2017

A n n u A l R e p o R tNatioNal associatioN of foreigN-trade ZoNes

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tAble of ContentsI. Welcome from the Chairman & President 2

II. Accomplishments and Highlights of 2017 3

III. 2017 Annual Conference & Exposition in San Diego 7

IV. 2017 Seminars and Webinars 8

V. Zone Trends & Analysis 11

VI. Sector Spotlight: Power Tools 14

VII. New Zones and Production Authorizations 16

VIII. What’s Ahead for 2018 18

IX. NAFTZ Policy Advocacy Agenda for 2018 20

X. NAFTZ Board, 22

CommitteeChairs&Staff 23

XI. Past Board Chairmen/Presidents & Honorary

Life Members 24

XII. Audited Financial Statements for 2015 & 2016 25

XIII. Appendix: What is a Foreign-Trade Zone? 26

XIV. Get Involved 27

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TheFTZprogramitselfcontinuestodelivermeasurablebenefitsinatimeof transition and considerable change for the United States. According to the most recent U.S. FTZ Board Annual Report to Congress, FTZ exports and employment have continued to provide positive impacts to the U.S. economy, which are documented in the FTZ trends and analysis section of this report (please see pp. 11-13).

In Washington, D.C., NAFTZ has been a tireless advocate for the interests of our members and an ever-more useful, dynamic, and viable FTZ program. We have collaborated with U.S. Customs and Border Protection (CBP) and the U.S. FTZ Board, as well as multiple partner government agencies, to improve the regulation of the program and transitional changes currently underway, particularly with the Automated Commercial Environment (ACE) programming. NAFTZ will continue to work closely with CBP and our members to facilitate a smooth and expeditious transition to the new system. The FTZ program and stakeholders will continue to face new opportunities and challenges in the public policy arena. In response, NAFTZ recently launched an important “FTZ Advocacy Campaign” to strengthen and solidify the FTZ program’s roleasadriverofeconomicbenefitsintheUnitedStatesandwehopeallFTZ operators, user and grantees help make this campaign a success. For NAFTZ’s ambitious policy agenda in 2018, please see p. 20.

With our latest annual report, we hope to convey our pride in what we have accomplished in the past year, and our hope and expectation of what can be achieved in 2018.

With our best wishes for a successful and prosperous 2018, Rebecca Williams, Board Chair Erik Autor, President

Welcome to the 2017 Annual Report of the National Association of Foreign-Trade Zones. This report will share with our members what has been accomplished in the past year on their behalf, and the association’s full agenda of advocacy, education, and events planned for the year ahead. The report also tells the success story of the FTZ program and its growing contributions to the U.S. economy.

Founded in 1973, NAFTZ is the collective voice of the FTZ community in the United States and Puerto Rico. The association represents more than 650 members, including FTZ grantees, operator/user companies, and service providers.

The mission of NAFTZ is to serve as the FTZ program’s principal educator and lead advocate in demonstrating the program’s value and role in the changing political and economic environment of international trade. NAFTZ supports local economic development and the global competitiveness of its members by disseminating vital information and promoting the expansion of international trade.

The 2017 NAFTZ Annual Report documents how we have been true to that mission. During the year, NAFTZ continued to provide exceptional educational and informative programs focused on FTZs and international trade topics. Hosted by NAFTZ, these events included the Fundamentals of FTZs Seminar in Orlando, Florida in January, providing comprehensive educational content; the Legislative Summit, in Washington, DC, the industry’spremierlobbyfly-inevent;theSpringSeminarinSanAntonio,Texas in May with over 160 attendees; and the Annual Conference and Exposition in San Diego, California in October with nearly 400 attendees. NAFTZeventsfeaturedanAdvancedTrackofferingmultipletopicsandcoverage of the most challenging issues currently facing FTZ operations.

A letteR of WelCome fRom the nAftZ boARd ChAiR & pResident 2017 nAftZ AnnuAl RepoRt looks bACk on eventful YeAR, AheAd to full AgendA foR 2018

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In 2017, NAFTZ made measurable progress in key advocacy objectives.• Advocacy Campaign. In October, the NAFTZ Board launched abroadadvocacycampaigntoraisetheprofileoftheFTZprogram,enhanceNAFTZ’sabilitytoinfluencepublicpolicyand decision-makers in Washington, and gather better data on theeconomicandemploymentbenefitsoftheFTZprogram.Aspart of this campaign and through membership support, NAFTZ aims to commission an economic study of the FTZ program andiscollecting“successstories”onhowtheprogrambenefitsindividual zone stakeholders.

• Legislative Briefing for the House Manufacturing Caucus. InNovember,NAFTZkickedofftheadvocacycampaignwithabriefingonCapitolHillhostedbytheU.S.House of Representatives Manufacturing Caucus. Entitled “Foreign-TradeZones:AnEffectiveTooltoBoostU.S.Manufacturing,ExportsandJobs,”thebriefingaimedtoeducateMembersofCongressandtheirstaffabouttheFTZprogram.The panel included Shane Williams of the Port of Houston speaking as an FTZ grantee, Gail Morin of Stanley Black & Decker speaking as an FTZ operator/user, and Rebecca Williams

of the Rockefeller Group speaking as an FTZ service provider. NAFTZ will make this an annual advocacy event. Watch the briefingatbit.ly/2E8B2YQ.

• Capitol Hill Lobbying. NAFTZ met throughout the year withMembersofCongressandstafffromnearly20differentoffices.LobbyvisitsfocusedparticularlyonmembersoftheSenate Finance and House Ways and Means Committees, which have jurisdiction over the FTZ program, to discuss policy and legislative issues of importance to the program and stakeholders.

• North American Free Trade Agreement (NAFTA). NAFTZfiledcommentswiththeOfficeoftheU.S.TradeRepresentative(USTR)andPresidentErikAutortestifiedbeforetheTradePolicyStaffCommittee(TPSC)chairedbyUSTRonindustry priority issues and objectives on rules of origin and drawback in the NAFTA renegotiation. Watch his testimony at bit.ly/2GhThvC.

• Automated Commercial Environment (ACE) Implementation. NAFTZ continued to advocate for full funding for ACE implementation, and communicated regularly with CBP and the U.S. Department of Treasury to push

ACComplishments & highlights in 2017

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for expeditious implementation of ACE and migration of e214 admission onto the ACE platform. NAFTZ’s activities included successfully convincing the U.S. Senate Committee on Appropriations to include report language in the 2018 Department of Homeland Security (DHS) appropriations bill recommending $5 million for ACE program enhancements and $38 million to support ACE core functionality, and encouraging CBP to work with the trade to expedite the ACE transition process and establish a sustainable funding mechanism for ACE enhancements. NAFTZ also successfully persuaded CBP to delay deployment of core e214 for FTZ admissions into ACE from September to December to allow time to correct problems revealed during pilot testing.

