2016A N N U A L R E P O R T

NATIONAL ASSOCIATION OF FOREIGN-TRADE ZONES

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TABLE OF CONTENTS

I. Welcome from the Chairman & President 2

II. Accomplishments and Highlights of 2015 3

III. 2015 Annual Conference in Los Angeles 5

IV. 2015 Seminars and Webinars 7

V. Zone Activity: Trends & Analysis 9

VI. Sector Spotlight: Motor Vehicles 11

VII. New Zones and Production Authorizations 12

VIII. What’s Ahead for 2016 13

IX. NAFTZ Federal Advocacy Agenda 14

X. NAFTZ Board and Committee Chairs 15

XI. Honorary Life Members; Donnie Barnes Memorial 16

XII. Audited Financial Statements for 2013 and 2014 17

XIII. Appendix: What is a Foreign-Trade Zone? 18

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A LETTER OF WELCOME FROM THE NAFTZ BOARD CHAIR & PRESIDENT

2016 NAFTZ Annual Report Looks Back on Eventful Year, Ahead to Full Agenda for 2016

Welcome to the 2016 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 education, events, and advocacy in the year ahead. The report also tells the story of the success 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 600 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 its leader in demonstrating the program’s value and its role in the changing environment of international trade. NAFTZ supports local economic development and the global competitiveness of its members by disseminating vital information and advocating for the expansion of international trade.

The 2016 NAFTZ Annual Report documents how we have been true to that mission. In 2015, NAFTZ hosted popular events for our members, including a successful Annual Conference and Exposition in Los Angeles, California, that attracted 429 attendees. For the first time, NAFTZ events in 2015 featured a mobile app that delivered real-time program information to those attending, and an Advanced Track offering insight into the most challenging FTZ issues. For photos and details of our exciting events in 2015, please see pp. 5-8.

The FTZ program itself continues to thrive and to deliver measurable benefits in a time of uncertainty for the U.S. economy. According to the most recent FTZ Board Annual Report to Congress, FTZ exports and employment have reached record highs. Growth in FTZ activity has been led by consumer electronics, motor vehicles and vehicle parts, pharmaceuticals, and petrochemicals. For FTZ trends and analysis, please see pp. 9-11.

In Washington, D.C., NAFTZ has been a tireless advocate for the interests of our members and an even more useful FTZ program. We have collaborated with major federal agencies, including U.S. Customs and the FTZ Board, to improve the regulation of the program. We have joined with other pro-trade groups to secure passage of Customs Authorization and full funding of the Automated Commercial Environment (ACE). NAFTZ will work closely with U.S. Customs and our members to facilitate a smooth transition to the new system in 2016. For NAFTZ’s ambitious policy agenda in 2016, please see p. 14.

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 2016.

With our best wishes for a prosperous 2016,

Jose Quinonez Daniel Griswold Board Chair President

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NAFTZ’s 2015 Annual Conference and Exposition in Los Angeles, California, attracted more than 425 attendees, who engaged with speakers from U.S. Customs and Border Protection, the FTZ Board, the Office of U.S. Trade Representative, and the Ports of Los Angeles and Long Beach. For more on the great content and social events at NAFTZ’s premier annual gathering of FTZ professionals, please see pp. 5-6.

NAFTZ membership reached 630 in 2015, with growth concentrated again in the category of FTZ operator/user companies.

FTZ exports and employment reached record highs in 2014, according to the Foreign-Trade Zones Board Annual Report to Congress released its in August 2015. • An NAFTZ press release touting the report was posted or published by more than 200 media outlets.

In 2015, NAFTZ made measurable progress in its key advocacy objectives.• Customs Authorization. NAFTZ members advocated for passage of H.R. 644, the Trade Facilitation and Customs

Enforcement Act, during visits to Capitol Hill. NAFTZ co-signed a joint industry letter in December along with more than 20 other pro-trade associations advocating passage of the legislation, including full funding for the Automated Commercial Environment. After years of effort, Congress approved the bill at the end of 2015.

• Revising CBP’s Part 146 Regulations. The U.S. Customs regulations for FTZs were last comprehensively rewritten almost 30 years ago. In 2015, a small working group at NAFTZ collaborated with a team at Customs to produce an initial, comprehensive draft of the Part 146 regulations, balancing the interests of Customs, the trade, and the public. The draft will serve as a starting point for internal vetting at Customs, with the aim of producing a proposed rule for publication and comments in the Federal Register.

• ACE Implementation. Through its ACE Task Force, NAFTZ has maintained close communications with Customs as the major implementation deadlines approach in 2016. On November 17, NAFTZ hosted a well-attended webinar that answered many questions about ACE and featured live polling on the state of ACE preparedness among those participating. In a letter to Customs in December, NAFTZ sought clarification on a number of issues facing FTZ users preparing to file 06 entries in ACE.

• Partner Government Agencies and ACE. NAFTZ engaged with the major PGAs to raise awareness of the special requirements of FTZ importers. In March, NAFTZ participated in the ACE Software Developer Session for PGAs, which focused on the status of various PGA efforts to prepare for the transition of the Customs entry summary and release process to ACE. In a December letter to U.S. Customs, NAFTZ expressed concern about PGA filing requirements for FTZ entries and entry summaries.

