Trade Trends After 4 ½ Years,

by Mary Jane Bolle. CRS Report 98-783E, p. 8, and Employment, Hours, and Earnings

United States 1990-95, Bulletin 2465.

The Caribbean Basin Economic Recovery Act (CBERA), applying to 27 Caribbean

nations, and the Andean Initiative (applicable to imports from Bolivia, Ecuador, Colombia,

and Peru) are similar to the GSP in that they offer duty-free treatment under specific

(continued...)

CRS-17

Table 2. Potential Winners and Losers From Zone Use33

Manufacturers

Potential Winners

Potential Losers

Final assemblers could win to the extent

that righting an inverted tariff lets them get

components at a lower cost.

Components manufacturers could lose to

the extent that the product becomes less

competitive with imported components.

Components manufacturers could win to

the extent that they can automate, become

more competitive with imports, and

thereby save on production costs.

Workers in assembly operations could win

to the extent that FTZ status results in

greater profits which may be passed along

to workers.

Workers

Either automation, or plant closings, in

components industries from losing sales to

importers operating in zones, could put

workers out of jobs.

Workers in “losing” industries could win to

the extent that job loss encourages them to

upgrade skills, which could them lead to

higher paying jobs.

Community

Any zone effects could have ripple effects

on the community. Communities with new

zones may benefit because zones can

attract new business into the area.

Communities with component

manufacturing operations that close may

suffer.

Consumers

To the extent that FTZs help manufacturers

reduce prices and those prices are passed

along to consumers, consumers could

benefit.

Consumers may suffer from reduced

choices or reduction in quality to the extent

that foreign-trade zones encourage the

substitution of cheaper imported

components or goods for domestically

produced ones.

Tariff Revenues

Total U.S. tariff revenues increase to the

extent that increased zone use results in an

increased demand for the imported

components.

Tariff revenues decline by the difference

between the tariff on the component and

the tariff on the finished product for each

item imported into a zone, times the

number of items.a

Tax Revenues

Total U.S. tax revenues increase to the

extent that increased zone use results in an

increased demand for the product and in

greater earnings for each worker producing

goods in zones. Increased tax revenues

would come from increases in U.S. income

tax collections brought about by increased

profits and wages, federal excise taxes, and

state and local taxes of the types affected by

increased business.

(...continued)

conditions.

These arguments were largely drawn from GAO and ITC reports.

CRS-18

An example showing the potential magnitude of such tariff revenue loss is an ITC finding that zone use reduced

overall tariff revenues by 3% for 1986. Overall customs duties of $1,216 million represented an overall duty savings

of nearly $39 million on the U.S. economy from foreign-trade zone use in 1986. This represents a total loss of about

3% of tariff revenues for 1986. Source of duty savings: 1988 ITC report, op. cit. Source of overall duties: Highlights

of U.S. Export and Import Trade, op. Cit., 1986.

In addition, the question of whether zones have helped or hurt U.S. businesses

invites a mixed response. Table 2 shows typical winners and losers from zone use.

Certainly businesses that have applied for and achieved zone status have benefitted. On

the other hand, once one business in an industry achieves zone status, others are forced

to follow suit to remain competitive. As a result, once auto assembly plants

started getting zone status, virtually all others in the industry followed suit.34 Today,

this is occurring in the oil refining industry.

On the other hand,zone regulations require that U.S. zone activity have a net

positive effect for U.S. businesses and workers. In addition, the 1991 regulations

applicable to the Foreign-Trade Zones Board specifically require that the Board

disallow any actions that would circumvent U.S. trade policy or programs developed

by the administration and Congress. In keeping with this policy, the Board has

disapproved applications that proposed to use the Foreign-Trade Zones program to

circumvent sugar, milk, textile and apparel quota programs in an attempt to prevent

situations where there are “losers” (businesses or workers).

Does the Zone System Set U.S. Trade Policy by Circumventing

Congress and U.S. Trade Negotiators?

It can be argued that the U.S. zone system sets trade policy by circumventing

Congress and U.S. trade negotiators. The decision to lower tariffs is thus shifted from

the traditional method involving Congress and U.S. negotiators to an alternative

method involving the U.S. Foreign-Trade Zones Board and its approval of the use of

zones by representatives of various industries. However, as mentioned, the gradual

decline of tariffs from an average rate of 5.5% to 2.0% between 1984 and 1998 has

somewhat diminished the influence of the Foreign-Trade Zones Board on U.S.

effective tariff rates. In addition, the Foreign-Trade Zones Board is adamant that if it

perceives that zone status in an industry (usually the assembly sector) will harm the

components sector, it will deny or limit zone status. Industries where zone status has

been denied or limited for this reason include textiles, steel, pigments, TV tubes, ink,

ethanol, chain saws, lawn mowers and agricultural products (e.g. dairy and sugar, and

orange juice.)35

Bass and Sek, op. cit., p. 11.

From a telephone conversation with Dennis Puccinelli, Executive Director of the U.S.

Foreign-Trade Zones Board on May 21, 1999.

CRS-19

Legislation Relating to Zones

In the last ten years, legislative issues relating to zones have shifted from the

macro to the micro level. Instead of being focused on how zones affect the U.S.

economy, they are now more focused on whether zone policy should be used to help

specific industries.

