U.S. Foreign-Trade Zones: Current Issues

U.S. Foreign-Trade Zones: Current Issues

Order Code RL30268
CRS Report for Congress
Received through the CRS Web
U.S. Foreign-Trade Zones: Current Issues
July 28, 1999
Mary Jane Bolle
Specialist in International Trade
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

ABSTRACT
This report provides an overview of the U.S. foreign-trade zone system which has evolved
under the U.S. Foreign-Trade Zones Act of 1934 [P.L. 73-397, 19 U.S.C. 81(a)-81(u)]. The
report covers what zones are and how they function, the history of the U.S. zone system, how
the zone system has evolved from its original intent, and policy issues and legislative issues
relating to zones. Twelve tables and figures provide a list of zones and subzones by state, and
information on zone or subzone application, cost savings available to zone users, winners and
losers from zone use, and major zone legislation in the 105th and 106th Congresses. While this
report mentions specific bills, it is not intended as a bill-tracking device. It will be updated
periodically, as needed.

U.S. Foreign-Trade Zones: Current Issues
Summary
Foreign-trade zones are the U.S. version of free trade zones scattered around
the world. Free trade zones are geographic areas which primarily facilitate economic
development, and co-production — the joint production of a single good through the
efforts of workers in two or more countries. All zones are geographic areas which
are physically located inside the boundaries of the country, but treated as if they were
located outside the country for customs purposes. Thus, for goods or materials which
are imported, processed, and later re-exported, no tariffs are payable and customs
procedures are streamlined.
The 235 U.S. zones are among nearly 850 zones world-wide, but differ from
them in two major ways. First, two-thirds of the world’s zones are in developing
countries, producing primarily for export, while U.S. zones produce primarily for
import. Second, whereas many foreign zones are exempt from customs oversight,
taxes, and regulations, U.S. zones are subject to customs control as well as most other
federal, state and local laws and taxes.
Most goods enter the United States through customs at the port of entry, and
then travel to their ultimate destination. Imports which are not yet complete, needed,
or allowed to enter the United States (for quota reasons, for example) after being
unloaded at ports of entry, may be taken to a nearby foreign-trade general purpose
zone (for warehousing or further processing) or to a special purpose subzone (a
manufacturing site which is separate from but linked to a zone.)
The system of U.S. foreign-trade zones has evolved greatly over its 65-year
history since it was set up by the U.S. Foreign-Trade Zones (FTZ) Act in 1934 [P.L.
73-397, 19 U.S.C. 81(a)-81(u)]. Envisioned by some as an engine of export growth,
it has become largely a system for avoiding inverted tariff structures on imports
(higher duties on components than on finished products.)
Policy questions relating to zones today are similar to those of a decade ago;
however, the answers are different, largely because of the evolution of the U.S. and
world economies. Issues today are: Is the Act fulfilling its original intent? (No. The
intent has evolved.) Have U.S. foreign-trade zones helped or hurt U.S. workers?
(The question has been eclipsed by the perceived effects of NAFTA and other trade
influences). Do U.S. foreign-trade zones set U.S. trade policy by circumventing
Congress and U.S. trade negotiators?” (Perhaps, but the issue has dimmed as tariffs
and trade barriers decline, and since new regulations went into effect in 1991.)
Legislative issues pertaining to zones have moved from the macro to the micro
level. P.L. 106-36 (S. Report 106-2), approved June 25, 1999, provides that
commercial importation data for foreign-trade zones shall be included under the
National Customs Automation Program under construction. In addition, H.R. 975
(H.Report 106-52), which passed the House on March 17, 1999, provides for a
reduction in the volume of steel imports, and requires a steel notification certificate
for any steel entering through a foreign-trade zone. Other bills, instead of being
focused on how zones affect the U.S. economy, are now focused more on whether
zone policy should be used to help specific industries and specific localities.

