REPORT OF THE EXECUTIVE SECRETARY
During fiscal 1997, the Foreign-Trade Zones (FTZ) Board issued
79 formal orders. The decisions included approvals for 8 new general-
purpose zones and 37 new subzones. Authority was also granted for the
expansion of 22 existing general-purpose zones and 3 subzones. Other
actions involved the granting of authority for revisions to zone
plans, as well as approvals for new manufacturing activity.1
At the same time, applications were withdrawn by applicants in 6
cases based on issues or changed circumstances.
There were 141 FTZ projects fully active during the year, with
subzones in operation in over 85 of them. The number of facilities
using subzone status increased to 201, with 47 new ones initiating
the use of FTZ procedures and 17 discontinuing.
The combined value of shipments into general-purpose zones and
subzones totaled $177.8 billion compared to $168.6 billion last year.
This increase is consistent with the long-term growth pattern for
zone activity (Figure 1 and Appendix D). General-purposesites
recorded an increase of $1.8 billion, raising the total received at
these facilities to $16.9 billion. Subzones, operating as adjuncts
to general-purpose zones, accounted for the greater part of the rise
in shipments with an increase of $7.4 billion. Total shipments
received at subzone sites amounted to $160.9 billion. With 90
percent of zone activity once again taking place at the latter
facilities, the comparative pattern of the past 15 years continues.2
||FY l997($ bil)
||FY l996($ bil)
Appendix A contains a list with a summary of each Board
Order. Zone authority for manufacturing/processing activity was
granted on a restricted basis in 26 cases, and activation limits were
adopted in another 10. The main products covered by restrictions
included crude oil, steel, and food products.
Appendices B and C contain figures on shipments into and out
of general-purpose zones and subzones. Appendix D contains
comparative statistics for the past 5 years. The figures represent
the latest statistical data available from grantees. Some are still
under review. Adjustments normally amount to less than one percent
of aggregate shipments and would be reflected in next year's
Over 367,000 persons were employed at facilities operating
under FTZ status during the year (compared with 370,000 persons last
year and an average of 310,000 persons over the previous five years).
Zones were used by almost 2,900 firms during the year (compared with
3,550 last year and an average of 2,820 over the previous five
years). The main foreign-origin products received at zones are
listed in Appendix E.
Industry sectors that continued to account for most zone
manufacturing activity were autos, office equipment, machinery,
computers/telecommunications/other electronic products,
pharmaceuticals, and oil refining. The most significant increases in
activity were in the latter three sectors. An estimated 68 percent
of the shipments received at zones for use in manufacturing activity
involved domestic status merchandise, continuing a 10-year pattern.
The level of domestic status inputs used by such FTZ operations
indicates that FTZ activity tends to involve domestic operations that
combine foreign inputs with significant domestic inputs. This
reflects the fact that FTZ procedures serve as a means of
rationalizing Customs treatment to assist domestic plants in their
efforts to be internationally competitive.
The Board received and filed 86 formal applications during
the fiscal year. These proposals requested authority for 9 new
general-purpose zones and 44 subzones, as well as authorization for
expansion and new manufacturing at existing zone projects (Appendix
F). In addition, 60 cases were processed under the Board's less
formal administrative procedures (Appendix G). The latter cases
involved routine, non-controversial changes to zone projects such as
boundary modifications and scope decisions. Some proposals were
processed under the Board's "fast track" procedures, which is used
when there are recent precedents for the contemplated activity or
when only exports are involved.
Last year, exports (shipments to foreign countries) from
facilities operating under FTZ procedures amounted to $16.9 billion
(Figure 2). This figure continues a level volume of exports since
1994 when the average volume of exports increased by 50 percent above
the previous five years. These figures do not include indirect
exports involving FTZ merchandise which undergoes further processing
in the U.S. at non-FTZ sites prior to export.
With regard to administrative matters, it is noted that the
sunset provision of the FTZ Board's regulations (1991 revision) went
into effect during the year. The Board published guidelines to
implement the rule, which provides for the lapse of authority for any
zone or subzone that does not activate within a five-year period from
the date of approval.
Summary FTZ Statistics (FY)
Domestic Status Inputs*
Domestic Status Inputs Ratio (%)
Foreign Status Inputs
Exports/Foreign Status Inputs Ratio (%)
|Approved FTZ Projects
|Active FTZ Projects**
Domestic status merchandise is mainly merchandise of domestic
origin but includes some foreign-origin goods on which Customs entry
and duty payments have been made prior to their entering FTZs.
Active projects have at least one site (including subzones) in