Nor does foreign-trade zone legislation in the 105th and 106th Congresses attempt

to reverse the evolutionary changes which have affected U.S. foreign-trade zones. The

current legislative proposals are much more narrowly focused on changing trade policy

for various industries and promoting economic development. Bills relating to the

foreign-trade zone system fall into four categories: technical corrections relating to

zones; bills to help achieve trade objectives through zones (i.e. legislation relating to

steel, peanut butter, or tobacco products); legislation to assist zone expansion or

promote economic development; and legislation to support specific programs (i.e.,

space exploration). (See table 3 on major zone legislation).

P.L. 105-303, enacted in the 105th Congress, included a foreign-trade zone

provision to further encourage the development of the commercial space industry. It

clarifies that payloads launched from trade zones shall be considered exports (not

imports) with regards to customs entry.

Technical Corrections Relating to Zones

In the 106th Congress, Sec. 2405 of P.L. 36, signed by the President on June 25,

1999 (S. Report 106-2) makes technical corrections to various trade laws. It

provides, among other things, that the Secretary of the Treasury shall include

commercial importation data for foreign-trade zones in the new program automating

customs procedures (the National Customs Automation Program) — which is

currently undergoing both construction and funding difficulties.

Legislation to Achieve Trade Objectives For Specific Industries

A number of bills relating to U.S. foreign-trade zones in the 106th Congress,

would accomplish trade objectives by affecting the way certain imports are treated.

H.R. 975, passed by the House on March 17, 1999, (H. Report 106-52) provides for

a reduction in steel imports. It requires a steel notification certificate before steel is

entered into the U.S. customs territory of the United States.

Other legislation in the 105th Congress would have related to the tobacco industry

by providing for an increase in taxes on tobacco products which enter the United

States through a foreign-trade zone (H.R. 1229), and prohibiting the manufacturing

of tobacco products in or forwarding them through foreign-trade zones, or selling them

in or to duty-free shops (H.R. 3738.)

Also in the 105th Congress H.R. 1875 would have allowed the entry of peanut

butter and paste from Mexican peanuts through foreign-trade zones without being

subject to the tariff rate quota.

CRS-20

Legislation to Assist Zone Expansion or Promote Economic

Development

Other bills would aim to promote economic development by directing the U.S.

Foreign-Trade Zones Board to grant approval for new or expanded zones. In the 106th

Congress, H.R. 465 would direct the Board on behalf of the municipal airport of

Chico, California. H.R. 5401 would make this direction for zones on Indian territory.

CRS-21

Table 3. Some Major Zone Legislation of the 106th and 105th Congresses

106th Congress

P.L 106-36: H.R. 435/S. 262 (S.Report 106 -2) made technical changes to various trade laws. It also

included a provision (Sec. 2405) which stated that not later than Jan. 1, 2000, the Secretary of the

Treasury shall provide for the inclusion of commercial importation data for foreign-trade zones under

the National Customs Automation Program. On June 7, 1999, the House agreed to Senate amendment,

roll call #168.

Passed the House March 17, 1999: H.R. 975 (Visclosky). H.Report 106-52 provides for a

reduction in the volume of steel imports. For steel brought into the United States through a foreigntrade zone, requires a steel notification certificate before the merchandise is entered into the customs

territory of the United States.

Other Bills:

H.R. 465 (Herger) directs the Foreign-Trade Zones Board to expand Foreign-Trade Zone No. 143 to

include an area of the municipal airport of Chico, California.

S. 401 (Campbell, Nighthorse), Sec. 205 provides for business development and trade promotion for

Native Americans. Directs the U.S. Foreign-Trade Zones Board to consider on a priority basis and

expedite processing of any application aiming to establish a foreign-trade zone on Indian territory,

including any designated an empowerment zone or enterprise community.

105th Congress

Enacted: H.R. 1702 (Sensenbrenner, P.L. 105-303, Oct. 28, 1998: To encourage the development of a

commercial space industry in the United States, and for other purposes. Sec.102: Clarifies that a

launch vehicle is not, because of launch or reentry, an export or import. However, payloads launched

pursuant to foreign-trade zone procedures shall be considered exports with regard to customs entry.

This means that if any part of the launch vehicle or its payload is imported (for example part of the

fuel), no tariffs are payable.

Other Bills

H.R. 1875 (Crane) would amend the U.S. Harmonized Tariff Schedule to allow entry of peanut butter

and paste from Mexican peanuts in foreign-trade zones without being subject to the tariff rate quota.

H.R. 1319 (Royce), Sec. 204 would abolish the Department of Commerce and transfer the U.S.

Foreign-Trade Zones Board to the Department of the Treasury. The U.S. Trade Representative would

replace the Secretary of Commerce on the Foreign-Trade Zones Board.

H.R. 1229 (Ackerman), Sec. 301 provides for an increase in taxes on tobacco products, cigarette

papers, or cigarette tubes entered into a customs territory from a foreign-trade zone.

H.R. 3738 (Doggett), Sec. 407: prohibits against the sale of tobacco products in or to duty-free shops

or forwarding through or manufacturing in foreign-trade zones.