Contents
U.S. Zones in a World Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Characteristics of U.S. Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
What Is An Inverted Tariff Structure? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
How To Achieve Zone Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
How Did the U.S. FTZ Program Begin? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Changes to the Foreign-Trade Zones Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1980s: The Zone System Began Expanding Rapidly . . . . . . . . . . . . . . . . . . . . . . 7
Congressional Oversight of Zone Growth . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Zone System Today . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Zones Today are Functionally Import Rather Than Export Zones . . . . . . . 12
Zones Today are Primarily “Domestic-Trade” Rather than
“Foreign-Trade” Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Industry Concentrations in Zones Have Changed . . . . . . . . . . . . . . . . . . . 13
The Future of Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Policy Issues Relating to Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Is the Congressional Intent of the Foreign-Trade Zones Program
Being Met? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Have Foreign-Trade Zones Helped or Hurt U.S. Businesses and
Workers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Does the Zone System Set U.S. Trade Policy by Circumventing
Congress and U.S. Trade Negotiators? . . . . . . . . . . . . . . . . . . . . . . . 18
Legislation Relating to Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Technical Corrections Relating to Zones . . . . . . . . . . . . . . . . . . . . . . . . . 19
Legislation to Achieve Trade Objectives for Specific Industries . . . . . . . . 19
Legislation to Assist Zone Expansion or Promote Economic
Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
List of Figures
Figure 1. Growth in Number of and Employment in Zones, 1978-1997 . . . . . . 8
Figure 2. Concentrations of U.S. Foreign-Trade Zones and Subzones
Among States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Figure 3. Extent to Which Imports Entering Zones are Subsequently
Exported 1978-1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Figure 4. Extent to Which Zone Exports are Consumed Domestically,
or Exported 1978-1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Figure 5. Source of Zone Inputs (Domestic or Foreign)
1978-1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Figure 6. Industry Concentrations of Imports into Zones,
1984 and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Tables
Table 1. Possible Cost Savings Available to U.S. Foreign-Trade Zone Users . . 4
Table 2. Potential Winners and Losers from Zone Use . . . . . . . . . . . . . . . . . . 17
Table 3. Major Zone Legislation in the 105 and 106
th
Congresses
th
. . . . . . . . . 21
Appendix Table 4. Information Pertaining to Zone or Subzone Application . 22
Appendix Table 5. Data Supporting Figures 3,4, and 5 . . . . . . . . . . . . . . . . . 23
Appendix Table 6. List of Zones and Subzones by State . . . . . . . . . . . . . . . . 24

U.S. Foreign-Trade Zones: Current Issues
Foreign-trade zones are the U.S. version of free trade zones scattered around
the world. Free trade zones are geographic areas which primarily facilitate economic
development, and co-production — the joint production of a single good through the
efforts of workers in two or more countries. 1 In the United States, this means that
zones are places where some foreign components are typically mixed with U.S.
components in the manufacturing process.
Current policy issues reflect the impact of U.S. zones relative to other influences
on the U.S. economy. Many current legislative proposals tend to focus on fine-
tuning the workings of the zone system or reflect the difference that zone status can
make in promoting economic development for a community and improving
competitiveness of a company in a specific industry.
First, however, this report examines what the U.S. zone system is, how it relates
to zones abroad, and how the U.S. foreign-trade zone program has changed from its
original intent. Tables detail trade zone legislation in the 105 and 106
th
Congresses,
th
provide information on application methods and requirements for zone status, and list
zones and subzones, by state.2
U.S. Zones in a World Context
Zones all over the world have an important characteristic in common: They are
geographic areas which are physically inside the boundaries of a country, but which
are treated as if they were located outside the country for customs purposes — that
is, zones are declared to be outside the customs territory of a country.
This separation from the country for customs purposes links world zones
together into a type of international “no-man’s-land,” which has two important traits.
First, no tariffs (taxes on imported goods), and in many cases, (including the United
States) no other taxes (sales, excise, or other) are payable on goods so long as they
remain in the zone system. Only when they leave the system and enter a country are
1 The difference between free trade zones and free trade areas is this: Free trade areas
involve agreement to reduce or eliminate certain trade barriers to all members of the group,
while each country is free to negotiate its own barriers with countries outside the group. Free
trade zones, on the other hand, do not affect a country’s trade barriers. Rather, they set up
secure locations (often fenced) which are inside the boundaries of the country but which are
considered to be outside the country for tariff purposes. Hence, the trade barriers do not apply
as long as the good is within the zone. When the good exits the zone, only if it then enters the
country in which the zone is located, do normal trade barriers apply.
2 While this report mentions a number of specific bills, it is not intended as a bill- tracking
device. It will be updated periodically as needed.