• FTZ Board “scope of authority” regulations. An NAFTZ working group collaborated with the FTZ Board staff in 2015 to determine the best way forward to allow FTZ users to stay within their scope of authority for production and manufacturing. The effort is expected to result in a pilot in 2016 to allow companies to use six-digit HTS numbers to describe their scope.

On December 1, 2015, NAFTZ moved to new office space more convenient to key federal agencies with oversight of the FTZ program. Located in the historic National Press Building, 529 14th Street NW, Suite 1071, Washington, D.C., 20045, the NAFTZ office is within two blocks of the U.S. Customs headquarters, the FTZ Board office in the U.S. Department of Commerce, and the U.S. Department of the Treasury. The new office space offers a modern, fully connected conference room and space to accommodate future staff expansion. Meeting at the new office in December 2015 are, from left to right, NAFTZ President Dan Griswold, General Counsel Marshall Miller, and Executive Committee members Rebecca Williams, Trey Boring, and Cornelia Steinert.

ACCOMPLISHMENTS & HIGHLIGHTS IN 2015

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NAFTZ members were among more than 600 zone experts and officials from 70 countries who gathered in Dubai, U.A.E., May 11-13 for the first annual conference of the World Free Zones Organization. As a founding member of the World FZO, NAFTZ played a major role in the event. NAFTZ members attending were Board Chair Jan Frantz, Board Secretary Julie Brown, Board Directors Kenneth Carlstedt and Johnny Fernandez, NAFTZ President Dan Griswold, Past Chair Lewis Leibowitz, and member Wayne Coleman. Jan and Lewis presented major addresses to the general session, reprinted below. Here NAFTZ Board Chair Jan Frantz addresses a general session of the conference.

On February 11, NAFTZ Board members visited more than a dozen congressional offices, including those of Senators Rob Portman (R-OH), Sherrod Brown (D-OH), Ben Cardin (D-MD), Johnny Isakson (R-GA), John Cornyn (R-TX), Chuck Schumer (D-NY), Debbie Stabenow (D-MI), David Perdue (R-GA), and Tim Scott (R-SC); and Representatives Devin Nunes (R-CA), John Lewis (D-GA), Charles Rangel (D-NY) and Xavier Becerra (D-CA). Pictured here are NAFTZ President Dan Griswold, NAFTZ Board Member Julie Brown, and NAFTZ Public Affairs Advisor Jim Smith with Sen. David Perdue (R-GA).

• FTZ Board Zone Schedule Notifications. Based on vigorous input from NAFTZ member grantees, the FTZ Board modified the “disclaimer” language that it had attached to each zone schedule published on the FTZ Board website. The modified disclaimers offer a more comprehensive view of the role of the grantee in administering the zone and promoting local economic development.

• Expanding Production and Manufacturing in FTZs. In an October letter to members of the FTZ Board (the secretaries of Commerce and the Treasury), NAFTZ advocated an application approval process that is more open to the importation of certain politically sensitive inputs. The letter cited the FTZ Board’s own regulations that applications should be assessed on their net economic impact, carefully weighing the full impact of an FTZ project on employment and other key indicators.

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 in FTZ regulations, including timely information about changes in ACE implementation.

• NAFTZ expanded its reach on Twitter, surpassing more than 1,000 followers of @naftz. The association also established an FTZ discussion group on LinkedIn.

• NAFTZ raised awareness of the program through articles it contributed to a special section of the Journal of Commerce published in September prior to the NAFTZ Annual Conference. NAFTZ also contributed articles to other influential trade publications.

• NAFTZ members participated in the first annual conference of the World Free Zones Organization held in May in the United Arab Emirates. For more details, please see the photo and caption nearby.

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2015 ANNUAL CONFERENCE IN LOS ANGELES

Annual Conference & Exposition

September 2015, Los Angeles, CA 429 attendees

NAFTZ’s 43rd Annual Conference was a great success! Over 420 foreign-trade zones professionals attended the single largest event of the year dedicated to FTZs. Specialized tracks were offered for Grantees, Operator/Users, the Petroleum sector, as well as a Fundamentals track for those new to the FTZ Program. The Advanced track was once again well received. The track covered topics such as entry reconciliation, in-bond summary, NAFTA duty deferral and temporary removal, and vendor managed inventory.

At the conference’s opening general session, Eric Caris, Director of Cargo Marketing for the Port of Los Angeles, discussed the importance of FTZs to the state and the local economy. Immediately following his address, Anne Maricich, Acting Director of Field Operations for CBP, provided an overview of the Trusted Trader Program and addressed ACE implementation and key dates for the ACE transition.

Monday’s keynote speaker, Christina Sevilla, Deputy Assistant U.S. Trade Representative (USTR) for Small Business, recognized Foreign-Trade Zones for their role in increasing exports and generating U.S. jobs. Sevilla noted that trade has accounted for one-third of U.S. growth since 2009. She urged NAFTZ members to support congressional approval of the recently concluded Trans-Pacific Partnership agreement.

Anne Maricich, Acting Director of Field Operations for CBP

NAFTZ members enjoy the glitter of the “Stars Come Out at Night” reception at the Loews Hollywood Hotel.

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As part of the FTZ Board Update, Executive Secretary Andrew McGilvray discussed potential changes in the “Scope of Authority” regulations for production operations. He noted that the FTZ Board was planning an outreach and training event for grantees on October 1st.

The Annual Conference featured 17 exhibitors and lively receptions where members could reconnect with old friends and make some new ones. This year marked the second annual NAFTZ 5K Charity Run. With 27 runners participating, the event produced a generous donation to benefit and raise awareness for a local charity called Homeboy Industries.