S. 1415 (McCain): Section 1147 is similar to the provision in H.R. 3738.

CRS-22

Appendix

The appendix includes information on how to apply for zone status, data supporting

figures 3, 4, and 5, and lists, zones and subzones, by state.

Appendix Table 4. Information Pertaining to Zone or Subzone Application

How To Apply for Zone or Subzone Status

Apply to the U.S. Foreign-Trade Zones Board, Import Administration, U.S. Department of

Commerce, Washington, D.C. 20230 (202) 482-2862.

Basic requirements for foreign-trade zone applications are found in 15 CFR Part 400, available at

the U.S. Foreign-Trade Zones Board website:

http://www.ita.doc.gov/import_admin/records/ftzpage/ftzhome.html.

Applications are rather involved, and the approval process is somewhat lengthy. General Purpose

Zone applications take about 18 and Subzone applications about 12 months.

After application approval is granted by the Foreign-Trade Zones Board, before operations can

take place, approval to activate the zone must be obtained from the Customs Port Director.

Zone Status:

Zone status is typically granted to state or local agencies or public type corporations (i.e., port

authorities or economic development agencies), which may contract out operations.

Zone sites must be in or near U.S. Customs ports of entry (listed at 19 CFR Part 101).

Zones are operated under the day-to-day supervision of the U.S. Customs Service. Overhead costs

include reimbursement to Customs for services. See regulations at 19 CFR Part 146.

Operations are conducted as public utilities, with published rates.

Zone projects should be coordinated at the state level for consistency with economic development

plans.

Applicants must have a suitable plan including provisions for facilities and financing.

Need for the proposed zone must be shown in terms of the local economy and overall economic

development objectives.

Zone manufacturing is reviewed under “public interest” criteria for consistency with trade policy

and net positive economic effects.

Zones should help create, not just divert employment from region to another.

There must be convincing evidence of a need for zone services. Letters of intent from firms

expecting to be the first zone users should be included in the application.

Subzone Status:

Subzones are normally private plant sites that usually cannot be accommodated within an existing

general-purpose zone.

Subzones can be approved only when a “public benefit” resulting in a “positive economic effect” is

demonstrated

Subzone applications include: company background, product description, industry background,

zone benefits to the company and public, impact on the domestic industry and environment.

Source of the above information: websites of the U.S. Foreign-Trade Zones Board (listed above), the

U.S. Customs Service: http://www.customs.ustreas.gov/imp-exp2/comm-imp/ftz/ftstart.htm, and the

National Association of Foreign-Trade Zones: http://www.imex.com/naftz.html.

CRS-23

Appendix Table 5. Data Supporting Figures 3, 4, and 5

(In $billions, and percent)

Data for

Figure 4

Data for

Figure 3

—

Data for

Figure 5

Exports

from Zones/

Imports Into

Zones

(%)

Domestic

Inputs/Total

Inputs

(%)

—

Mdse

Received in

Zone

($billions)

Domestic

Inputs

($billions)

Foreign

Inputs

($billions)

Exports

($billions)

Exports as

% of Mdse.

Received in

Zones

(%)

1978

0.81

0.17

0.63

0.24

1979

1.52

0.43

1.09

0.35

1980

2.60

0.89

1.71

0.69

1981

3.02

1.03

1.99

0.93

1982

3.40

1.32

2.08

1.54

1983

6.51

3.61

2.90

1.67

1984

15.00

10.50

4.50

2.65

1985

24.75

19.01

5.74

3.89

1986

40.19

31.07

9.12

4.87

1987

48.95

38.42

10.52

5.40

1988

58.65

44.56

14.10

7.22

1989

76.27

57.51

18.76

10.75

1990

90.06

70.64

19.42

11.59

1991

84.44

66.42

18.02

10.48

1992

98.69

78.39

20.30

11.65

1993

103.97

80.16

23.81

11.65

1994

119.57

93.61

25.96

17.37

1995

143.51

114.37

29.14

16.94

1996

168.62

125.68

42.94

17.09

1997

177.85

121.16

56.69

16.93

Source of data: U.S. Foreign-Trade Zones Board.

CRS-24

Appendix Table 6. List of Zones and Subzones, by State

STATE

ZONE# SUBZONE #

LOCATION

BUSINESS

INDUSTRY

YEAR

APPROVED

ALABAMA

211

222

233

Mobile

Huntsville

Birmingham

Anniston

Montgomery

Dothan

116 Mobile

ADDSCO

shipbuilding

137 Huntsville

Chrysler

auto electronics

159 Mobile

Degussa

methhionine

293 Foley

Peavey

electronics

329 Tuscaloosa Mercedes-Benz motor vehicles

334 Dothan

Sony

magnetic &

336 Madison

MagneTec

lighting ballasts

351 Mobile .

Zeneca

ag. chemicals

368 Tuscaloosa. ZFIndustries

auto axles

382 Mobile Cnty. Coastal

oil refining

392 Tuscaloosa JVC America

videotape prds.