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tariffs payable on the imported value of the product and are sales taxes payable on
imported goods sold. If the goods are re-exported, no duties are payable.
Second, customs procedures are streamlined for all goods entering and leaving
the zone system. As a result, if buttons from Indonesia and fabric from India are sent
to a trade zone in the Philippines for assembly into a shirt, which is then exported to
the United States, no tariffs are payable in the Philippines, and all customs procedures
are streamlined until the completed shirt enters the United States for consumption.
At that time, tariffs are payable on the import value, and the shirt goes through normal
customs procedures.
The 235 U.S. zones are part of the world system of 850 zones.3 Two thirds of
these zones are in developing countries, which produce primarily for export. In these
countries, zones are often used as an economic development tool. Production takes
place in export processing zones which are typically islands of modernization, located
at ports, in countries which lack extensive infrastructure. Supplies which are
unloaded from container ships travel a short distance to be manufactured into
components or completed goods, which are then reloaded on ships for export.
Multinational corporations in developed countries may view these zones as low-cost
offshore production sites.
Characteristics of U.S. Zones
U.S. zones, in contrast with the export emphasis of zones in developing
countries, are primarily for warehousing or processing of imports prior to going
through customs at the port of entry.
U.S. zones differ from other zones around the world in other ways as well. U.S.
imports which are not complete, not yet needed, or not allowed to enter the United
States (for quota reasons, for example) after being unloaded at ports of entry, prior
to facing full customs procedures, may be taken to a nearby foreign-trade general
purpose zone for warehousing or further processing, or to a subzone — a unique
U.S. invention. The 235 zones include seaports, airports, and fenced industrial parks
with warehousing and processing facilities, which are run by public corporations as
if they were utilities — with published rates. Subzones, of which there are about 427,
are manufacturing operations which are administratively linked to a zone, but
physically separated from it. They are typically pre-existing operations which have
3 Zones around the world are called by at least 19 different names, depending on the country
in which they are located or the author or organization referring to them. Among these are the
following: Generically they are often called free trade zones. Those in the United States are
called foreign- trade zones. Those in developing countries producing specifically for export
are typically called export processing zones. They are also called maquiladoras in Mexico,
special economic zones in China, industrial free zones or export free zones in Ireland, free
zones in the United Arab Emirates, and duty free export processing zones in the Republic of
Korea. In addition they are called tax free zones or tax free trade zones by Walter H. and
Dorothy B. Diamond, authors of Tax-Free Trade Zones of the World. They have been called
free export processing zones by the Organization for Economic Cooperation and
Development. Source: International Labor Organisation. Economic and Social Effects of
Multinational Enterprises in Export Processing Zones. Geneva, 1988, p.5.