For many attendees, the Annual Conference event app enhanced their overall event experience. Results show that about 52 percent of attendees downloaded the app. The most popular features were the conference schedule, speaker information, conference session evaluation, as well as tools to connect with other attendees.

Christina Sevilla, Deputy Assistant U.S. Trade Representative (USTR) for Small Business

Eric Caris, Director of Cargo Marketing for the Port of Los Angeles

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2015 SEMINARS AND WEBINARS

Zonecast Webinars

11 webinars hosted in 2015

The NAFTZ 2015 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 up-to date on the latest topics such as the Harmonized Tariff Schedule (HTS), Scope of Authority, and 06 Entry Filing in ACE. Guest speakers included Liz Whiteman of the FTZ Board and Lewis Leibowitz of the Law Office of Lewis E. Leibowitz. Complimentary to all NAFTZ members, the live webinars attracted 578 participants and were viewed on demand 223 times. 2015 webinar attendance marks an increase from 2013 and 2014. With our added feature of live polling, presenters can share real-time results with participants.

Fundamentals of FTZs Seminar

January 4-5, 2015, Austin, TX 71 attendees

NAFTZ welcomed more than 70 attendees to its annual Fundamentals of FTZs Seminar. Speakers included two operator/user veterans−Virginia Thompson of Crate and Barrel, and NAFTZ Board Member Frankie Bryson of Nissan North America−who provided practical experience and perspective from both the warehouse/distribution and the production/manufacturing sides 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.

Legislative & Regulatory Seminar

February 10, 2015, Washington, DC 76 attendees

NAFTZ attendees gathered together in Washington, D.C., to learn the latest developments affecting the Foreign-Trade Zones Program through invited regulators and policy makers from U.S. Customs, the U.S. Foreign-Trade Zones Board, and the Department of Homeland Security. The seminar began with a Congressional Trade panel featuring three Congressional staffers from the House Ways and Means Subcommittee on Trade and the Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness. Trade Counsels Shane Warren (Senate Majority), Nasim Deylami (House Majority), and Beth Baltzan (House Minority) discussed important trade and FTZ-related issues, including the pending Trans-Pacific Partnership and Trans-Atlantic Trade and Investment Partnership agreements, Trade Promotion Authority, Customs Authorization, and the Miscellaneous Tariff Bill process.

In his FTZ Board Update, Executive Secretary Andrew McGilvray engaged in discussions with NAFTZ members on such issues as the publication of zone schedules on the FTZ Board website and the accompanying notifications that the FTZ Board had attached to each schedule. McGilvray also shared some updates on the prevalence of the Alternative Site Framework (ASF), which continued to grow in 2014, with 136 zones now under ASF and 16 pending applications.

The following day, NAFTZ board members participated in Capitol Hill visits. They urged legislators to support the passage of the Customs Authorization Bill with the full funding of the Automated Commercial Environment (ACE). In addition, they informed Congressional members and their staff of the importance of FTZs to the U.S. economy and to their state and district.

NAFTZ Public Affairs Advisor Jim Smith moderates a discussion with key congressional trade committee staff members during the Legislative and Regulatory Seminar.

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Annual Spring Seminar

May 17-19, 2015, Tampa, FL 167 attendees

“FTZs: Competitiveness & Compliance in Global Trade” was the official theme of this year’s Spring Seminar. Mayor Bob Buckhorn, City of Tampa, welcomed attendees and enthusiastically spoke on how FTZs have contributed to the competitive advantage of Florida. After the general sessions, we launched our first ever Advanced Track sessions, which covered topics such as limiting exposure and the value, removal, and operational impact of scrap and waste products. The Advanced track was generally well received.

The program also featured a discussion of the upcoming changes and timeframe for FTZ automation. Jim Swanson of CBP directed attendees to a FTZ Automation Participant Checklist in coordination with NAFTZ’s ACE Task Force which is available on CBP.gov. This session ended with an ACE Task Force update from NAFTZ Board Member Melissa Irmen. Following the CBP Update, attendees split into separate tracks for Grantees, Operator/Users, and Fundamentals. Among the topics covered were in the ins and outs of scope of authority, the e214 Handbook, and new tools for cost-benefit analysis and case studies on targeted marketing for FTZ projects.

After the first full day of sessions, attendees and their families unwound with an evening reception held at the Tampa Museum of Art. The museum contained a spectacular collection of Norman Rockwell’s original artwork.

James Swanson, Director of Cargo Security, U.S. Custom and Border Protection speaks at the Spring Seminar.

FTZ Board Executive Secretary Andrew McGilvray updates NAFTZ members at the Spring Seminar.

NAFTZ members enjoy a reception at the Tampa Museum of Art at the Spring Seminar.

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ZONE TRENDS & ANALYSIS FTZ EXPORTS TRIPLE IN FIVE YEARS, FAR OUTPACING OVERALL EXPORT GROWTH

The Foreign-Trade Zones program continues to make an outsized contribution to U.S. economic growth, with record FTZ exports and employment as documented in the most recent report from the U.S. Foreign-Trade Zones Board.

In 2014, goods exported directly from U.S. foreign-trade zones jumped 24.8 percent from the previous year, to a record $99.2 billion. The increase represents a more than three-fold increase in FTZ exports in the five-year period dating back to 2009. In contrast, total U.S. exports during that same period grew by less than 50%. Please see the nearby chart on FTZ exports.