Valdez

St. Paul

Anchorage

Fairbanks

Kodiak

256 Fairbanks

pipeline insulation

Pima

Nogales

Phoenix

Sierra Vista

Pima

Yuma

Mesa

197 Glendale

Conair

small appliance

250 Buckeye

Wal-Mart

distribution

269 Chandler

Intel

semiconductors

323 Phoenix

SGS-Thompson semiconductors

353 Casa

Abbott Mfg.

infant formula

354 Phoenix

PETsMART

warehouse/distrib

375 Phoenix

Sumitomo Sitix semionductor

420 Chandler/Te Microchip

semiconductors

427 Yuma

Meadowcraft

patio furniture

Little Rock

16 Forrest City Sanyo

microwave ovens

350 West Helena Cedar Chemical ag. chemicals

376 El Dorado

Mid States Pipe steel pipe fab.

ALASK

108

159

160

195

232

Flowline

ARIZON

139

174

219

221

ARKANSAS

CALIFORNIA

San

San Jose

Long Beach

STATUS: (Active

unless otherwise

indicated)

CRS-25

STATE

ZONE# SUBZONE #

143

153

191

202

205

226

230

LOCATION

BUSINESS

INDUSTRY

YEAR

APPROVED

Oakland

San Diego

Palmdale

Los Angeles

Port

Merced

Stockton

1 San

Lilli Ann

aparel

25 Long Beach Toyota

truck beds

30 San Jose

Olympus

med. equip.

54 San Diego

National Steel & shipyard

56 Fremont

NUMMI

auto

147 Benecia

Mazda

auto

178 Perris

National RV

motor home/RV

233 Pasadena

Datatape

tape recording

276 Garden

Alps Mfg.

computer etc.

332 Auburn

C. Ceronix

video monitors

380 Los Angeles MMM

pharmaceuticals

385 Sacramento Hewlett-Packar computer-related

398 Dixon

Gymboree

apparel/toys

400 El Segundo Checron

oil refining98

408 Richmond

Chevron

oil refining

412 Fremont

Cirrus Logic

integrated circuit

419 San Jose

Hewlett-Packar computer etc.

El Paso

Denver

226 Fountain

234 Boulder

415 Broomfield

data proc. equip

electronic storage

elec. power

pharmaceuticals

Wilimington

Wilmington J. Schoeneman apparel

42 Newark

Chrysler

auto

47 Wilmington Ge. Motorsauto -286 Newark

Zeneca

pharmaceuticals

340 Newastle

Star Enterprise oil refinery

COLORADO

112

123

Apple

Storage

Artesym

CONNECTICUT

162

208

Windsor

Bridgeport

North Haven

New London

174 West Haven Miles

DELAWARE

FLORID

135

136

166

Broward

Miami

Orlando

Jacksonville

Panama City

Tampa

Palm Beach

Brevard

Homestead

STATUS: (Active

unless otherwise

indicated)

CRS-26

STATE

ZONE# SUBZONE #

169

180

193

198

209

213

215

217

218

LOCATION

BUSINESS

INDUSTRY

YEAR

APPROVED

Manatee

Miami

Pinellas

Volusia & Flagler Counties

Palm Beach County

Fort Myers

Sebring

Oscala

St. Lucie County

204 Cocoa

Flite

231 Melbourne American

277 Tampa

Reilly Dairy

281 Tampa

Group

355 Ft.

Federal-Mogul

407 Miani

Hewlett-Packar

411 Broward

CITGO

426 BrevardCou Harris Corp

machinery

telecom./compute

dairy prds.

electronics

vehicle parts dist.

computer etc.

petrol. storage

telecommunicatio

Atlanta

Savannah

Brunswick

24 Atlanta

46 La Grange

70 Hapeville

149 Coweta

296 Dougherty

299 Bulloch

330 Chatham

346 Columbus

347 Columbus

Goetze Gasket

Ford

Yamaha

Merck

Wal-Mart

CITGO

Pratt& Whitney

Precision

auto

auto gaskets

auto

golf carts/water

pharmaceuticals

distribution

oil refining

United

aircraft engine

Honolulu

2 Oahu

57 Honolulu

95 Kahului

72 Honolulu

138 Oahu

364 Oahu

Tesoro Hawaii

Kerr Pacific

Maui pineapple

Dole

Chevron

Gasco

refinery

-food

food

oil refining

steel pipe fab.83

tractor

auto

packaging

auto

STATUS: (Active

unless otherwise

indicated)