• Partner Government Agencies (PGAs) and ACE. In 2017, NAFTZ sent letters to and met with six separate agencies regarding issues in integrating PGA/FTZ data requirements in ACE. While much remains to be done, unresolved issues between CBP and the PGAs on funding ACE enhancements brought a reprieve from the constant negotiation process NAFTZ led in 2016. For 2018, NAFTZ will remain focused on ensuring the unique aspects of FTZs are accounted for as PGAs continuetorefinetheirdata-collectionrequirementsinACE.

• Government Accountability Office (GAO). Following the 2016 launch of a GAO study of the FTZ program requested by Sen. Ron Wyden (D-OR), Ranking Member of the U.S. Senate

Committee on Finance, NAFTZ worked closely with GAO researcherstoeducatethemonthebenefitsoftheprogramand explain the unique set of rules under which it operates. TheensuingreportreleasedinAugust,reflectsthisinputandisdriving improvements and uniformity in CBP’s oversight of and data collection from FTZs, which will help enhance the program for our industry.

• Revising CBP’s Part 146 Regulations. In April, NAFTZ met with Acting Customs Commissioner, Kevin McAleenan, to discuss reviving the initiative to update regulations governing the FTZ program under 19 CFR Part 146. CBP subsequently announced it will work on Part 146 revisions through the Commercial Customs Operations Advisory Committee (COAC). In December, NAFTZ sent McAleenan a letter stating that it welcomes this opportunity to play a central role in this process.

NAFTZ’s 2017 Conferences. The success of all four of NAFTZ’s conferences in 2017 was demonstrated by the strong participation of our members and record support from our sponsors. For more information on these programs, including content and social events, please see pp. 7-10.

NAFTZ Membership in 2017. NAFTZ membership in 2017 remained steady at nearly 660. Meanwhile, we reformed our procedures and policies on membership that will improve data collection and better support member retention and recruitment.

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These changes included revisions to the NAFTZ bylaws and policy manual to create a new membership category for trade associations, consolidating three other membership categories into one,firmlyestablishingacalendar-yearbasedmembershipperiod,and clarifying treatment of delinquent members and member voting rights.

FTZs continued to drive U.S. exports and employment per the U.S. Foreign-Trade Zones Board Annual Report to Congress released in November 2017 covering calendar year 2016.• In 2016, more than 420,000 persons were employed in zones

approved in all 50 States and Puerto Rico.

• The largest industries accounting for zones activities in 2016 includedoilrefining,automotive,electronics,pharmaceuticals,and machinery/equipment.

• 2016 saw an increase in the number of approved FTZs to 264 and active zones FTZs to 195, with the number of active zones’ production operations remaining steady at 324.

• In 2016, the value of merchandise received at FTZs and the value of merchandise exported from FTZs declined again from the previous year due mainly from the decrease in the price of petroleum products. Also of note: 63 percent of all FTZ activities were associated with manufacturing/production operations and exports from FTZs totaled $78 billion dollars.

NAFTZ communicated important information about the program to its members and the public.• The monthly Zones Report e-newsletter reached every member

with vital information about the association and the program.

• Blast emails informed members of breaking developments on FTZ issues, including timely information on ACE implementation and PGA requirements.

• NAFTZ continued to expand its reach on Twitter, with an increase to more than 1,300 followers on @naftz, a ten percent increase over 2016.

• NAFTZ also maintained an active presence on other social media sites, providing members regular updates and photos through LinkedIn and Facebook.

• The Journal of Commerce published a special section in October highlighting the FTZ program. It included articles written by NAFTZ President, Erik Autor; Former NAFTZ Board Chairman, Trey Boring; current NAFTZ Board Chairman, Rebecca Williams; and current NAFTZ Directors Angie Atwood and Torrey Chambliss with NAFTZ members, Julie Brown and Denise Yanez.

• In October, Logistics Management magazine published an article on the FTZ program entitled “Big Savings, Little Hassle” which quoted NAFTZ President, Erik Autor.

• Supply Chain Management Review also quoted Erik Autor in its on-line article “Foreign Trade Zones Face New Supply Chain Challenges” published in September.

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• NAFTZ issued several press releases and statements on its conferences and important developments including NAFTZ President, Erik Autor’s testimony on NAFTA, and the NAFTZ’s role in persuading CBP to delay deployment of e214 in ACE.

NAFTZ Leadership.• In October, Rebecca Williams of the Rockefeller Group

succeeded Trey Boring as NAFTZ Board Chairman.

• In October, a new slate was elected to the NAFTZ Board, including four new directors – Christine Allen of the Lubbock Economic Development Alliance (grantee), Chris Smith of IKEA (operator), Michael Thomas of MLTIG (service provider), and Eva Tomlinson of UPS Trade Management Services (operator).

• New members of the NAFTZ Executive Committee included Eva Tomlinson (Vice Chair), Frankie Bryson (Treasurer), and Melissa Irmen (Secretary).

NAFTZ continued to build its international engagement. • WFZO Conference. NAFTZ is a founding member of the

World Free Zones Organization (WFZO) and again participated in the WFZO’s 3rd annual conference in Cartagena, Colombia. NAFTZ President, Erik Autor, was a speaker and panelist at

the May event. Among the other U.S. attendees were NAFTZ directors Kenneth Carlstedt and Torrey Chambliss, and NAFTZ member, Julie Brown, of the Georgia FTZ. Both Ken and Julie are directors on the WFZO board. With the end of Ken’s tenure in October, NAFTZ director, Shannon Fura, was designated as his replacement to represent NAFTZ on the WFZO board.

• OECD/EUIPO Conference. In September, NAFTZ President, Erik Autor, was invited to speak at a joint meeting of the Organization for Economic Cooperation and Development (OECD)andtheEuropeanUnionIntellectualPropertyOffice(EUIPO) in Alicante, Spain. He addressed the topic of how the U.S. FTZ program handles enforcement and compliance in addressing the problem of illicit trade moving through zones in other countries.

• AZFA Conference. In October, NAFTZ President, Erik Autor, also represented NAFTZ at the annual conference of the Asociación de Zonas Francas de las Américas (AZFA) in Tenerife, Spain, where he discussed proposals on cooperation and engagement under memoranda of understanding NAFTZ signed with both AZFA and the WFZO.

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AnnuAl ConfeRenCe & expositionOctober 22-25, 2017, San Diego, CA 396 Attendees

NAFTZ’s 45th Annual Conference in San Diego was by all measures a great success. There were 22 exhibitors, representing the latest software, products and service providers in the industry, 92 speakers/moderators and over 390 engaged attendees. FTZ professionals attended this single largest event of the year dedicatedspecificallytoFTZstostrategize,network,andlearnabouttherecentreportbytheGovernmentAccountabilityOffice(GAO)ontheFTZprogram,thefinalruleonCBP’sin-bondregulations, and new CBP compliance actions.

