U.S. Foreign-Trade Zones may be bright spot for shippers in 2020

The Foreign-Trade Zones (NAFTZ), Exposition will be held Monday, September 9 through Wednesday, September 11 at The Palmer House Hilton in Chicago.

By ·

With trade policy currently a hot political topic, the U.S. Foreign-Trade Zones program plays an even more important role in promoting trade, investment, and job creation. Indeed, industry leaders say it’s a “show stealer” this year. 

The Foreign-Trade Zones (NAFTZ), Exposition will be held Monday, September 9 through Wednesday, September 11 at The Palmer House Hilton in Chicago.

Erik Autor, president of NAFTZ, says large-scale distribution operations – particularly in consumer products – is showing the most growth these days. 

“The biggest users of the FTZ program continue to be in the automotive, pharmaceuticals, aerospace, consumer products, and petroleum industries,” he says. “And while we have not seen any noticeable increase in the number of zone operators, we have seen a significant increase in the number of zone projects approved by the Foreign Trade Zones Board. This suggests current operators in the program are increasing their zone activities.”

A big reason for this surge in activity, adds Autor, is to mitigate risk at a time of global trade uncertainty.

“The benefits under the FTZ program provide participating companies cash-flow and supply-management predictability in admitting imported goods into a zone free of duty, paying duty only when the goods leave the zone into U.S. customs territory, and paying no duty when exporting from a zone,” he says.

This situation is significantly different than for companies operating in the U.S. outside a zone. According to Autor, this is especially important given that the average U.S. duty rate was approximately 2 percent prior to the additional duties imposed under the various trade actions. The additional duties now range from 15-30 percent on a significant portion of U.S. trade.

“Clearly managing the trade actions by the Administration will continue to be a major challenge,” says Autor. “This includes the threat of Sec. 232 duties on vehicles and parts, 301 duties on the EU and France, and further escalation of the tit-for-tat trade war with China.”

In a political environment where it is unclear what, if anything, might get through Congress prior to next year’s election, another challenge is advancing the NAFTZ’s legislative agenda as part of a USMCA implementation.

Autor explains that this bill will clarify the tariff treatment of FTZ merchandise and address three unfair restrictions on FTZ manufacturers and distributors that companies in Canada and Mexico do not face. 

Another hurdle is to advance their regulatory agenda, including major revisions to update the FTZ rules and integrating the compliance data for all agencies regulating imports onto Customs’ Automated Commercial Environment (ACE) software platform. 

“More generally,” concludes Autor, “our continuing challenge during a period of major changes in global commerce and technology is to ensure that the FTZ program is recognized and structured in a way that will allow it to continue its primary mission — creation and enhancement of business operations and jobs in the United States, attracting investment into American communities, and promoting exports.”


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [ protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
Are Your Profits Taking a Hit in This New Retail Environment?
This whitepaper aims to provide a better understanding of whether it might be a solution for your retail supply chain operations.
Download Today!
From the September 2019 Logistics Management Magazine Issue
For me, September is the time to make a fresh start. It’s the beginning of new school year for the kids; a new college and professional football season ramps up; and, of course, conference season for nearly all professions is about to get into full swing.
IMO 2020 is Coming to Town: Will the spiking cost of fuel cause you pain?
Cold Chain/ Food Logistics: Setting the standard for cold chain
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly newsletter!
Latest Webcast
The State of Rail/Intermodal Markets. Volumes are down, but the future looks bright
In this webcast, our panel will provide a comprehensive update on the current state of the rail/intermodal markets and offer an in-depth look at the pain points shippers have been experiencing (service challenges, precision scheduled railroading (PSR), rates, capacity management) and offers shippers advice on how to prepare for the Q4 2019.
Register Today!
EDITORS' PICKS
Masters of Logistics 28th Edition: Find your digital direction
Given the number of available and emerging digital solutions capable of transforming and improving...
36th Annual Quest for Quality Awards: Winners in the spotlight
Which carriers, third-party logistics (3PL) providers and U.S. ports have reached the pinnacle of...

State of Logistics in 2019: What’s next?
Tight capacity, high rates, rapid e-commerce growth and a booming economy fueled an 11.45% rise in...
Got labor? How supply chain companies are recruiting talent during a labor crunch
How are companies faring in the race to recruit and train high-level supply chain talent in a market...