GEORGIA

104

144

Lapsed

HAWAII

IDAHO

192

Meridian

ILLINOI

114

133

146

176

Chicago

Granite City

Peoria

Milan

Lawrencevill

Rockford

22 Chicago

UNR-Leavitt

60 Peoria

Caterpillar

89 Chicago

Ford

98 Du Page

Power

99 Du Page

Power

100 Kane

Power

104 Belvidere

Chrysler

Lapsed

expired 91

transferred 93

CRS-27

STATE

ZONE# SUBZONE #

LOCATION

BUSINESS

INDUSTRY

YEAR

APPROVED

112 Flora

N. Am. Lighting auto components

113 Salem

N. Am. Lighting auto components

114 Peoria

Mitsubishi

auto

154 Galesburg Maytag

appliances

155 Herrin

Maytag

appliances

220 Effingham

Fedders

room air

222 Dundee

Milk

animal feed

224 Loves Park Clinton

cathode ray tubes

243 N. Chicago Abbott

pharmaceuticals

275 Des Plaines Sanofi

pharmaceuticals

306 Manhattan Amoco

crude storage

312 Will County UNO-VEN

oil refining

314 Robinson

Marathon

oil refining

361 Madison

Shell

oil refining97386

386 Marengo

Nissan

engines

401 Will County Mobil Oil

oil refining

403 obile County Shell

oil refining989

405 Kankakee

Henkel

vitamin E

Indianapolis

South Bend

Burns

Clark

Evansville

Fort Wayne

50 Kokomo

73 Indianapolis Eli Lilly

74 Lafayette

Eli Lilly

75 Clinton

Eli Lilly

90 Indianapolis Chrysler

91 Kokomo

Chrysler

92 New Castle Chrysler

127 Lafayette

Caterpillar

148 Lafayette

Subaru-Isuzu

179 Indianapolis Alpine

180 South Bend EWI

239 Midlebury

Coachmen

244 Greenwood Endress&

246 Evansville

Mead Johnson

249 Elkhart

Fairmont

252 Bartholome POnkyo

305 Whiting

Amoco

333 Indianapolis Thompson

379 Rushville

Fugitsu

auto electronics

pharmaceuticals

auto

auto components

auto

tractor engines

auto

audio equip.

auto parts

vehicles

instruments

pharmaceuticals

manufactured

accoustical prods.

oil refining

electronics

auto audio

Polk County

Davenport

Cedar

55 Forest City Winnebago

156 Newton

Maytag

auto

appliances

Kansas City

Sedgwick

84 Kansas

274 McPherson Abbott Labs

auto

pharmaceuticals

STATUS: (Active

unless otherwise

indicated)

lapsed

INDIAN

114

133

146

176

lapsed

IOWA

107

133

175

KANSA

161

lapsed

CRS-28

STATE

BUSINESS

INDUSTRY

YEAR

APPROVED

Equilon

oil refining

lift trucks

auto

home appliances

typewriters &

auto

auto audio

auto parts

oil refining

elec./electronic

New Orleans

Calcasieu Parish

St. Charles

Shreveport

Baton

120 Gramercy

Trans-American oil refining 88

134 Lake

Conoco

oil refining 88

150 Lake

Citgo

oil refining

193 Avondale

Avondale

shipbuilding

194 Westwego

Avondale

shipbuilding

195 Harvey

Avondale

shipbuilding

196 New Orleans Avondale

shipbuilding

210 Lafourche

N.Am.Shipbuild shipbuilding

212 Shreveport AT&T

telecommunicatio

223 New Orleans Equitable

shipbuilding

261 Convent

Star Enterprise oil refining

297 Lafourche

LOOP

crude oil

310 Garyville

Marathon

oil refining

318 St. Bernard Chalmette

oil refining

337 Plaquemine BP

oil refining

343 St. Charles Shell Oil

oil refining

348 Baton

Exxon

oil refining

373 St. Bernard Murphy Oil

oil refining

404 Lockport

Halter Marine

shipbuilding

418 Lockport

Bollinger

shipbuilding

Bangor

Madawaska

Waterville

202 Madawaska Northern

cosmetics

Prince Geoge's County

BWI Airport

Baltimore

61 Sparrow's

Bethlehem

307 Walkersville Rotorex

steel

rotary

ZONE# SUBZONE #

LOCATION

356 Butler

STATUS: (Active

unless otherwise

indicated)

KENTUCKY

Jefferson County

Campbell

37 Georgetown Clark

43 Louisville

Ford

86 Jefferson

87 Jefferson

Lexmark

111 Scott

Toyota

177 Walton

Clarion

182 Harrodsburg Hitachi

359 Boyd

Marathan

365 Campton

Ascent

LOUISIANA

124

145

154

MAINE

179

186

MARYLAND

MASSACHUSETTS

Boston

New

lapsed

CRS-29

STATE

ZONE# SUBZONE #

201

LOCATION

BUSINESS

INDUSTRY

YEAR

APPROVED

Holyoke

7 Fall River

Sterlingwale

apparel

31 Quincy

General

shipyard

32 Lawrencevill Lawrence

textiles

105 Framingham GM

auto

117 New

Codman &Shur. surgical

118 Avondale

Codman &

surgical

119 Randolph

Codman &

surgical

183 Norwood

Polaroid

camera

184 Needham

Polaroid

camera

185 New

Polaroid

camera

186 Waltham

Polaroid

camera

187 Freetown

Polaroid

camera

188 Boston

Polaroid

camera

189 Cambridge Polaroid

camera

410 Quincy

Mass. Heavy

shipbuilding

Sault Ste. Marie

Battle Creek

Detroit

Flint

Kent/Ottawa/Muskegon

St. Clair

10 Romeo

Ford

13 Detroit

Chrysler

19 Wayne

Ford

28 Wixom

Ford

29 Dearborn

Ford

36 Springfield Clark

48 Ypsilanti

49 Pontiac

67 Sterling

Chrysler

94 Flat Rock

Mazda

101 Flint

103 Trenton

Chrysler

123 Midland

Dow

129 Detroit

130 Orion

131 Lansing

161 Detroit

Chrysler

162 Trenton

Chrysler

163 Detroit

Chrysler

164 Detroit

Chrysler

165 Detroit

Chrysler

216 Zeeland

Mead Johnson

303 Wyandotte BASF

362 Detroit

Marathon

377 Sturgis

Abbott

390 Kentwood

Diesel

tractor

auto

lift trucks

auto

chemical

auto

-vitamins/plastics

oil refining

infant formula

fuel injection

Duluth

Minneapolis/St. Paul

248 St. Peter

Davisco

251 Apple Valley Wirsbo

255 Howard

Am. Feeds &

264 Preston

Wisconsin

dairy prds.