During Monday’s General Session, NAFTZ Board Member Rebecca Williams moderated a panel on the Impact of PGAs on FTZs inACE,whichincludedofficialsfromseveralkeyPGAs—JimJoholske with the Consumer Product Safety Commission (CPSC), Charlotte Washington with the Drug Enforcement Agency (DEA), and Jim Swanson with U.S. Customs and Border Protection (CBP).

Monday’s program also featured an update from FTZ Board Executive Secretary, Andrew McGilvray. He explained that the FTZBoardstaffcontinuestoconductmonitoringvisitsusingrepresentative sampling of FTZ production operations. Following a request from NAFTZ, the FTZ Board is preparing an online memo explaining procedures documents needed for monitoring visits.

The Tuesday luncheon keynote speaker, Dr. Peter Cowhey, Special Advisor to the Chancellor, UC San Diego, Qualcomm Endowed Chair in Communications and Technology Policy and Dean of the School of Global Policy & Strategy and former Senior Advisor attheOfficeoftheU.S.TradeRepresentative(USTR),spokeonthe subject of free trade agreements in a new trade environment. Cowhey discussed the major players on trade policy, whether and to what extent any relationship exists between balance in trade and declines in manufacturing jobs, and the possible outcomes of the NAFTA Renegotiation talks.

2017 AnnuAl ConfeRenCe in sAn diego

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The Annual Conference featured lively receptions where members couldreconnectwitholdfriendsandmakenewones.Forthefirsttime, NAFTZ secured The Parq restaurant venue with the help of our sponsors UPS Trade Management Services, Braumiller Law and Braumiller Consulting Groups, and Port Houston for the Main Event Reception. Our Charity 5K Run/Walk continues to grow in participation with t-shirt donations by Ralph Lauren, glow sticks provided by Avalon Risk Management and earbuds provided by the Port of Albany. All monetary donations went to the Second ChanceSanDiego,alocalnon-profitcharitableorganization.

The event app enhanced the overall event experience and increased attendee engagement from last year. Those participating in our event app challenges through photo scavenger hunts and event app usage, more than doubled from last year and continues to better connect our members with professionals in attendance at events.

InherfirstaddressasNAFTZChairman,RebeccaWilliams,unveiled an ambitious and comprehensive advocacy initiative for the coming year to help position NAFTZ as an even more effectivevoiceinWashingtononkeyissuesimpactingtheFTZstakeholder community. Central elements in this initiative include commissioninganeconomicstudyexaminingthebenefitsfromtheFTZ program and collecting success stories from NAFTZ members on how the program has helped businesses, employment, and communities in the United States.

2017 seminARs And WebinARs ZoneCAst WebinARs13 webinars hosted in 2017

Our 2017 Zonecast webinar series featured noted industry leaders sharing their experience and expertise on the major topics of interest to the foreign-trade zone community. Members were kept informed on a variety of subjects such as Zones Around the World, FTZ Scope of Production, and Cybersecurity in FTZs. Guest speakers included such names as Isaac Barrow, Port of Portland and David Panko, City of El Paso FTZ No. 68. In all, the webinars attracted 503 participants and were viewed 198 times ondemand.Thesemetricsshowasignificantincreaseinonlineengagement compared to last year. NAFTZ featured live polling at six webinars; we received over 60 percent response rate per questionwhichdemonstratesthisnewtechnologywaseffectivein increasing engagement.

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fundAmentAls of ftZs seminARJanuary 10-11, 2017, Lake Buena Vista, FL 79 Attendees

NAFTZ welcomed more than 70 attendees to its annual Fundamentals of FTZs Seminar. Speakers included Torrey Chambliss, Manager for FTZ No. 79 and Business Cargo, Port of Tampa Bay and Diana Urelius, Assistant Secretary & Senior Compliance Manager Mitsubishi Caterpillar Forklift America Inc., who provided practical experience and perspective from the grantee and operator/user side of FTZ operations. They guided newcomers through FTZ operational details and regulations and shared ways to use a Foreign-Trade Zone as part of their supply chain strategy. The interactive event app elements of polling and app challenges kept attendees engaged throughout the educational program.

legislAtive summit February 9, 2017, Washington DC 96 Attendees

Federalgovernmentofficials,policymakers,andindustryleadersfrom the foreign-trade zone industry community alike were eager to hear FTZ news on Capitol Hill in exploring our event theme of “FTZs: Stability in Changing Times.” The summit began with a Congressional Trade panel, featuring Shane Warren, International Trade Counsel (Rep.), U.S. Senate Committee on Finance; and Keigan Mull, International Trade Counsel (Dem.), U.S. House of Representatives, Committee on Ways and Means. The panelists provided updates on a wide range of trade and FTZ-related issues, including the proposed Border Adjustability Tax (BAT), renegotiation of the North American Free Trade Agreement (NAFTA), and the future of trade agreements following President Trump’sdecisiontowithdrawfromtheTrans-PacificPartnership(TPP) Agreement.

Among the issues highlighted in his update on the FTZ Board, ExecutiveSecretary,AndrewMcGilvray,remarkedthathisstaffhadprocessedarecord-numberofcases.Healsoconfirmedthat one of the key factors in scope of production authorization decisions is written description submitted by a zone operator/user.

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Meanwhile,BillScopaandValarieNeuhartofCBPofferedattendees an overview of customs issues, including ACE implementation. For the luncheon address, noted trade-policy scholar, Bill Reinsch, provided an interesting analysis of trade policy in the Trump era.

During the Industry Perspectives on Trade Policies Session, participants heard from a panel of trade experts from associations representingindustriesthataresignificantusersoftheFTZprogram. Michael Flickinger (American Petroleum Institute), Jon Gold (National Retail Federation), Steve Lamar (American Apparel & Footwear Assoc.), and Paul Ryan (Global Automakers) explored their respective industry viewpoints on international trade and customs issues.

The following day, a delegation of NAFTZ board members, NAFTZ PresidentErikAutor,andNAFTZpublicaffairsadvisors,JimSmithandBrianHanniganvisitedkeycongressionalofficestohighlightNAFTZ’spolicyprioritieswithMembersofCongressandstaff.Meetings were held with two important members of the Senate Finance Committee, Senators John Cornyn (R-TX) and Claire Haskell (D-MO), to underscore the continued growth in the FTZ program and its importance to their home states’ economies.

AnnuAl spRing seminAR May 22-24, 2017, San Antonio, Texas 163 Attendees

“FTZs:NavigatingUnchartedWaters”wastheofficialthemeofthis year’s Spring Seminar, which was attended by many industry leaders. The event provided guidance to the U.S. FTZ community at a time of great uncertainty throughout the international trade sector. Attendees learned of new developments at CBP and the FTZ Board and were informed on ACE Updates. San Antonio Mayor, Ivy R. Taylor, opened the event with a discussion on the role of FTZs in San Antonio’s economic success.