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applied for and been granted subzone status. However, businesses may also apply for
zone status before beginning construction on a new manufacturing operation.
4
U.S. zones and subzones, like other zones around the world, are viewed, in part,
as an economic development tool. They allow businesses to save money on imports
through duty (tariff) deferral, duty exemption, elimination of the need for duty
drawback, and tax avoidance. They also allow U.S. businesses to save small amounts
through quota storage, zone-to-zone transfer, and customs and inventory efficiencies.
(See table 1 for details.) Most importantly, however, subzones in particular, allow
businesses to save money, in part because they are places where inverted tariff
structures can be changed to uniform rate structures (explained below). The Foreign-
Trade Zones Board estimates that slightly less than 50% of all foreign merchandise
entering through trade zones is being used in the inverted tariff situation.
What is an Inverted Tariff Structure?
An inverted tariff structure means that the tariff rate on a product used as a
component of a finished product is higher than the tariff rate on the finished good
containing the component. When imported components are combined with domestic
supplies in subzones, importers can effectively reduce the tariff rate on components
to the same level as those levied on a completed good.5
Thus, if a zone manufacturer applies for and is granted subzone status, he can
use his zone status to eliminate the adverse cost effect of the inverted tariff in the
industry in which he produces. This is because customs provisions allow zone users
to choose (when the component enters the zone) between paying, (when the
component leaves the zone system as part of a completed good) the tariff on the
component itself or the tariff on the component as if it were incorporated into the
completed good.
6 Industries where there may be inverted tariffs include oil refining,
auto manufacturing, electronics, chemicals, food products, pharmaceuticals, apparel
4 Another difference is that many foreign zones allow companies to operate under special or
relaxed rules with respect to taxes and customs oversight. Certain foreign zones require
neither customs documentation or supervision of merchandise while materials are admitted,
stored, or processed in the zone. Some allow significant tax exemptions, including income and
property taxes. U.S. foreign-trade zones, on the other hand, are fully subject to all federal,
state and local laws and taxes, except for federal excise taxes and local inventory taxes. They
are also subject to full customs supervision throughout while materials are admitted,
processed, and shipped, and to customs penalties for failure to adhere to requirements, and to
customs penalties for failure to adhere to requirements. In addition, prohibited goods
(including illegal products) are not allowed into U.S. zones.
5 World Wide Shipping. Economic Impact Analysis, by Dennis Puccinelli, August, 1985, p.
71.
6 The procedure the zone manufacturer follows to change the tariff rate is as follows: When
the duty rate on the imported component is lower than that on the end product into which the
component is to be incorporated, the zone manufacturer must file a formal application for the
component to receive “privileged foreign status.” It such status is approved, the component,
when it leaves the zone, is dutied at its own rate -- typically that applicable to the product of
which it will make an integral part.

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and textiles, steel, and machinery. Not all zone applicants in these industries have
been granted zone status. The granting of zone status by the Foreign- Trade Zones
Board means that zone status has been deemed in the “public interest.” The
determination is based, in part, on the cause of the inverted tariff structure.
Inverted tariffs have arisen in the very extensive Harmonized Tariff Schedule in
two ways: inadvertently, and by design. When an industry has an inverted tariff by
design, it is generally to protect the component industry from import competition. In
such cases, application for zone status may be denied or limitation may be placed on
zone status. Inverted tariff structures are the major reason for zone application in the
United States, and the greatest source of benefit to users (with duty deferral second).
In recent years, tariff levels generally have been negotiated to very low levels, and
typically the differences between tariffs on components and tariffs on finished
products have become smaller and smaller.
Table 1. Possible Cost Savings Available to
U.S. Foreign-Trade Zone Users
Benefit
How Costs Can Be Saved
Duty Reduction
Zone users may choose the lower duty rate when a product is entered
(on Inverted Tariff
into customs territory (for importation) in inverted tariff situations
Situations)
(when the rate of the foreign inputs is higher than the rate applied to
the finished product produced in the zone. Zone status, however, is
granted by the FTZ Board when it determines that such status will
result in a public benefit (typically a net positive effect for U.S.
businesses and workers).
Duty Deferral
Cash flow savings can result because customs duties are paid only
when and if the goods are transferred from the zone to a U.S. customs
territory for import.
Duty Exemption
No duty is payable on goods which are exported from a zone, or
which are consumed, scrapped, or destroyed in a zone.
Drawback
Zones eliminate the need for duty drawback. That is, the refunding of
Elimination
duties previously paid on imported and then re-exported merchandise.
Tax Savings
Goods stored in zones and goods exported are not subject to state and
local ad valorem taxes, such as personal property and sales taxes.
Quota Storage
Cash flow savings and savings from buying in bulk can be made
because U.S. quota restrictions do not apply to merchandise admitted
to a zone until is entered into customs territory. When the quota
opens, the goods may be immediately entered into U.S. customs
territory for importation.