polyethylene

animal feeds

infant formula

STATUS: (Active

unless otherwise

indicated)

terminated 89

lapsed

MICHIGAN

140

189

210

MINNESOTA

119

terminated 91

lapsed

terminated 92

CRS-30

STATE

BUSINESS

INDUSTRY

YEAR

APPROVED

Plastic

Artesyn

in-line skates

elec. power

Harrison

Vicksburg/Jackson

115 Escatawpa Moss Pt.

190 Pascagoula Ingalis

237 Harrison

Avondale Ent.

271 Corinth

Cortelo USA

279 Meridian

Peavey Elec.

300 Pascagoula Chevron

shipbuilding

phone & computer

audio/acoustical

oil refining

Kansas City

St. Louis

Springfield

20 St.Louis

23 Claycomo

40 Hazelwood

64 Kansas

132 Wentzville

151 Kirksville

152 Kansas City

160 Kansas City

181 Grandview

278 Jefferson

auto

auto components

ag. chemicals

engine parts

sink processing

shoes

ZONE# SUBZONE #

LOCATION

345 Lindstrom

414 Redwood

STATUS: (Active

unless otherwise

indicated)

MISSISSIPPI

158

MISSOURI

102

225

Chrysler

Ford

-GM

Ortech

Bayer

Kawasaki

Metcals

Florsheim

lapsed

MONTANA

187

190

Great Falls

Toote

Butte-Silver Bow

NEBRASKA

Omaha

Lincoln

8 Lincoln

Kawasaki

motorcycles &

Clark

Sparks

52 Reno

Porsche

auto

Portsmouth

18 Portsmouth Nashua

33 Colebrook Manchester

232 Newington ABB

office equip

apparel

industrial/nuclear

Morris

Newark/Elizabeth

Salem/Millvi

Mercer

Lakewood

35 Edison

Ford

85 Linden

107 Hazlet

Int'l Flavors

auto

NEVAD

126

NEW HAMPSHIRE

NEW JERSEY

142

200

235

lapsed

CRS-31

STATE

ZONE# SUBZONE #

LOCATION

BUSINESS

INDUSTRY

YEAR

APPROVED

108 Union

Int'l Flavors

109 S.

Int'l Flavors

153 N.

Squibb

298 Rahway

Merck

319 Linden

Bayway

321 Gloucester Mobil Oil

331 Gloucester CITGO

363 Perth

Chevron

372 Gloucester Coastal Eagle

383 East

Conair

416 Bridgewater Hewlett-Packar

--pharmaceuticals

pharmaceuticals

oil refining

Oil refining

warehouse/distrib

computer-related

Albuquerqu

Rio Rancho

Dona Ana

58 Albuquerqu SP

pharmaceuticals

NY City

Buffalo

Niagara

Orange

Suffolk

Clinton

Onondaga

Jefferson County

JFK Intl. Airport

Ogdensburg

Albany

Monroe

Oneida

26 Webster

Xerox

office equip

59 Waltertown NYAirbrake

-63 Cortland

Smith-Carona electronics

66 N.

auto

93 NY City

Jack Young

-96 Chatauqua CPS Corp.

-106 Onodaga

Chrysler

auto

133 Rochester

Eastman Kodak photography

213 Rochester

ITT

auto electronics

258 New

Bally

shoes

273 Rensselaer Sanophi

pharmaceuticals

292 Rochester

Gleason Corp. gear production

302 Sherrill &

Oneida

tableware

322 Rensselaer BASF

chem.

Mecklenburg County

Wilmington

Morehead

Raleigh

Lenoir

Fuilford, Forsuth,, etc.

88 Mecklenbur IBM

173 Alamance

Honda

STATUS: (Active

unless otherwise

indicated)