During the update on Automated Commercial Environment (ACE),JamesSwansonofCBPoutlinedthebenefitsofthesinglewindow through ACE, post release capabilities, and ACE post-core priorities, and the funding challenges facing ACE after the post-core deployment. Following this presentation, NAFTZ Board Member, Shane Williams, led a discussion of the Outlook of Ocean Cargo/Shipping Industry and reviewed possible new trade lanes and their impact on future business.

Afterthefirstfulldayofsessions,attendeesandtheirguestswere taken to new heights atop the Tower of Americas evening reception providing guests a bird’s-eye view of the city’s landmarks while they savored Texas-style cuisine. Seminar guests networked with industry professionals and engaged in the 4D Movie experience highlighting top attractions of the city.

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TheForeign-TradeZonesprogramremainsasignificantcontributorto the U.S. economy in terms of employment and the size and value of trade (both exports and imports), according to the latest annual report of the U.S. Foreign Trade Zones Board to Congress for 2016.

During that year, the value of goods exported directly from U.S. foreign-trade zones to foreign countries totaled nearly $76 billion (5.2percentoftotalU.S.merchandiseexports).Thisfigurewasa fall of 10.5 percent from the previous year’s export total from FTZs, continuing a downward trend since the high-mark in 2014 due almost entirely to the continued drop in the global price of oil impactingFTZoil-refiningoperations.However,thisdeclineappearsagain to have been tempered by exports in other industry sectors in thezonesprogram.Moreover,thetotalexportfigureissomewhatunderstated due to the exclusion of certain indirect exports involving FTZ merchandise that undergoes further processing at non-FTZ sites prior to export or is not exported in-bond.

Despite volatility in the global petroleum market, petroleum refiningremainedaleadingFTZexportsectorin2016.AccordingtotheFTZBoard’sannualreport,refineriesandpetroleum-relatedoperations accounted for 12 of the top 25 exporting subzones in 2016. As in previous years, pharmaceuticals and motor vehicles also represented major FTZ export sectors accounting respectively for seven and four of the top 25 exporting subzones.

Employment in foreign-trade zones remained steady from 2014, with approximately 420,000 Americans working in FTZ activitiesin2016.Thismayagainbeattributabletosignificantchanges in the market for petroleum products as domestic oil and gas production in the United States increased and imports, demand, and prices declined, reducing the extent of FTZ activity bypetroleum-refiners.Again,thisdeclineinthepetroleumsectorappears to have been mitigated by employment growth in other FTZ industry sectors.

Zone tRends & AnAlYsisftZs Continue to plAY impoRtAnt Role in u.s. emploYment And tRAde

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FTZs also continue to play a key role in U.S. production and distribution operations that rely on global supply chains to remain competitive. In 2016, the value of shipments into zones totaled $610 billion, of which $384 billion (63 percent) was for production operations and $226 billion (37 percent) for warehouse/distribution operations. About 63 percent of total shipments into the zones involved domestic-status merchandise, indicating FTZ production activities involve a combination of foreigninputswithsignificantdomesticcontent.

Foreign-status inputs in FTZs totaled $225.3 billion in 2016, accounting for 10.2 percent of all goods imported into the United States.Whilethisfigurehastrendeddownsince2012,itagainappears to be mainly the result of the sharp drop in oil prices and petroleum’s diminished share in the value of total FTZ imports since2014,whichsawasmallincreasein2016—from31.5percent to 36.3 percent. Meanwhile, non-petroleum imports into FTZs saw a decrease from 7.4 to 6.5 percent of total U.S. goods imports from 2015 to 2016. (See the chart on FTZ imports on the next page).

Among non-oil products, the largest percentage increases in foreign-status goods received into FTZs for production operations were rail cars, parts & equipment; iron/steel; electrical machinery; aircraft/spacecraft; optical, photographic, and medical instruments; and pharmaceuticals. The largest percentage increases for warehouse/distribution operations were food products; fragrances/cosmetics; consumer electronics; advanced fibermaterials;consumerproducts;andbeverages/spirits.

2009 2010 2011 20132012 2014 2015 2016

FTZ and Total U.S. Exports, 2009-2016

$1,800

$1,600

$1,400

$1,200

$1,000

$800

$600

$400

$200

$0

FTZ Exports Billions

Sources: U.S. Census Bureau.

U.S. Exports

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During 2016, there were 264 approved FTZs (up from 262); 195 active FTZs (up from 186), with a total of 324 active production operations(unchanged);and3,300firmsusingFTZs(upfrom2,900). The FTZ Board docketed 88 requests and issued 85 decisions, including the establishment of two new foreign-trade zones, the reorganization or expansion of 16 zones under the alternative site framework (ASF), and 53 applications and notificationsforneworexpandedproductionauthority.Underdelegatedauthority,theFTZBoardstaffprocessed192additionalrequestsincludingminormodificationsandscopedeterminations.

“The U.S. FTZ program continues to demonstrate its value to the U.S. economy,” said Erik Autor, President of the National Association of Foreign-Trade Zones. “Companies in many key Americanindustriesgainsignificantglobalcompetitiveadvantageby locating their production and distribution operations in U.S.-based FTZs, thereby boosting U.S. exports, manufacturing, investment, jobs, and a higher standard of living.”

However, Autor noted that “the FTZ program continues to be a work in progress as the global economy and technology continue to evolve, creating new opportunities and challenges. There are anumberofwaystheprogramcanbemadeevenmoreeffective,including completing the integration process enabling FTZ users full use of CBP’s Automated Commercial Environment (ACE) platform; updating customs regulations governing FTZs dating back to 1986, and ensuring companies in U.S. FTZs can compete on equal terms with their foreign competitors, particularly in countries benefittingfromfree-tradeagreementswiththeUnitedStates.”

20011991 2011 201620061996

FTZ IMPORTS AS A SHARE OF TOTAL U.S. GOODS IMPORTS, 1990-2016

16%

14%

12%

10%

8%

6%

4%

2%

0%

Petroleum

Sources: FTZ Board Annual Reports and U.S. Census Bureau.

Other Merchandise

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Stanley Black & Decker, STIHL, Husqvarna, and Makita are widely-recognized power-tool brands that use the U.S. Foreign-Trade Zone (FTZ) program to manufacture their products in the United States for both the domestic and export markets. The FTZ program provides all four companies a stronger competitive advantagethroughsignificantcostsavingsandsupply-chainandoperationalefficiencies.Asaresult,thecompanieshavesteadilyexpanded their FTZ footprint and jobs, jointly employing over 4,500 American workers in their zones operations.

