Short Takes: News from the International Trade Administration
Foreign-Trade Zones Record Increase in Shipments
According to the newly released annual report of the Foreign-Trade Zones Board, the shipment of goods through U.S. foreign-trade zones (FTZs) continued to grow despite the recent economic downturn that began in 2007. In fiscal year 2008, the combined value of shipments into general-purpose zones and subzones totaled nearly $693 billion, compared with $502 billion the previous year. This reflects, at least in part, fluctuations in the prices of commodities such as oil that often pass through FTZs. That figure has grown from $157 billion in 1998.
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FTZs are secure facilities where foreign merchandise can be warehoused or manufactured before the payment of customs duties. Duties are deferred on merchandise that ultimately enters into the U.S. market, and merchandise that is later reexported is exempt from duties.
The Foreign-Trade Zones Act of 1934 established FTZs and created the U.S. Foreign-Trade Zone program to expedite and encourage international trade during the Great Depression. More than 75 years later, the program continues to grow and evolve as a recognized way of encouraging and retaining U.S.–based trade and activity that is consistent with all U.S. trade obligations. Changes in the program have maintained its goal of expediting trade and encouraging activity in the United States that could otherwise be done abroad.
According to the board’s report, 164 FTZ projects were fully active during 2008, with subzones operating in more than 100 of them. Exports to foreign countries from facilities operating under FTZ procedures totaled $40 billion. There were approximately 330,000 employees at some 2,500 firms that operated under FTZ procedures.
The FTZ program is housed within the Department of Commerce’s Import Administration and includes provisions to guard against circumvention of unfair trade remedies or other U.S. trade policies. The program not only benefits U.S. operations, but also supports local economic development and provides an additional layer of import security through an in-depth partnership and oversight by U.S. Customs and Border Protection.
The board’s latest report is available on the Web at www.trade.gov/ftz.
Enforce Trade Rules, Reduce Energy Imports, Says Manufacturing Council
The Manufacturing Council, a federal advisory committee to the secretary of commerce, met on December 15, 2009, to deliberate and adopt a series of recommendations to Secretary of Commerce Gary Locke. The council was responding to a request for specific recommendations on how to create manufacturing jobs and how to revitalize the U.S. manufacturing sector,
“We believe the two most important actions the administration can take to create manufacturing jobs are to reduce our dependence on imported oil and to enforce existing trade rules with China,” said the council in its message to Locke.
The council recommended that the administration consider several strategies to reduce dependence on foreign sources of oil. Those strategies include improving the fuel efficiency of vehicles, instituting wider use of alternative fuels, and developing and increasing domestic energy sources.
The council noted that China now accounts for 40 percent of the U.S. trade deficit and more than 60 percent of the U.S. trade deficit in manufacturing. It urged the administration to take a number of steps regarding trade with China. “Correcting this imbalance will require acting to eliminate Chinese currency manipulation; eliminate subsidies to Chinese manufacturing firms; and eliminate barriers to U.S. exports into China, including business cost disadvantages faced by U.S. manufacturers.”
The Manufacturing Council comprises up to 15 private-sector executives who reflect a balance of U.S. manufacturing industry sectors, geographic locations, and business size. More information about the council, as well as the full text of the council’s recent recommendations, is available on the Web at www.manufacturing.gov/council.
Contributors to this section include Elizabeth Whiteman of the Import Administration and Marc Chittum and Michael Masserman of the International Trade Administration’s Manufacturing and Services unit.