Among the leading FTZ export sectors is petroleum refining. Of the top 15 exporting subzones in 2014, 11 of them were refineries or petroleum related operations. It remains to be seen what the impact will be on energy-related exports from FTZs after the vote in Congress at the end of 2015 to finally lift the four-decade-old restrictions on exporting U.S.-produced crude oil. Another leading FTZ export sector is motor vehicle production, as highlighted in the Sector Spotlight on p. 11.

Employment in foreign-trade zones also reached a new high in 2014. According to figures compiled by the FTZ Board, 420,000 Americans were employed in FTZ activities in 2014. That marks an increase of 7.7 percent from the previous year, far outpacing overall U.S. employment growth.

“The FTZ program continues to be a vital component of America’s trade policy,” said Daniel Griswold, President of the National Association of Foreign-Trade Zones. “The competitive advantage for companies operating in an FTZ has enabled them to boost their exports and employment to record levels, continuing their strong contribution to America’s economic expansion.”

2009 2010 2011 20132012 2014

FTZ and Total U.S. Exports, 2009-2014

350

300

250

200

150

100

FTZ Exports

Sources: FTZ Board Annual Reports and U.S. Census Bureau. 2009 exports = 100.

U.S. Exports NEI Goal

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On the import side, FTZs have also continued to grow in their importance for U.S. production and distribution operations that rely on global supply chains to remain competitive. Foreign-status inputs to FTZs totaled $288.3 billion in 2014, accounting for 12.1 percent of all foreign goods imported to the United States. FTZ imports have tripled as a share of U.S. imports over the past two decades, as illustrated in the nearby chart on FTZ imports.

Behind the long-term growth in FTZ imports lies a profound shift in the composition of those imports. Because of the dramatic increase in domestic U.S. crude oil production in recent years, driven by the revolution in fracking and other extraction technologies, crude oil has been plunging as a share of overall FTZ imports.

In 2014, petroleum accounted for 51 percent of FTZ imports, its lowest share since 1996. Other, non-oil FTZ imports, such as industrial components and consumer goods, reached a record 5.9 percent of total U.S. goods imports in 2014.

Within non-oil FTZ imports for production, the largest gains were in petrochemicals, motor vehicle parts, pharmaceuticals, and other electronics. Among imports for warehouse/distribution operations, the largest gains were in consumer electronics, motor vehicles, other metals and minerals, pharmaceuticals, and textiles/footwear. “Foreign-trade zones continue to be hubs of manufacturing activity where domestic and foreign-sourced inputs are combined by American workers on U.S. soil to produce value-added final products for export and domestic consumption,” said Daniel Griswold. “Key U.S. industries depend on the FTZ program to remain competitive. But we can do even better. U.S. Customs should take every step to enable FTZ users to fully integrate into the Automated Commercial Environment as soon as possible to make sure that U.S. FTZ manufacturing operations can take full advantage of global supply chains.”

There were 179 active FTZs during 2014, with a total of 311 active production operations; 2,700 firms used FTZs during the year. The FTZ Board processed 57 applications for new or expanded production authority in 2014, and reorganized 18 zones under the alternative site framework (ASF).

20001990 201020051995

FTZ Imports as a Share of Total U.S. Goods Imports, 1990-2014

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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FTZ SECTOR SPOTLIGHT: MOTOR VEHICLE MANUFACTURING & DISTRIBUTION

For decades, the Foreign-Trade Zones program has provided a profitable and competitive home for the U.S. automotive industry. Today many of the top international motor vehicle manufacturers are producing record output from FTZ subzones across the United States.

Locating in a foreign-trade zone allows automobile manufacturers to reduce duties on imported parts and other materials and to eliminate duties entirely on inputs that are then re-exported as components in finished vehicles. Manufacturers and distributors alike save from deferring the payment of duties until the cars leave the zone for entry into the U.S. market for domestic sale.

FTZ-based automakers have been leading the remarkable recovery of U.S. manufacturing output and exports in recent years. Since 2009, U.S. motor vehicle exports have more than doubled, to a record 2.1 million vehicles in 2014. Among the most successful exporters have been such FTZ-based producers as:

• BMW Manufacturing in Greer, South Carolina, FTZ Subzone 38A. In 2015, the company produced its 3 millionth vehicle at the plant. Production now tops 350,000 vehicles a year, 70 percent of which are exported. The company is investing an additional $1 billion in the plant from 2014 through 2016, which will increase total employment to nearly 9,000.

• Nissan North America in Smyrna, Tennessee, Subzone 78A, and Canton, Mississippi, Subzone 158D. The Japanese-owned automaker has ramped up U.S. production in recent years. Nissan’s exports rose 29 percent in 2014 to 129,761 units. According to the U.S. Commerce Department, “Nissan moved production of the Murano from Japan to Canton in 2014, and the plant now serves as the global source of Murano production with export opportunities to markets worldwide. Nissan exports to dozens of markets around the globe from the United States across its product range, including the Altima, Pathfinder, Rogue, and the Infiniti QX60.”

• Mercedes-Benz U.S. International in Vance, Alabama, Subzone 98A. The plant produces the M-Class, R-Class, GL-Class, C-Class and the GLE Coupe vehicles for 135 worldwide export markets. The FTZ operation employs 3,200 people producing approximately 232,000 vehicles in 2014. More than half the vehicles manufactured at the plant are exported to markets outside the United States, Canada, and Mexico.