U.S.-headquartered, Stanley Black & Decker, has run manufacturing and distribution operations for its power tools andstoragebusinessovertenyearsintwodifferentzones–FortMill, South Carolina (FTZ 38), and Rialto/Fontana, California (FTZ 50). The company added manufacturing operations to its South Carolina FTZ in 2015, which had production activity valued at $1-5 billion and a workforce of over 1,300 people in 2016. The company plans further expansion of its South Carolina operations and to set up a new site in Hidalgo County, Texas (FTZ 12), both of which are anticipated to create over 1,000 new American jobs.

ftZ seCtoR spotlight: poWeR toolsAccording to the company, the FTZ program has helped reduce its operational costs in the United States by millions of dollars a year.

The German company, STIHL Inc., located its U.S. operations in Virginia Beach, Virginia in 1974 where it manufactures chain saws and other power tools. At that time, the company importedcomponentsfromGermanyandfileddrawbackclaimsfor refunds of the customs duties. That arrangement changed in 2009, when the company was approved for production as a zone operator in FTZ 20, encompassing the greater Norfolk, Virginia metropolitan area, including the Port of Virginia. STIHL has stated that FTZ status, proximity to the port, and elimination of having tofileclaimsfordutydrawbackallowedthecompanytoobtainsignificantcostsavingsandimprovedefficiencyandimproveditscompetitive advantage. The company has expanded its production operations in FTZ 20 several times, most recently in 2017. In 2016, its production activity was valued at $1-5 billion and exports at $250-500 million. It currently employs a workforce of approximately 2,000 in zone production.

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The Swedish company, Husqvarna Outdoor Products, is located in Southwest Arkansas (FTZ 14) where it manufactures and distributes chain saws, trimmers, blowers, and pole saws. It was approved as a zone operator in 2009 and its zone workforce numbers approximately 1,200 employees. In 2016, its production activity was valued at $100-200 million, with much of its production destined for the U.S. market and a portion exported to Canada and Europe. The company is consolidating its distribution operations within a 350,000 square foot warehouse adjacent to its productionfacility,whichwillsignificantlyimprovetheefficiencyofits operations.

The Japanese company, Makita Corporation of America, assembles a substantial portion of its power tools sold in North America in its factory in Buford, Georgia (FTZ 26), including hand-held/stationary power tools and gasoline/electric-powered lawn and garden tools. It was approved as an FTZ operator in 2011, and, in 2016, its production activity was valued at $75-100 million and exports at $25-50 million.

ThemainbenefitoftheFTZprogramforallfourcompaniesistheability to reduce duties on imported components that are higher thandutiesonthefinalproduct.Amanufactureroperatinginazone

caneliminatethis“invertedtariff”problembyelectingtopaythelowerorzerodutyonthefinalproductwhenitleavesthezoneforsale in U.S. commerce – the same rate paid by competing imported products—ratherthanthehigherdutyonimportedcomponentswhen they land at a U.S. port or are brought into the zone.

Otherbenefitsthecompaniesderivefromtheprograminclude:enhancedefficiencythroughbetterinventorycontrolandmanagement; eliminating duties on products exported from a zone to a foreign country; direct-delivery and electronic e214 procedures allowing simpler and quicker admission of goods into a zone; the option to consolidate zone shipments destined for U.S. sale into a single customs entry rather than multiple entries over the course of a week; and reduced customs administrative and brokeragefees.Thesebenefitscombinedwithstrictrequirementsfor robust security measures and supply-chain controls create an ingrained culture of compliance in the companies and ensure more effectiveenforcementforCBPandtheotherfederalagenciesregulating trade.

Finally, with foreign brands comprising three of the four companies in the power-tools sector, the FTZ program also demonstratesitseffectivenessinattractingforeigndirectinvestment to the United States and generating thousands of skilled, good-paying jobs for American workers.

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neW foReign-tRAde ZonesNo new FTZs were established in 2017, and the total number of approved zones remained at 263. At the start of 2017, there were 195 active zones, nine more than the previous year.

AlteRnAtive site fRAmeWoRk ReoRgAniZAtions The FTZ Board approved the following six applications for reorganization under the Alternative Site Framework in 2017.Zone Location Zone No. ApprovalImperial County, CA FTZ 257 03/13/17

Fayette/Hardeman/ McNairy Counties, TN FTZ 238 03/14/17

Boone County et al., WV FTZ 229 06/26/17

Hidalgo County, TX FTZ 12 08/11/17

Pinellas/Hernando/Pasco Counties, FL FTZ 193 09/07/17

City of Athens, TX FTZ 269 12/06/17

As of Dec. 31, 2017, there are 162 zones organized under the ASF, with nine applications pending.

neW foReign-tRAde Zones: Asf ReoRgAniZAtions, & subZones AppRoved in 2017

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Company Location Subzone ApprovalJos. A. Bank Mfg. Co. Hampstead, MD 73D 01/04/17