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Benefit
How Costs Can Be Saved
Zone to Zone
Zones can transfer merchandise “in-bond” from one zone to another.
Transfer
Customs duties may be deferred until the product’s eventual entry into
U.S. customs territory.
Customs and
Cost savings (especially cash-flow savings) can occur from zone
Inventory
efficiencies affecting inventory control. These efficiencies include
Efficiencies
customs procedures such as direct delivery and weekly entries.
Source of table data: U.S. Foreign-Trade Zones Board.
How to Achieve Zone Status
The primary constituent interest relating to zones is how to achieve zone status,
as quickly as possible. Appendix table 4, p 20, includes information on how to apply
for zone or subzone status and requirements for applications, together with telephone
and website contacts. While new zones are approved when the Board finds tha
7
t
existing or authorized zones do not adequately serve the “convenience of
commerce,” subzones can be approved only when a “public benefit”
8
—(i.e.,
increased employment without detrimental effects on other competitors) can be
clearly demonstrated.
9
Zone or subzone status is achieved by applying to the U.S. Foreign-Trade Zones
Board in the Import Administration of the U.S. Department of Commerce in
Washington, D.C. (202) 482-2862. The Board is a committee of two, made up of
the Secretaries of Commerce and the Treasury, whose agencies each play a role in the
approval and oversight of foreign-trade zones.
10
The U.S. Foreign-Trade Zones Board is supported by a professional staff of 11,
under the leadership of an executive director. It is responsible for reviewing
applications for zone approval and making recommendations to the Board.
Regulations covering zone application may be found at 15 CFR Part 400. The general
purpose zone applications process takes about 18 months, and the subzone
application process takes about 12 months. Zones are operated by public or public-
7
Most successful zone applicants use general purpose zones for storage, manipulation,
and manufacturing, and special purpose subzones for specific larger scale manufacturing.
However, some creative uses of zones are also emerging. The International Wildlife
Recovery Center has set up an operation in the Medford-Southern Oregon FTZ. The Center
specializes in the decontamination and rehabilitation of wildlife affected by oil and other
hazardous material spills around the world. By locating the center in a foreign-trade zone, in
a pollution event involving 250 birds, for example, the IWRC can save $500,000 in customs
duties associated with food imports for the animals.
8 Foreign-Trade Zones Act, P.L. 73-397, sec. 2(b).
9 Da Ponte, John J., Jr. United States Foreign-Trade Zones: Adapting to Time and Space.
The Maritime Lawyer, Fall, 1980, p. 211.
10 Authority is typically delegated to the Assistant Secretary of Commerce for Import
Administration, and the Deputy Assistant Secretary of the Treasury for Enforcement.

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type corporations, which may contract out operations. Zones are operated like
utilities, with published rates.
Day-to-day supervision of goods into and out of zones is the responsibility of the
U.S. Customs Service in the Treasury Department. Customs Service regulations
relating to zones are included at 19 CFR Part 146. Overhead costs for zones include
reimbursement to Customs for services rendered.
How Did the U.S. Foreign-Trade Zones Program Begin?
The Foreign-Trade Zones Board was created by the U.S. Foreign-Trade Zones
Act in 1934 [P.L. 73-397, 19 U.S.C. 81(a)-81(u)] . It was given the power t
11
o
approve applications by public corporations for zone status. The act itself was fairly
short — less than six pages in length. It entitled each U.S. port of entry to at least
one zone, and prescribed physical conditions and standards for each zone,
requirements for operation, recordkeeping, and goods being moved into and out of
zones, activities permissible in zones, and the applicability of all U.S. laws to zones
When the U.S. foreign-trade zones program began in 1934, it was a program
designed to help accelerate U.S. trade in the wake of the restrictive impact of the
Smoot-Hawley Tariff bill of 1930, which raised U.S. tariffs on imported goods as high
as 53%. Some have argued that zones were designed originally to be way stations
12
where goods coming in from one foreign port could be transshipped (reloaded for
export to another foreign port) or re-exported (processed for subsequent export).13
The foreign-trade zones legislation was controversial, however, because there
was some fear that it would promote imports of cheaper components used in the
manufacturing process, and thereby put domestic components manufacturers at risk.
To make sure this would not happen, the Act prohibited manufacturing in zones.
11 Regulations issued by the U.S. Foreign-Trade Zones Board for establishing and maintaining
a foreign-trade zone can be found at 15 CFR 400.
12 Yarbrough, Beth V., and Robert M. The World Economy: Trade and Finance. Harcourt
Brace, 1991, p. 368.
13 U.S. General Accounting Office. Foreign-Trade Zone Growth Primarily Benefits Users
who Import For Domestic Commerce. GAO/GGD 84-52, March 2, 1984, p. 3, 5.