Foreign-trade zones have also proven useful to automakers that import finished or near-finished vehicles from abroad. Distributing vehicles through an FTZ allows the companies to defer paying duties on inventory that can often spend 30 to 120 days in the zone before entry into the U.S. market. It can also allow for the more economical installation of accessories to the vehicles once in the zone. With the aid of FTZs, ports such as Tacoma, Long Beach, Port Hueneme (CA), Newark (NJ), Philadelphia, Baltimore, Brunswick (GA), and Jacksonville (FL) have become major hubs for imported automobile distribution. This table lists the major automobile manufacturers currently operating in a U.S. FTZ.

Major Motor Vehicle Manufacturing FTZ Subzones, 2014

Company Zone Location SubzoneMerchandise

Received Exports ShipmentsBMW Manufacturing Co. Greer, SC 38A $5,000–$10,000 $500–$750 $5,000–$10,000

Honda America Manufacturing Inc. Marysville, OH 46B $10–$25 $1–$5 $5–$10

Honda America Manufacturing Inc. Anna, OH 46D $1–$5 $1–$5 $1–$5

Hyundai Motor Manufacturing Montgomery, AL 222A $5,000–$10,000 $500–$750 $5,000–$10,000

Mercedes-Benz U.S. International Vance, AL 98A $10,000–$25,000 $5,000–$10,000 $10,000–$25,000

Nissan North America Inc. Canton, MS 158D $1,000–$5,000 $250–$500 $1,000–$5,000

Nissan North America Inc. Smyrna, TN 78A $10,000–$25,000 $1,000–$5,000 $10,000–$25,000

Tesla Motors, Inc. Fremont, CA 18G $500–$750 $100–$250 $500–$750

Toyota Motor Manufacturing Georgetown, KY 29E $5,000–$10,000 $750–$1,000 $5,000–$10,000

Toyota Motor Manufacturing Buffalo, WV 229A $5–$10 $1–$5 $5–$10

Volkswagen Group of America Chattanooga, TN 134 $1,000–$5,000 $250–$500 $1,000–$5,000

Source: Foreign-Trade Zones Board, 76th Annual Report to Congress. The report covers zone activity in 2014. All values are in millions of dollars. The board reports the dollar value of individual subzone activity in ranges to protect proprietary information.

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NEW FOREIGN-TRADE ZONES, ASF REORGANIZATIONS, SUBZONES, AND PRODUCTION ACTIVITIES APPROVED IN 2015

New Foreign-Trade ZonesZone Location Zone No. ApprovalCameron Parish, LA FTZ 291 01/23/15Lake County, FL FTZ 292 01/23/15Limon, CO FTZ 293 06/19/15Paducah, KY FTZ 294 11/25/15

All four of the new FTZs approved in 2015 were established under the Alternative Site Framework.

Alternative Site Framework Reorganizations The following zones were approved for reorganization under the Alternative Site Framework in 2015. As of Dec. 17, 2015, there were 147 zones organized under ASF, with 12 applications pending.

Zone Location Zone No. ApprovalDublin, VA FTZ 238 01/23/15Houston, TX FTZ 84 02/12/15Waterville, ME FTZ 186 03/20/15Bangor, ME FTZ 58 03/20/15Buffalo, NY FTZ 23 04/10/15Prince George's County, MD

FTZ 63 04/14/15

Lewiston-Auburn, ME

FTZ 263 04/16/15

Windsor Locks, CT FTZ 71 04/16/15San Antonio, TX FTZ 80 04/16/15Newark/Elizabeth, NJ

FTZ 49 05/15/15

Cedar Rapids, IA FTZ 175 05/18/15Orlando, FL FTZ 42 07/02/15Bowie County, TX FTZ 258 12/01/15Pittsburgh, PA FTZ 33 12/01/15

New FTZ Subzones & Production Activities

Company Location Zone or Subzone Approval

Airbus Americas, Inc. Mobile, AL 82 01/08/15Schumacher Electric Corp. Hoopeston, IL 245B 02/04/15Spenco Medical Corp. Waco, TX 246A 02/23/15MAT Industries Jackson, TN 283 02/24/15Red Wing Shoe Co. Salt Lake City, UT 30A 02/25/15Komatsu America Corp. Newberry, SC 127 03/04/15MH Wirth, Inc. Theodore, AL 82 03/06/15Thyssenkrupp Presta Danville

Danville, IL 245C 03/06/15

M & G Resins USA Corpus Christi, TX 122S 03/11/15Keurig Green Mountain Auburn, WA 5A 03/13/15Coleman Co. Sauk Rapids, MN 119I 03/18/15Keurig Green Mountain Suffolk, VA 20F 03/25/15MAT Industries Springfield, MN 119J 03/25/15Red Wing Shoe Co. Red Wing, MN 119K 04/23/15MHI Compressor International Corp.