lapsed

NEW MEXICO

110

194

197

NEW YORK

109

111

118

121

141

172

NORTH

214

230

electronics

lawnmowers

lapsed

expired 96

lapsed

CRS-32

STATE

ZONE# SUBZONE #

LOCATION

BUSINESS

219 Kernersville Deere-Hitachi

227 Raleigh/Dur IBM

230 Wake

Mallinckrodt

283 Wilson

Merck

328 Goldsboro R.G. Barry

335 Whitsett

Lucent

378 Yadkinville Unifi

NORTH DAKOTA

103

INDUSTRY

YEAR

APPROVED

hydraulic

info processing

pharmaceuticals

footwear &

telecommunicatio

polyester yarn

Toledo

Cleveland

Butler

Dayton

Clinton

Franklin

Findlay

Akron/Canto

5 Hamilton

jet engines

6 Union City Honda

motorcycles

34 Toledo

Jeep

auto

44 Lorain

Ford

auto

65 Lordstown GM

auto

102 Norwood

auto

110 Shelby

Honda

car/motorcycle

121 Findlay

Cooper Tire & tires

128 Cincinnati

Nine West

shoes

157 Dayton

electric motors

158 Kettering

auto parts

166 Dayton

Chrysler

auto parts

167 Perrysburg Chrysler

auto parts

168 Sandusky

Chrysler

auto parts

169 Van Wert

Chrysler

auto parts

170 Toledo

Giant Products industrial pumps

203 Richwood

Wascator Mfg. washing machines

236 Ottawa

W.C. Wood

freezers

254 Avon Lake Ford

motor vehicles

257 Euclid/Ment Lincoln Electric arc welding equip.

259 McComb

Consolidated

food

268 Bedford

Mr. Coffee

small appliance

280 Valley View Picker

medical

325 Grove City Pier 1

distribution

326 Bedford

Ben Venue

pharmaceuticals

338 Toledo

BP Oil

oil refining

344 Euclid

Motch

machinery

358 Stark/Allen Marathon

oil refining

366 Springboro pioneer

auto audio

387 Columbus

Abbott

infant formula

417 Beverly

Globe

ferroalloys

424 Columbus

Lucent

telecommunicatio

425 Lima

Clark USA

oil refining

Grand Forks

OHIO

100

101

138

151

181

OKLAHOMA

106

164

Rogers

Oklahome

Muskogee

STATUS: (Active

unless otherwise

indicated)

CRS-33

STATE

ZONE# SUBZONE #

227

LOCATION

Durant

51 Oklahome

240 Oklahome

394 Lincoln

BUSINESS

INDUSTRY

auto

Ted Davis Mfg. voice aoil motors

ARCO Pipe

crude oil

YEAR

APPROVED

STATUS: (Active

unless otherwise

indicated)

OREGO

132

184

206

Portland

Coos

Klamath

Medford-Jackson County

9 Multnomah Beall Pipe

171 Portland

AIM

207 Portland

Alcatel

221 Pendleton

Continental

247 Tualatin

Tofle USA

fiberoptic cable

food

stainless steal

Pittston

Allegheny County

Philadelphia

Berks

3 Westmorela VW

4 Harrisburg Olivetti

21 Landsdale Ford

142 Allegheny

Verosol USA

282 West Point Merck

285 Riverside

Merck

342 Philadelphia Sun Company

369 Delaware

Tosco

auto

typewriters,

auto

window shade

pharmaceuticals

oil refining

Mayaguez

Guyanabo

Ponce

15 Penuelas

CORCO

217 Humacao

Bristol-Myers

218 Barceloneta Bristol-Myers

245 Caguas

Searle

266 Barceloneta Searle

267 Cidra

SB Pharmco

294 Arecibo

Merck

295 Barceloneta Merck

316 Guayama

IPR

317 Carolina

IPR

360 San Juan

Baxter Caribe

371 Skagit Cnty. PR Sun oil

384 Cidra

PepsiCo

423 San Juan

Pfizer

oil refining

pharmaceuticals

oil refining

concentrate

pharmaceuticals

auto

auto electronics

deactivated 83

lapsed

PENNSYLVANIA

147

PUERTO RICO

163

RHODE ISLAND

105

Providence

SOUTH

127

Dorchester Cnty

Spartanburg Cnty

West

53 Charleston Porsche

208 Anderson

AUTECS

deactivated 81

CRS-34

STATE

ZONE# SUBZONE #

LOCATION

BUSINESS

235 Goose

Haarmann &

272 Spartanburg BMW

399 Goose

Bayer Corp

SOUTH DAKOTA

220

INDUSTRY

YEAR

APPROVED

chemicals

auto

rubber

truck/auto

microwave ovens

energy

microwave ovens

auto

-pharmaceuticals

industrial

typewriters/word

room

equip. parts dist.

Sioux Falls

TENNESSEE

134

148

204

223

Memphis

Nashville

Chattanoog

Knoxville

Tri-City

Memphis

14 Symnra

27 Lebanon

38 Hartsville

39 Phipps

45 Memphis

175 Maury Cnty.

192 Hawkins

289 Bristol

301 Carter Cnty.

308 Bartlett

311 Columbia

413 Ripley

Nissan

Toshiba

TVA Nuclear

Global Power

Sharp

Saturn

Form Rite

SmithKline

Soemens

Brother Ind.

Columbia

Komatsu

TEXAS

113

115

116

117

122

149

150

155

156

165

168

171

178

183

196

199

234

McAllen

Galveston

Dallas/Fort Worth

Brownsville

El Paso

San Antonio

Harris

Webb

Starr County

Maverick

Val Verde County

Ellis County

Beaumont

Jefferson County

Orange

Corpus

Freeport

El Paso

Victoria & CalhounCounties

Weslaco

Midland

Dallas/Fort Worth

Liberty

Presidio

Austin

Fort Worth

Texas City

Gregg

62 Jefferson

Bethlehem

76 Corpus Ch. Coastal St.

oil refining

STATUS: (Active

unless otherwise

indicated)

CRS-35

STATE

ZONE# SUBZONE #

LOCATION

BUSINESS

INDUSTRY

77 Corpus Ch. Koch Refining oil refining

78 Corpus Ch. Trifinery

oil refining

79 Corpus Ch. Gulf Marine

oil refininh

80 Corpus Ch. Berry

-81 Corpus Ch. CC Distributing -82 Corpus Ch. Compressors

-83 Corpus Ch. Hitox

-122 Athens

Harvey Inds.