Thor Industries, Inc. Jackson Center, OH 100D 01/09/17

Samsung Electronics Dallas/Ft. Worth, TX 168 01/12/17

AGFA Corp. Branchburg, NJ 44I 01/27/17

AxisCare Health Logistics Toa Baja, PR 163E 02/02/17

CGT U.S., Ltd. New Braunfels, TX 80E 02/03/17

Best Petroleum Corp. Toa Baja, PR 163F 02/08/17

Topship, LLC Gulfport, MS 92F 02/28/17

Brake Parts Inc. Hazleton, PA 24E 03/02/17

Volvo Car US Operations Ridgeville, SC 21F 03/02/17

ExxonMobil Oil Corp. JeffersonCounty,TX 115B 03/13/17

Wacker Polysilicon Charleston, TN 134B 03/30/17

Danos & Curole Maritime Morgan City, LA 124Q 04/07/17

Aceros de America Inc. San Juan, PR 61S 04/13/17

STIHL Inc. Virginia Beach, VA 20E 04/13/17

Mead Johnson & Co. Zeeland, MI 43B 05/04/17

Caribe Rx Services, Inc. Caguas, PR 163G 06/08/17

Destileria Serralles, Inc. Ponce, PR 163I 06/08/17

R. Ortiz Auto Distributors Caguas, PR 163H 06/08/17

Expeditors Int’l Inwood, NY 37E 06/13/17

Company Location Subzone ApprovalPremier Logistics, LLC Tulsa, OK 53C 06/16/17

Scott USA Inc. Ogden, UT 30C 06/16/17

Universal Metal Prods. Pharr, TX 12B 07/14/17

Westlake Chemical Corp. Westlake, LA 87F 08/11/17

5.11, Inc. Manteca, CA 231B 08/17/17

R.W. Smith & Co/Trimark Lewisville, TX 168C 08/25/17

Glovis America, Inc. Shreveport, LA 145B 08/11/17

MTD Consumer Group Martin, TN 283A 08/24/17

Hitachi Automotive Berea, KY 29F 08/25/17

LT Autos, LLC Ponce, PR 163J 09/07/17

BMG America, Inc. Marion, SC 127C 09/08/17

Mitsubishi Chemical Sacramento, CA 143D 09/13/17

Lam Research Corp. Freemont, CA 18F 09/14/17

LOOP LLC St. James, LA 124D 10/13/17

Gulfstream Aerospace Dallas, TX 168E 11/06/17

Lockheed Martin Corp. Littleton, CO 123G 11/08/17

Ekornis, Inc. Somerset, NJ 44 11/13/17

Consolidated Diesel Co. Enfield,NC 214A 11/28/17

Orgill, Inc. Coeur d’Alene, ID 280B 12/13/17

North Am. Hoganas Co. Hollsopple, PA 295B 12/19/17

estAblishment oR expAnsion of ftZ subZonesThe following chart lists the 41 new or expanded FTZ subzones the FTZ Board approved in 2017.*

In 2017, the FTZ Board also authorized 59 production activity requests in zones and subzones for a wide range of products and activities, including: auto parts, chemical products, construction equipment, consumer electronics, energy-storage systems, flavorproducts,lawnandgardenequipment,lumberproducts,metalsandminerals,motorvehicles,oilrefining,outdoorpowerproducts,passengeraircraft,pharmaceuticalproducts, printer/copier cartridges and components, sports equipment, storage containers, upholstered furniture, and washing machines.

ftZ boARd CAlendAR• February 12, FTZ Board Grantee Training event 2:00 - 5:00

p.m. in Washington, DC (bit.ly/FTZTraining18)

• March 31, deadline for all grantees to report 2017 zone activity to FTZ Board.

• FTZ Board’s 79th Annual Report to Congress on FTZ Activity in 2017 will likely be released sometime in the fall.

AutomAtion & RegulAtoRY ACtion• While funding issues have made ACE timetables uncertain, 2018

may see further progress on ACE development, integration of PGAdatasets,andnewrequirementsforFTZfilers.

• 2018 could also see progress by CBP on updating 19 CFR Part 146 (FTZ regulations).

• The U.S. Department of Commerce and the International Trade Commissioncouldinitiateasignificantlyhighernumberoftraderemedy investigations (antidumping, countervailing-duties, safeguards, sections 301 and 232) on imported goods possibly impacting the supply chains of FTZ operators and users.

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WhAt’s AheAd foR nAftZ membeRs in 2018• CBP is expected to provide a clearer picture on informal

entry procedures (321/de minimis) in FTZs and a process and enforcementframeworkfore-commercefulfilment.

• CBP may issue further guidance to the trade on the new in-bond regulations (19 CFR Part 18), including the requirement to submit additional data elements (e.g., six-digit HTS classificationnumbers).

• CBP is examining enhancements to trusted-trader initiatives (e.g.,C-TPATandISA)thatcouldbenefitFTZoperator/users.

AdministRAtion & CongRessionAl ACtion• On international trade, the Administration and Congress

will remain focused on President Trump’s goal to reduce bilateraltradedeficitsandprotectAmericanmanufacturingjobs by: renegotiating existing trade agreements - particularly NAFTA and the Korean-US Free Trade Agreement (KORUS); aggressively pursuing trade-remedy measures (see above); and changing the dispute-settlement rules of (and possibly withdrawing from) the World Trade Organization (WTO) in response to adverse decisions against the United States.

• WiththeriskofpossibleincreasedtariffsandreductionofFTZbenefits,NAFTZmemberswillhavetheopportunityto participate in Congressional visits February 14 after the LegislativeSummitprogramtohighlightthebenefitsoftheFTZprogram to the U.S. economy and jobs.

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In addition to our regularly-scheduled events, NAFTZ will continue to host its series of monthly educational webinars on a wide range of topics important to FTZ professionals. The webinars will continue to be free to NAFTZ members.

nAftZ sCheduled eventsFundamentals of FTZs January 7-8, 2018 The Westin New Orleans Canal Place New Orleans, LA

Annual Spring Seminar May 20-22, 2018 Doubletree by Hilton Portland, OR

Legislative Summit February 13, 2018 Madison, a Hilton Hotel Washington, DC

Annual Conference & Exposition September 16-19, 2018 The Westin Peachtree Plaza Atlanta Atlanta, GA

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The NAFTZ Board of Directors recently approved the launch of a proactive advocacy initiative to advance the following policy priorities with the Administration and Congress.

1. A smooth transition of FTZs to the Automated Commercial Environment (ACE). As foreign-trade zones process about 10 percent of total U.S. merchandise imports, the so-called “single-window” initiative through the International Trade Data System (ITDS) to ensure full and timely integration of all FTZ compliance data onto the ACE platform is vital to maintainanefficientflowofinternationalcommerceacrossAmerica’s borders. NAFTZ continues to work with U.S. Customs andBorderProtection(CBP)andCongresstosecuresufficientfunding, set trade-enhancing objectives with realistic deadlines, and provide adequate opportunity for software testing.

2. ACE programming for the FTZ e214 admission. An important milestone in the ITDS single-window initiative occurred in 2017 with the integration of the e214 FTZ admission process from the legacy Automated Commercial System (ACS) software platform into ACE. The next step is to add Partner Government Agencies (PGAs) message sets into the e214 through ACE for those PGAs needing their compliance data for FTZ goods before entry from a zone into U.S. Customs territory. NAFTZ continues to work with the PGAs and CBP

nAftZ’s poliCY AgendA foR 2018to facilitate this process and adopt a viable interim compliance processthatfulfillsthePGAs’enforcementmandatewhileminimizingunnecessaryburdensonFTZfilers.

3. Revise the FTZ Board’s “production scope of authority” regulations. Current regulations do not adequately allow FTZ operator/usercompaniessufficientflexibilitytomodifytheirapprovedlistofimportedcomponentsand/orfinishedproductstoaccommodate changing demands of global competition. NAFTZ continues to urge the FTZ Board to introduce changes that wouldallowuseofsix-digitHarmonizedTariffSchedule(HTS)numberstodefinethescopeofproductionauthority(versuswrittencommercialdescription),andaretrospectivenotificationprocess to allow companies to maintain full compliance and keep assembly lines in operation. NAFTZ seeks a pilot program for both concepts, and new regulations where necessary.