Pearland, TX 84 05/15/15

Spectro Coating Corp. Leominster, MA 27N 05/15/15Global Solar Energy, Inc. Tucson, AZ 174 05/20/15Mizuno USA, Inc. Braselton, GA 26 05/22/15Roger Electric Corp. Bayamon, PR 61O 05/22/15Cormetech Durham and Butner,

NC 93I 06/18/15

Keurig Green Mountain Jersey City, NJ 49N 06/24/15Samsung Electronics America, Inc

Coppell, TX 168 06/29/15

Helly Henson USA Auburn, WA 5B 07/15/15Isola USA Corp. Ridgeway, SC 127 07/21/15Syncreon Logistics (USA) Torrance, CA 202 07/30/15Autogermana San Juan, PR 61Q 08/06/15Toyota Motor Manufacturing Alabama

Huntsville, AL 83E 08/12/15

Valeo North America, Inc. Dallas, TX 39 08/12/15Michaels Stores Procurement Co.

Lancaster, CA 191A 08/14/15

Syngenta Crop Protection LLC

St. Gabriel and Baton Rouge, LA

154B 08/27/15

CoLinx, LLC Crossville, TN 148 09/01/15Voestalpine Texas Portland, TX 122T 09/25/15Saft America Inc. Jacksonville, FL 64 10/01/15Tesla Motors Sparks, NV 126D 10/15/15Swarovski Lighting Plattsburgh, NY 54A 10/28/15Swisscosmet Corp. New Port Richey, FL 79D 10/30/15Springsteen Logistics Rock Hill and Fort

Lawn, SC 38J 11/09/15

Cookson Co., Inc. Goodyear, AZ 277 11/16/15Outokumpu Stainless USA Calvert, AL 82 12/01/15Sasol Chemicals (USA) Calcasieu Parish, LA 87E 12/01/15Festo Corp. Mason, OH 46 12/04/15Kohler Co. Sheboygan, WI 41M 12/11/15Haier America Trading Olive Branch, MS 262B 12/16/15

Nissan Manufacturing Team Members, Smyrna, Tenn.

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NAFTZ Scheduled Events

Fundamentals of FTZs January 10-11, 2016 The Queen Mary, Long Beach, CA

Annual Spring Seminar May 22-24, 2016 Loews Vanderbilt Hotel Nashville, Nashville, TN

Legislative & Regulatory Seminar February 9, 2016 Loews Madison Hotel, Washington, DC

Annual Conference & Exposition October 16-19, 2016 Loews Royal Pacific Hotel, Orlando, FL

WHAT’S AHEAD FOR NAFTZ MEMBERS IN 2016

FTZ Board Calendar

• March 31, deadline for all grantees to report 2015 zone activity to FTZ Board

• FTZ Board’s 77th Annual Report to Congress on FTZ Activity in 2015, likely to be released in late August or early September.

Regulatory Action

• February 28, 2016. FTZ 06 entry filers will only be permitted to file in ACE and no longer permitted to file in the Automated Commercial System (ACS). In addition, electronic data for the following agencies must be filed in ACE: Food and Drug Administration (FDA), National Highway Traffic Safety Administration (NHTSA), and Animal and Plant Health Inspection Service (APHIS) for Lacey Act transactions.

• July 2016. All FTZ e214 admissions must be filed in ACE. CBP will issue a Final Rule implementing the “no hybrid” policy. Hybrid submissions, those that are a combination of electronically submitted information via ACE and paper forms, will be allowed until the effective date of a Final Rule, anticipated for publication in July 2016.

• October 1, 2016: Mandatory use of ACE for all remaining electronic portions of the CBP cargo process, including protest, reconciliation, NAFTA Duty Deferral, drawback, liquidation data, etc.

Congressional Action• Congress will consider passage of the Trans-Pacific Partnership trade agreement with 11 other Pacific Rim

nations, including Canada, Mexico, and Japan.

• NAFTZ plans annual Congressional visits February 10.

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.

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NAFTZ’S POLICY AGENDA FOR 2016

In 2016, the NAFTZ Board of Directors has determined to pursue the following policy objectives as the top priorities of the association:

1. A smooth transition of FTZs to the Automated Commercial Environment in conformity with key deadlines. In cooperation with U.S. Customs, NAFTZ is advocating realistic deadlines with adequate opportunity for testing of software compatibility, and the full participation of key Partner Government Agencies in the International Trade Data System. Foreign-trade zones process more than 12 percent of total U.S. goods imports, so full and timely integration of FTZs into ACE is vital to maintaining the flow of international commerce across America’s borders.

2. A complete revision of the Customs Part 146 regulations of FTZs. The regulations have not been comprehensively rewritten since 1986. NAFTZ advocates a modernization of the Customs regulations to fully account for the revolution in CBP automation and the equally sweeping changes in modern global supply-chain management. Among other changes, NAFTZ is seeking an expansion of direct delivery and elimination of the outdated five-day rule and the blanket 216 for manufacturing, manipulation, and exhibition. NAFTZ would welcome a proposed rule soon that would transform the regulations to meet the 21st century needs of Customs, the FTZ community, and our more globally integrated U.S. economy.

3. Revise the FTZ Board’s “scope of authority” regulations to encourage industry compliance. The current regulations do not adequately allow FTZ operator/user companies to modify their list of imported components to reflect the changing demands of global competition. NAFTZ has been collaborating with the FTZ Board to introduce changes that would allow the use of six-digit Harmonized Tariff Schedule numbers and retrospective filing to better allow companies to maintain compliance and keep assembly lines in operation. The association will seek a pilot program for the HTS filings and proposed new regulations for retrospective adjustments.