TVs

124 Victoria

Safety Railway freight car repair

125 Victoria

Safety Steel

freight car repair

135 Corpus

Citgo

oil refining

136 Nueces

Valero

oil refining

139 Weslaco

McManus

food processing

140 Weslaco

FGulf De Bruyn food processing

141 Weslaco

Sundor

food processing

143 Corpus Ch. Reynolds

alumina

144 Houston

Hughes Tool

drilling tools

145 Houston

Texas Steel

heat-treat oil

176 LaPorte

DuPont

hydrofluoric acid

198 Houston

United General hand tools

199 San Antonio Bausch & Lomb sunglasses

200 San Antonio Colin Medical

medical equip,

201 San Antonio Friedrich A/C & air conditioners

205 Calhoun

Alcoa

alumina/aluminum

206 Houston

Gulf Coast

oil refining

209 Nueces

Koch Refining oil refining

211 Arlington

auto

214 Houston

Calero Refining oil refining

215 Houston

Goodman Mfg. -225 Harris

Shaffer

oil drilling equip.

241 Austin

Dell Computer electronics

242 Harris

Tuboscope

steel tube prds.

260 Harris

Shell Oil

oil refining

262 Port Arthur Star Enterprise oil refining

263 Wylie

Sanden

auto a/c

265 Houston

Dril-Quip

oil field equip

287 Houston

Hydril

oil field equip

288 Houston

Tadiran

telecom. prds.

290 Tx City

Amoco

oil refining

291 Freeport

BASF

chemicals

309 Jefferson

Fina

oil refining

313 Jefferson/Li Mobil Oil

oil refining

315 Freeport

JHoffnam-LaRo pharmaceuticals

320 Harris

Crown Central oil refining

324 Mansfield

Pier1

distribution

327 San Angelo R.G. Barry

footwear &

339 Texas City Marathon

oil refining

341 Harris

Exxon

oil refining

349 Jefferson

Clark

oil refining

357 Texas City Valero

oil refining

374 Jefferson

USDOE Oil

crude oil shortage

381 Brazoria

Phillips

oil refining

388 Richardson Fossil Partners watches, etc.

389 Dallas

B&F System

consumer prds.

395 Brazoria

Seaway

crude oil

396 Texas City Seaway

crude oil

402 Harris

Lyondell-Citgo oil refining

409 Harris

Equistar

petrochemicals

YEAR

APPROVED

STATUS: (Active

unless otherwise

indicated)

expired 91

lapsed

CRS-36

STATE

ZONE# SUBZONE #

LOCATION

YEAR

APPROVED

BUSINESS

INDUSTRY

Ultrak

Amoco

closed circuit TV

petrochemicals

Pedigree

Wyeth

apparel

Suffolk

Wash. Dulles Intl. Airport

Culpeper

Richmond

146 Va. Beach

Stihl

228 Culpeper

ITT Teves

229 Culpeper

Rochester

253 Newport

284 Elkton

Merck & Co

305 Whiting

Amoco

367 Altavista

Abbott

406 Richmond

Hewlett-Packar

chain saw/power

auto brake comp.

cable

shipbuilding

pharmaceuticals

oil refining

formula/nutritional

computer-related

Seattle

Everett

Tacoma

Cowlitz

Whatcom

Grays

Yakima

Moses Lake

Tacoma

Olympia

Spokane

126 Tacoma

Tacoma Boat.

191 Hoquiam

Lamb-Grays

270 Arlington

West-Coast

370 Skagit Cnty. Equilon

shipbuilding

-wood building

oil refining

Wood/Jackson Counties

Charleston

397 Buffalo

Toyota

auto engines

Milwaukee

Brown

11 Kenosha

12 Manitowac

68 Janesville

69 Oak Creek

auto

piston rings

auto

auto electronics

421 Lewisville

422 Brazoria

STATUS: (Active

unless otherwise

indicated)

UTAH

Salt Lake

Burlington

Newport

17 St. Albans

172 Georgia

VERMONT

VIRGINI

137

185

207

lapsed

WASHINGTON

120

128

129

130

131

173

188

203

212

216

224

WEST VIRGINIA

228

229

WISCONSIN

167

Chrysler

Muskegon

lapsed

CRS-37

STATE

ZONE# SUBZONE #

LOCATION

71 Sturgeon

97 Milwaukee

238 Blue

352 Hudson

391 Osceola

393 Plymouth

WYOMING

157

Casper

BUSINESS

INDUSTRY

Bay

shipbuilding

Ambrosia

-Stauffer

cheese prods

Robin Mfg.

small engines

Polaris

small engines

Sargento Foods cheese prcessing

YEAR

APPROVED

STATUS: (Active

unless otherwise

indicated)

expired 91

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.