4. Revise Customs Part 146 FTZ regulations. Customs regulations on FTZs have changed little since 1986. NAFTZ has launchedaneffortwithCBPtomodernizetheseregulationstoaccount fully for the revolution in CBP automation and sweeping changes in modern global supply-chain management. NAFTZ seeks an expansion of direct delivery and elimination of the outdatedfive-dayruleandtheblanket216formanufacturing,manipulation, and exhibition. NAFTZ also seeks a proposed rule to transform the regulations, including those under subpart H dealing with the petroleum sector, to meet the 21st century needs of CBP, the FTZ community, and a more globally-

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integrated U.S. economy. The NAFTZ is pressing CBP to pursue an immediate update and ensure a prominent voice for NAFTZ in the rewrite.

5. North American Free Trade Agreement (NAFTA). NAFTArenegotiationoffersFTZstakeholdersanopportunitytoimprovecertainNAFTArulesthathaveadverselyaffectedFTZ operations. These include ensuring manufacturers in U.S. FTZsgetthesameduty-freetreatmentwhenU.S.tariffsareeliminated on imported components for factories in NAFTA partner countries. Another is to change NAFTA rules on drawback (i.e., duty refunds on exported goods) to ensure U.S. FTZ manufacturers can compete equally with companies in Canada and Mexico, which have rules relieving their manufacturers from duty on goods destined for export. NAFTZ will continue to work with the Administration and Congress to ensure these changes are included in any new agreement and implementing legislation.

6. 321/De Minimis. Recent changes to the U.S. informal-entry rules increased the duty-free de minimis level for imported goodsfrom$250to$800.Thismodificationimpactedsupply chains, by encouraging a shift of direct-to-consumer e-commercefulfilmentoperationsfortheU.S.markettoCanadaand other foreign locations. NAFTZ seeks to mitigate the adverse impact of this change on the FTZ program and stakeholders.

7. Approval of FTZ Production Authority. The Government AccountabilityOffice(GAO)isexaminingtheFTZBoardprocess for approving production authority applications facing certain domestic opposition. Where appropriate, NAFTZ will work to advance reforms in this process to allow broader utilization of the program.

8. Trusted Trader Programs. NAFTZ seeks recognition in CBP’s physical-security guidelines of FTZ supply-chain security requirementsandenhancedbenefitstoFTZoperator/userswithtrusted-trader status under the Customs-Trade Partnership Against Terrorism (C-TPAT) and/or Importer Self-Assessment (ISA) programs.

In support of the advocacy initiative, NAFTZ has begun the process of commissioning an economic study of the FTZ program and is soliciting sponsorship funding to help pay for it.

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boARd of diReCtoRsCHAIR

Rebecca Williams Managing Director Rockefeller Group FTZ Services

DIRECTORS

Christine Allen Director of Workforce Development & FTZ 260 Lubbock Economic Development Alliance

Angie Atwood FTZ Administrator Columbus Regional Airport Authority

Torrey Chambliss Manager for FTZ & Cargo Business Dev. Port Tampa Bay

VICE CHAIR Eva Tomlinson Director UPS Trade Management Services

Lesley Couch Principal Indigo Trade Solutions

Shannon Fura Partner Page Fura, P.C.

James Grogan Senior Manager Ernst & Young LLP

TREASURER Frankie Bryson Senior Manager, ACT (USA and Canada)Nissan North America

Trudy Huguet Director of FTZ Services GEODIS USA, Inc.

Sean Lydon President ISCM Inc.

Christopher Smith Trade Advisor IKEA Purchasing Services (US) Inc.

SECRETARY Melissa Irmen SVP, Products & Strategy Integration Point

Michael Thomas President/Managing Director, Thomas International Group

Shane Williams Foreign Trade Zone Administrator Port Houston

HONORARY DIRECTOR Domenick Gambardella Pricewaterhouse-Coopers, LLP (retired)

IMMEDIATE PAST CHAIR Trey Boring Sr. Vice President IMS Worldwide, Inc.

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CHAIR, MEMBERSHIP COMMITTEE Eric Berry Director, Trade Services, PointTrade Services, Inc.

CHAIR, OPERATOR/USER COMMITTEE Shana Head FTZ Managed Services Indigo Trade Solutions

CHAIR, PROGRAM COMMITTEE David Murphy Partner Grunfeld Desiderio et. al.

CHAIR, PETROLEUM COMMITTEE Beverly Cruz Customs & FTZ Analyst Shell Exploration & Production Company

Committee ChAiRs & stAffCommittee ChAiRsCHAIR, ACCREDITATION COMMITTEE

Laylan Hime FTZ Operations Supervisor Sony Electronics, Inc.

CHAIR, AUTOMATION COMMITTEE Elizabeth Connell Vice President – Product Management Integration Point

stAffErik Autor President

Jarmila Zapata Senior Manager of Communications & Member Services

Victoria Cartwright Director of Events & Education

Melvin Morris Manager of Accounting & Administration

CHAIR, GRANTEE COMMITTEE Renee Boyette Admin. & Member Services Director, Triangle J Council of Governments

CHAIR, INTERNAL POLICY MANUAL COMMITTEE Shannon Fura Partner Page Fura, P.C.

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pAst boARd ChAiRs/pResidents & honoRARY life membeRs pAst boARd ChAiRs And pResidents2016-2017 Trey Boring, IMS Worldwide, Inc. 2015-2016 Jose Quinonez, Economic Development Department, County of El Paso2013-2015 Jan Frantz, BC/CAL/KAL Inland Port Development Corp.2012-2013 Scott Wienke, Abbvie, Inc.2011-2012 Lewis Leibowitz, Hogan Lovells US LLP2009-2011 LindaC.Hothem,PacificAmericanGroup2007-2009 Brandi B. Hanback, Rockefeller Group2005-2007 Ray E. Shaw, Aligned Border Solutions LLC2003-2005 PhyllisSaathoff,PortFreeport2001-2003 Donnie B. Barnes, LCB BMW Manufacturing Co., LLC1999-2001 Dom Gambardella, PricewaterhouseCoopers, LLP1997-1999 Karen Sager, FTZ Consulting LLC1995-1997 Chris Koelfgen, Foreign-Trade Zone Services1993-1995 Greg Jones, Foreign-Trade Zone Corp.1991-1993 Catherine Durda, FTZ 49, New York, NY1989-1991 Tommy L. Berry, PointTrade Services, Inc.1987-1989 Dennis J. Curran, Sandler & Travis Trade Advisory Services