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Changes to the FTZ Act14
After the Foreign-Trade Zone Act was passed, it proved restrictive enough to
be very little used. It did not encourage U.S. exports, as some had expected. Even
sixteen years after the Act was passed, in 1950, there were still fewer than ten
zones.
15 Intense lobbying by manufacturing trade groups to make the zone concept
more useful led Congress to permit manufacturing in zones. Many reasoned that
zones were too small for much manufacturing to occur there.
The Foreign-Trade Zones Board took the amendment one step further. This one
step led the zone system on a course which eventually made it successful in a way
that was very different from what some originally intended the program to be. Two
years after Congress passed the amendment permitting manufacturing in zones, the
Foreign-Trade Zones Board issued regulations creating the concept of subzones.
Those regulations declared that when a zone was of insufficient size to accommodate
manufacturing, an employer could apply for subzone status, and thereby have access
to full zone benefits without having to relocate.
Two administrative decisions by the U.S. Treasury Department served to make
zone status even more attractive for manufacturing operations. These decisions —
one in 1980 (U.S. Treasury decision 80-87) and another in 1982, modifying the first
decision, clarified that manufacturers need not pay duty either on value added or on
brokerage or transportation fees connected with imported goods.16
1980s: The Zone System Began Expanding Rapidly
Once the second Treasury decision was handed down in 1982, the zone
program began growing very rapidly and changing in nature, for a number of reasons.
Among these were that the world-wide technological support system
(communications, transportation, merchandise tracking, etc.) was at last ready to
handle the huge demands of expanded international trade. Second, increased
international price competition led U.S. businesses to seek new ways of shaving costs.
14 Historical material in this and the following two sections is taken from: U.S. General
Accounting Office. Foreign-Trade Zone Growth Primarily Benefits Users Who Import For
Domestic Commerce. GAO/GGD 84-52. March 2, 1984, and Foreign-Trade Zones
Program Needs Clarified Criteria. GAO/NSIAD 89-85; U.S. International Trade
Commission. The Implications of Foreign-Trade Zones for U.S. Industries and for
Competitive Conditions Between U.S. and Foreign Firms. USITC Publication 1496,
February, 1984, and The Implications of Foreign-Trade Zones for U.S. Industries and for
Competitive Conditions Between U.S. and Foreign Firms. USITC Publication 2059,
February, 1988.
15 In fact, even as recently as 1970, there were still fewer than ten cities with zones. All of
these were ocean or Great Lakes ports. Source: Da Ponte, John J., Jr. United States Foreign-
Trade Zones: Adapting to Time and Space. The Maritime Lawyer, Fall, 1980, p. 202.
16 GAO Report, 1984, op. cit., p. 12.