4. Trade Equality for American Manufacturers (TEAM). Enactment of free-trade agreements in the past two decades have exposed FTZ producers to increased competition from imports from FTA partner countries that actually face lower duties than products made by American workers in FTZs. NAFTZ is ready to work with U.S. lawmakers to modernize the Foreign-Trade Zones Act to put American manufacturers on an equal footing with their competitors in Canada, Mexico, and other FTA countries. The potential passage of the Trans-Pacific Partnership agreement in 2016 makes the TEAM initiative even more urgent.

Additional policy goals of NAFTZ in 2016:

• Expand the June 2013 Customs pilot to include extending direct delivery to non-owner operators and affiliates.

• Modify the Census Bureau’s Automated Export System so that the in-bond fields are optional for those who choose the FTZ identifier, thus capturing more “indirect” FTZ exports in Census data. At the same time, working with the FTZ Board to encourage the reporting of full FTZ export value-added in the annual reports. The result of these initiatives will be more robust FTZ export data, reflecting the full, positive impact of the program on U.S. trade and economic growth.

• Modernizing the U.S. Customs in-bond regulations, consistent with ACE implementation.

• Revise the FTZ Board process for approval of production authority applications that face certain domestic opposition to allow broader utilization of the program.

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NAFTZ BOARD OF DIRECTORS, COMMITTEE CHAIRS & STAFF

Board of DirectorsChairman of the Board

Jose Quinonez Foreign-Trade Zone Manager, City of El Paso, El Paso Int’l Airport

Vice Chairman Trey Boring Sr. Vice President IMS Worldwide, Inc.

DirectorsAngie Atwood FTZ Administrator Columbus Regional Airport Authority

Frankie Bryson Manager, Import Compliance Nissan North America

Kenneth Carlstedt Global Compliance Manager, Momentive Performance Materials

William Carr US Customs Compliance Phillips 66

Lesley Couch Principal Indigo Trade Solutions

Johnny Fernandez Executive Director CODEZOL C.D.

Treasurer Rebecca Williams Managing Director The Rockefeller Group, LLC

Secretary Cornelia Steinert Program Manager, International Trade Canon Virginia, Inc.

Bill Fisher Chief Compliance Officer FTZ Networks, Inc.

Shannon Fura Partner Page Fura, P.C.

James Grogan Senior Manager Ernst & Young LLP

Melissa Irmen SVP, Products & Strategy Integration Point

Sean Lydon President ISCM Inc.

Honorary Director Domenick Gambardella PriceWaterhouse-Coopers, LLP

Committee ChairsChair, Accreditation Committee

Amie Ahanchian Managing Director KPMG LLP

Chair, Automation Committee Elizabeth Connell Vice President – Product Management Integration Point

Chair, Customs Committee Curtis Spencer President IMS Worldwide, Inc.

Chair, Grantee Committee Sonya Lopez-Sosa Foreign-Trade Zone Manager Port of Corpus Christi

Chair, Internal Policy Manual Committee Shannon Fura Partner Page Fura, P.C.

Chair, Membership Committee Eric Berry Senior Manager PointTrade Services, Inc.

Chair, Operator/User Committee Shana Head Manager of FTZ Operations Abbott

Chair, Petroleum Committee Michael Thomas President/CEO Thomas International Group

Chair, Program Committee Shane Williams FTZ Administrator Port of Houston Authority

Chair, Regulated Industries Committee Sean Murray, Esq. Partner Miller & Company P.C.

StaffDaniel Griswold President

Jarmila Zapata Manager of Communications and Member Services

Victoria Cartwright Manager of Education and Meetings

NAFTZ members honored the life of NAFTZ Past Chair Donnie Barnes (1947-2015) on Sept. 30, 2015, at NAFTZ’s 43rd Annual Conference in Los Angeles, CA. To a standing ovation by more than 400 people in attendance, Donnie’s husband, Ed Barnes, accepted the NAFTZ Lifetime Achievement Award on her behalf. Pictured with Ed are current board members and past chairs. Front row, left to right: Cornelia Steinert, Brandi Hanback, Ed Barnes, Jan Frantz, Marshall Miller, Melissa Irmen. Second row, left to right: Greg Jones, David Ostheimer, Rebecca Williams, Tommy Berry, Ray Shaw, Dom Gambardella, Scott Wienke, Trey Boring, Lewis Leibowitz, Bill Fisher, Kenneth Carlstedt, Jose Quinonez, Jim Maloney, and NAFTZ President Dan Griswold.

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NAFTZ PAST BOARD CHAIRS & PRESIDENTS & HONORARY LIFE MEMBERS

Past Board Chairs and Presidents2013-2015 Jan Frantz, BC/CAL/KAL Inland Port Development Corp.

2012-2013 Scott Wienke, Abbvie, Inc.

2011-2012 Lewis Leibowitz, Hogan Lovells US LLP

2009-2011 Linda C. Hothem, Pacific American Group

2007-2009 Brandi B. Hanback, The Rockefeller Group

2005-2007 Ray E. Shaw, Aligned Borders Solutions LLC

2003-2005 Phyllis Saathoff, Port Freeport

2001-2003 Donnie B. Barnes, LCB BMW Manufacturing Co., LLC

1999-2001 Dom Gambardella, PricewaterhouseCoopers, LLP

1997-1999 Karen Sager, FTZ Consulting LLC

1995-1997 Chris Koelfgen, Foreign-Trade Zone Services

1993-1995 Greg Jones, Foreign-Trade Zone Corp.

