FOREIGN-TRADE ZONES BOARD ANNUAL REPORT Excerpts 59th Annual Report of the Foreign-Trade Zones Board To the Congress of the United States for the fiscal year ended September 30, 1997 FTZ logo

  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for revisions to zone plans, as well as approvals for new manufacturing activity.1 At the same time, applications were withdrawn by applicants in 6 cases based on issues or changed circumstances.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

Merchandise Received FY l997($ bil) FY l996($ bil)
General-purpose zones 16.9 15.1
Subzones 160.9 153.5
______ ______ _____
Total 177.8 168.6

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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.

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Appendices B and C contain figures on shipments into and out of general-purpose zones and subzones. Appendix D contains comparative statistics for the past 5 years. The figures represent the latest statistical data available from grantees. Some are still under review. Adjustments normally amount to less than one percent of aggregate shipments and would be reflected in next year's report.

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)
($ bil)
  1993 1994 1995 1996 1997
Merchandise Received
GP Zones 11.77 13.12 13.67 15.11 16.92
Subzones 92.21 106.45 129.85 153.51 160.92
Total 103.97 119.57 143.51 168.62 177.85
% Subzones 89% 89% 90% 91% 90%

Domestic Status Inputs*
GP Zones 1.61 3.06 4.14 5.28 6.32
Subzones 78.55 90.55 110.23 120.40 114.83
Total 80.16 93.61 114.37 125.68 121.16

Domestic Status Inputs Ratio (%)
GP Zones 14% 23% 30% 35% 37%
Subzones 85% 85% 85% 78% 71%
Average 77% 78% 80% 75% 68%

Foreign Status Inputs
GP Zones 10.16 10.06 9.53 9.82 10.60
Subzones 13.65 15.90 19.62 33.11 46.09
Total 23.81 25.96 29.14 42.94 56.69

GP Zones 3.16 4.51 3.77 4.04 4.23
Subzones 8.49 12.86 13.17 13.05 12.70
Total 11.65 17.37 16.94 17.09 16.93

Exports/Foreign Status Inputs Ratio (%)
GP Zones 31% 45% 40% 41% 40%
Subzones 62% 81% 67% 39% 28%
Average 49% 67% 58% 40% 30%

Approved FTZ Projects 190 196 203 211 219
Active FTZ Projects** 122 124 134 134 141
GP Zones 103 103 107 110 118
Subzones 121 136 159 179 201

* 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 operation.