64th Annual Report of the
Foreign-Trade Zones Board
to the Congress of the United States

for the fiscal year ended
September 30, 2002

REPORT OF THE EXECUTIVE SECRETARY

  During the 2002 fiscal year, the Foreign-Trade Zones (FTZ) Board issued 54 formal orders. The decisions included approvals for three new general-purpose zones and 18 new subzones. Authority was also granted for the expansion of 15 existing general-purpose zones and 11 subzones. Other actions involved the granting of authority for revisions to zone plans, as well as approvals for new or increased manufacturing activity. ¹

  There were 150 FTZ projects fully active during the year, with subzones in operation in more than 100 of them. The number of facilities using subzone status increased to 237, with 22 new ones initiating the use of FTZ procedures and five discontinuing.

  The combined value of shipments into general-purpose zones and subzones totaled $204.1 billion, compared with $225.2 billion last year( Figure 1 and Appendix D). It appears that a major portion of the decrease in the value of zone shipments was related to lower crude oil prices during the period, which affected the value of inputs to a substantial number of zone operations in the oil refining industry. General-purpose sites received $32 billion in merchandise. Total shipments received at subzone sites amounted to $172.1 billion. Some 84 percent of zone activity took place at subzone facilities, which is consistent with the pattern of the past 15 years.²

          ____________________________________________________
          Merchandise Received      FY 2002 ($ bil)3     FY 2001 ($ bil)3
          General-purpose zones		32.0		29.5
          Subzones		              172.1	              195.7
          _____                                          _____                     _____
          Total                      	              204.1                       225.2
          ____________________________________________________

  Exports (shipments to foreign countries) from facilities operating under FTZ procedures amounted to $15.6 billion (Figure 2). The export figures do not include indirect exports involving FTZ merchandise that undergoes further processing in the United States at non-FTZ sites prior to export.

  Some 319,000 persons were employed at the 2,285 firms that operated under FTZ status during the year. The main foreign-origin products received at zones are listed in Appendix E.

  Industries that continued to account for most zone manufacturing activity included the oil refining, automotive, electronic, and pharmaceutical product sectors. An estimated 65 percent of the shipments received at zones for use in manufacturing activity involved domestic status merchandise. The level of domestic status inputs used by FTZ operations indicates that FTZ activity tends to involve domestic operations that combine foreign inputs with significant domestic inputs.

  The Board received and filed 46 formal applications during the fiscal year. These proposals requested authority for one new general-purpose zone and 18 subzones, as well as authorization for expansion and new manufacturing at existing zone projects (Appendix F). In addition, over 75 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.

   
(1)   Appendix A contains a summary of each Board Order. Zone authority for manufacturing/processing activity was granted on a restricted basis in nine cases, and activation limits were adopted in another nine. The main products covered by restrictions included crude oil, steel, textiles and robotics. (back)

(2)   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 five years. The figures represent the latest statistical data available from grantees. Some are still under review. Adjustments normally amount to less than 1 percent of aggregate shipments and would be reflected in next year’s report. (back)

(3)   The dollar values in this report and appendices are rounded numbers. Calculations were performed before rounding. (back)

	1998	1999	2000	2001	2002
Merchandise Received
GP Zones	20.6	24.6	28.2	29.5	32.0
Subzones	136.5	149.0	209.9	195.6	172.1
Total	157.1	173.6	238.0	225.2	204.1
% Subzones	87%	86%	88%	87%	84%

Domestic Status Inputs1
GP Zones	8.5	11.1	15.0	15.6	16.5
Subzones	96.3	104.5	136.8	123.1	117.0
Total	104.8	115.7	151.8	138.6	133.6

Domestic Status Inputs Ratio

GP Zones ..............	41%	45%	53%	53%	52%
Subzones	71%	70%	65%	63%	68%
Average	67%	67%	64%	62%	65%

Foreign Status Inputs
GP Zones	12.1	13.5	13.2	14.0	15.5
Subzones	40.2	44.5	73.1	72.6	55.0
Total	52.3	57.9	86.3	86.5	70.5

Exports2
GP Zones .................	6.6	6.5	3.7	3.8	3.5
Subzones	10.3	10.3	11.0	11.6	12.2
Total	17.0	16.8	14.7	15.4	15.6

Exports/Foreign Status Inputs Ratio (%)

GP Zones ..................	55%	48%	28%	27%	22%
Subzones	26%	23%	15%	16%	22%
Average	32%	29%	17%	18%	22%

Approved FTZ Projects

226

232

231

238

241

Active FTZ Projects3	145	142	145	146	149
GP Zones	123	121	117	113	116
Subzones	204	210
216	220	237

¹ 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.

² Export figures are based on material inputs and do not include value added.

³ Active projects have at least one site (including subzones) in operation.

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