1985-1987 Roy Jaeger, FTZ 49, Newark, NJ1983-1985 Joseph O’Connor, FTZ 44, Mount Olive, NJ1981-1983 Robert G. Brave, FTZ 14, Little Rock, AR1979-1981 Marshall Miller, Miller & Company, P.C.1977-1979 Craig J. Rovzar, FTZ 18, San Jose, CA1975-1977 Robert N. Dee, FTZ 2, New Orleans, LA1973-1975 Homer A. Maxey, FTZ 9, Honolulu, HI

honoRARY life membeRs 1979 Homer A. Maxey, Jr., FTZ 9, Honolulu, HI1982 Marshall Miller, Esq., Miller & Co.1986 Robert N. Dee, FTZ 2, New Orleans, LA1988 Joseph O’Connor, FTZ 44, Mount Olive, NJ1993 Dennis J. Curran, Sandler & Travis Trade Advisory Services1995 Tommy L. Berry, PointTrade Services, Inc.2000 Greg Jones, Foreign-Trade Zone Corporation2007 Domenick Gambardella, PricewaterhouseCoopers, LLP2007 Karen Sager, FTZ Consulting LLC2008 Donnie Barnes, BMW Manufacturing Co., LLC2008 David Ostheimer, Lamb & Lerch

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Audited finAnCiAl stAtementsnAtionAl AssoCiAtion of foReign-tRAde Zones stAtement of ACtivities foR the YeARs ended deCembeR 31, 2015 And 2016

2015 2016SUPPORT & REVENUE Dues $ 566,720 $ 568,727 Registrations 469,758 471,635 Sponsorships 126,200 187,830 Investment income 7,791 9,817 Exhibit booths 39,500 48,200 Other income 11,955 16,468 Total Support & Revenue $ 1,221,924 $ 1,302,677

ExPENSES

Conference & seminars $ 303,702 $ 338,382 Salaries 315,026 322,489 Professional fees 290,849 150,500 Employeebenefits 64,801 75,004 Website 18,038 49,573 Recruitment - 43,650 Bank & credit card fees 27,258 41,631 Rent 89,203 79,627 Communications 31,708 29,147

2015 2016ExPENSES (CONT.)

Printing 27,780 26,524 Payroll taxes 20,713 25,516 Taxes 15,372 15,470 Publications & subscriptions 6,175 11,840 Equipment rental & maintenance 10,132 11,017 Insurance 17,708 10,878 Travel 12,545 8,709 Supplies 4,554 6,297 Postage & delivery 5,166 5,175 Other operating expenses 6,394 4,822 Depreciation 6,080 2,026 Contract labor 2,168 1,092 Total Expenses $ 1,275,372 $ 1,259,369

OPERATING INCOME $ (53,448) $ 43,308

OTHER INCOME (ExPENSE)

CHANGE IN NET ASSETS $ (69,099) $ 42,874

NET ASSETS, BEgINNINg OF 661,961 592,862

NET ASSETS, END OF YEAR $ 592,862 $ 635,736

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Foreign-Trade Zones (FTZs) are designated areas within the United States,which,forthepurposesoftarifflawsandcustoms-entryprocedures, are treated as though they are outside U.S. customs territory. Congress established the program in 1934 with passage of the Foreign-Trade Zones Act.

Foreign and domestic merchandise may be admitted into FTZs for storage, exhibition, assembly, manufacture, production, and processing, without formal customs entry procedures, payment of customsduties,orpaymentoffederalexcisetaxes.Thesebenefitshelpstimulate U.S. employment, attract foreign and domestic investment into U.S. communities, promote U.S. exports, and improve the global competitiveness of U.S.-based companies.

FTZs help the U.S. economy by allowing companies to source component products from around the world at competitive prices, while keeping important value-added activities, such as manufacturing, within the United States. For example, when a manufacturer wishes to remove a finishedproductfromanFTZforU.S.consumption,theymayelecttopaycustomsdutiesateithertherateofthefinishedproductorthatofitsforeigncomponents.ThisoptionallowsU.S.-basedfirmstoelectthelower of the two duty rates, placing them on an equal footing with their foreign competitors.

FTZs also increase the export competitiveness of U.S.-based producers. When merchandise is removed from a zone, customs duties can be eliminated if the goods are then exported from the United States. By loweringthecostofexporting,thisbenefithelpsU.S.firmscompetemoreeffectivelyinexportmarkets.

If merchandise is removed from a zone and formally entered into U.S. commerce, customs duties and often excise taxes are not due until the timeoftransferfromtheFTZ.Thisdelayallowsfirmstorealizecash-flowsavingswhilegoodsarebeingprocessedinthezone.

Designation as a foreign-trade zone is granted by the Foreign-Trade Zones Board, an independent agency housed within the U.S. Department of Commerce. The Board consists of the Secretary of Commerce and the Secretary of the Treasury. An Executive Secretary administers the day-to-dayactivitiesoftheBoardandsupervisestheFTZBoardstaff.The FTZ Board gives “grants of authority” to state and local government agenciesornon-profitcorporations,collectivelyknownas“grantees,”which are then empowered to establish and maintain zone projects within their communities as a public utility. Since 2009, a majority of active zones have reorganized under the so-called “Alternative Site Framework” (ASF), which allows for a simpler and expedited process for designating “subzones”and“usage-drivensites”asthefacilitiesofspecificcompanies wishing to operate a zone site.

The other important federal agency involved in the FTZ program is U.S. Customs and Border Protection (CBP), which is responsible for the control of merchandise moving into and out of FTZs, and ensures all revenues are properly collected. In addition, CBP is charged with ensuring all zone procedures are in compliance with the Foreign-Trade Zones Act, and all CBP and other federal agencies’ laws and regulations pertaining to zone use are followed. The CBP Port Director where the FTZ is located is the local representative of the Foreign-Trade Zones Board.

Appendix: WhAt is A foReign-tRAde Zone?

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membeRshipStay relevant in this fast-paced industry by joining the nation’s largest association of FTZ professionals. Members gain access to exclusive tools and resources.

ContactJarmilaZapata—jzapata@naftz.org

sponsoRshipWe are always seeking partners to shape the future of the FTZ industry through our sponsorship programs. Learn how partnering withtheNAFTZismutuallybeneficial.

ContactVictoriaCartwright—vcartwright@naftz.org

ConneCtOur social media sites let you join the conversation about important issues and share ideas and information within your network.

get involvedThere are several ways you can show your support for the foreign-trade zone industry. Contributing your time, resources, andenthusiasmcanhelpmakeadifference.Whateverchoiceyoumake, we are deeply grateful for your support. Learn more at www.naftz.org/get-involved.

AdvoCACYWe are on the frontlines every day promoting the FTZ program and ensuring the interests of the FTZ industry. Learn about our federalprioritiesandfindouthowadvocacybeginswithyou.

ContactErikAutor—eautor@naftz.org

@NAFTZ

/naftzdc

Find us on Facebook Badge CMYK / .ai

bit.ly/NAFTZLinkedIn

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NATIONAL ASSOCIATION OF FOREIgN-TRADE ZONES

Tel: 202-331-1950 Fax: 202-331-1994 www.naftz.org

National Press Building 529 14th Street NW, Suite 1071

Washington, D.C. 20045

@NAFTZ

/naftzdc

Find us on Facebook Badge CMYK / .ai

bit.ly/NAFTZLinkedIn