1991-1993 Catherine Durda, FTZ 49, New York, NY

1989-1991 Tommy L. Berry, PointTrade Services, Inc.

1987-1989 Dennis J. Curran, Sandler & Travis Trade Advisory Inc.

1985-1987 Roy Jaeger, FTZ 49, Newark, NJ

1983-1985 Joseph O’Connor, FTZ 44, Mount Olive, NJ

1981-1983 Robert G. Brave, FTZ 14, Little Rock, AR

1979-1981 Marshall Miller, Miller & Company, P.C.

1977-1979 Craig J. Rovzar, FTZ 18, San Jose, CA

1975-1977 Robert N. Dee, FTZ 2, New Orleans, LA

1973-1975 Homer A. Maxey, FTZ 9, Honolulu, HI

Honorary Life Members 1979 Homer A. Maxey, Jr., FTZ 9, Honolulu, HI

1982 Marshall Miller, Esq., Miller & Co.

1986 Robert N. Dee, FTZ 2, New Orleans, LA

1988 Joseph O’Connor, FTZ 44, Mount Olive, NJ

1993 Dennis J. Curran, Sadler & Travis Trade Advisor

1995 Tommy L. Berry, PointTrade Services, Inc.

2000 Greg Jones, Foreign-Trade Zone Corporation

2007 Domenick Gambardella, PriceWaterhouseCoopers, LLP

2007 Karen Sager, FTZ Consulting LLC

2008 Donnie Barnes, BMW Manufacturing Co., LLC

2008 David Ostheimer, Lamb & Lerch

LIFETIME ACHIEVEMENT AWARD FOR DONNIE BARNES

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AUDITED FINANCIAL STATEMENTSNational Association of Foreign-Trade Zones Statement of Activities for the Years Ended December 31, 2013 and 2014

2013 2014

SUPPORT & REVENUE

Dues $ 600,415 $ 608,970

Registrations 514,379 480,550

Sponsorships 139,656 134,760

Investment income 268 1,155

Exhibit booths 23,160 31,000

Other income 16,992 16,009

Total Support & Revenue $ 1,294,870 $ 1,272,444

EXPENSES

Salaries $ 336,470 $ 352,581

Conference & seminars 292,434 260,463

Professional fees 133,016 129,719

Rent 83,590 86,420

Employee benefits 59,323 64,978

Credit card fees 28,423 26,530

Communications 24,947 24,897

Payroll taxes 22,999 24,513

Printing 24,415 24,427

Insurance 13,651 14,882

Taxes 14,437 14,713

Other operating expenses 10,113 11,060

Equipment rental & maintenance 10,042 10,239

Supplies 5,884 9,514

Travel 9,236 9,495

Depreciation 8,020 6,562

Postage & delivery 5,948 6,376

Publications & subscriptions 4,819 6,052

Website 6,560 5,844

Contract labor 3,296 2,320

Total Expenses $ 1,097,623 $ 1,091,585

OPERATING INCOME (LOSS) $ 197,247 $ 180,859

OTHER INCOME (EXPENSE)

Realized & unrealized investment gains (losses) — 1,501

CHANGE IN NET ASSETS $ 197,247 $ 182,360

NET ASSETS, BEGINNING OF YEAR 282,354 479,601

NET ASSETS, END OF YEAR $ 479,601 $ 661,961

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APPENDIX: WHAT IS A FOREIGN-TRADE ZONE?Foreign-trade zones (FTZs) are designated areas within the United States which, for the purposes of tariff laws and Customs entry procedures, are treated as though they are outside of 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 foreign-trade zones for storage, exhibition, assembly, manufacture, production, and processing, without formal Customs entry procedures, the payment of Customs duties, or the payment of federal excise taxes. These benefits help stimulate U.S. employment, attract foreign investment, and improve the export 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 finished product from an FTZ for U.S. consumption, they may elect to pay Customs duties at either the rate of the finished product or that of its foreign components. This option allows U.S. based firms to select the lower of the two duty rates, placing them on equal footing with their foreign competitors.

Zones also increase the export competitiveness of U.S.-based producers. When merchandise is removed from a foreign-trade zone, Customs duties can be eliminated if the goods are then exported from the United States. This benefit helps U.S. firms compete in export markets.

If merchandise is removed from a zone and formally entered into U.S. commerce, Customs duties and excise taxes are not due until the time of transfer from the foreign-trade zone. This delay allows firms to realize cash flow savings while goods are being processed in the zone.

Designation as a foreign-trade zone is granted by the Foreign-Trade Zones Board, which is 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-day activities of the Board and supervises the FTZ Board staff. Grants of Authority are given by the FTZ Board to state and local government agencies or non-profit corporations, known as Grantees, which are then empowered to establish and maintain zone projects in their communities as a public utility. Since 2009, a majority of active zones have re-organized under the Alternative Site Framework, which allows a simpler and expedited process for designating “subzones” and “usage-driven sites” at the facilities of specific companies.

The other important federal agency involved in the FTZ program is U.S. Customs and Border Protection (CBP). U.S. Customs and Border Protection is responsible for the control of merchandise moving into and out of FTZs, and ensures that all revenues are collected properly. In addition, CBP is charged with ensuring that all zone procedures are in compliance with the Foreign-Trade Zones Act, and that all CBP and other federal agency 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.

Nat iona l Assoc ia t ion of Fore ign -Trade Zones

529 14th Street NW, Suite 1071 Washington, D.C. 20045

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