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In addition, the value of the
Figure 1. Growth in Number of and
dollar was quite high in the 1980s,
Employment in Zones, 1978-1997
making cheaper imports even more
attractive.
17
On top of this, the Tariff
Schedule of the United States (TSUS,
replaced by the Harmonized Tariff
Schedule in 1989) contained a number
of inverted tariffs. Many inverted
400
700
tariffs were later reduced or eliminated
600
by the Uruguay Round of negotiations
300
500
under the General Agreement on
Employment in
Tariffs and Trade (GATT) in 1994.
Zones
400
200
300
Soon businesses figured out that,
if they could achieve zone status, they
200
100
Number of Zones
could import components in industries
and Subzones
100
with inverted tariff structures,
19780 1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
0
assemble them together with domestic
inputs in zones, and import from U.S.
zones products that were less
Source of data: U.S. Foreign Trade Zones Board
expensive to produce by the amount
saved in customs costs on each item
times the number of items. Word of how to take advantage of the inverted tariff
structure and other cost-saving means afforded by zones (reported in table 1) spread
through trade organizations. Zone use and zone employment accelerated
dramatically. (see figure 1.)
Congressional Oversight of Zone Growth
The House Ways and Means Committee, concerned about the potential impact
that zone status was having on U.S. industries (especially domestic components
industries), employment, communities, tariff and tax revenues, competitiveness
abroad, and the U.S. economy in general, asked both the General Accounting Office
(GAO) and the International Trade Commission (ITC) to examine the economic
impact of U.S. foreign-trade zones, in 1983 and again in 1987. Primary findings of
these agencies were that the zone program, while growing rapidly, was having only
a small (but difficult to measure) effect on U.S. revenue collection, employment, and
the economy in general, and a somewhat larger effect on the U.S. components
industry, particularly in the auto sector. Not only did the auto sector have an inverted
tariff, but application for zone status there was reportedly met with relatively little
objection from components manufacturers.
18
17 U.S. Congress. House. Committee on Government Operations. Foreign-Trade Zones
(FTZ) Program Needs Restructuring. House Report 101-363. November 16, 1989, p. 11.
18 Quantitative findings included the following:
Effect of Zones on Tariff Revenues: International Trade Commission (ITC) reports
(referred to in footnote 13) found that the net effect of zone operations on customs revenue
was small — 0.04% of total customs duties collected in 1982 and 0.3% of the total customs
(continued...)

CRS-9
One of the most important ITC findings, however, was that the U.S. foreign-
trade zones program was doing the opposite of what it was originally intended to do:
The International Trade Commission found that “While a stated intention of the 1934
Act was to increase the competitiveness of U.S. products in foreign markets, zone
status (particularly subzone status) is being used to maintain or improve the
competitive posture of firms in domestic markets (emphasis added).” The U.S
19
.
Foreign-Trade Zones Board points out, however, that this statement is not entirely
correct. In fact, the Act itself stated as its purpose “to expedite and encourage
foreign commerce,” favoring neither exports nor imports over the other.
20
In 1989, subsequent to the GAO and ITC studies, subcommittees of the House
Ways and Means Committee and the House Government Operations Committee held
hearings on foreign-trade zones. In addition,
21
the House Government Operations
Committee issued an independent report on the Foreign-Trade Zones Program. Its
findings were compatible with those reported by GAO and ITC, but went a step
further. It found that the Foreign-Trade Zones Act and program were in need of
extensive revision for failing to carry out what it referred to as “the original intent of
the Act.” The committee report, like the GAO and ITC reports, criticized the
program for promoting instead of exports, domestic competitiveness and imports for
domestic consumption.
The House Government Operations Committee report also criticized the
Foreign-Trade Zones Board, among other things, for poorly conceived and
inefficiently administered processes, for overly general regulations, which failed to list
and use a single set of criteria for granting zone or subzone status, for maintaining
regulations no longer consistent with Board practice, for relying on improperly
conducted economic analyses, for failing to set time limits for stages in the application
process, for failing to certify that operations continue to function in the public interest,
(...continued)
18
duties collected in 1986. (ITC Report 1984, p. xi) and (ITC Report 1988, p. xix-xx).
Per-auto savings by manufacturing in zones: In addition, in 1986, autos accounted
for 87% of all shipments from subzones, seven zones accounting for 76% of total zone
employment. (ITC Report 1988, p. xiv) and (ITC Report 1988, p. 5-2). For auto plants, the
average duty savings per car in 1986-87 was small — about $8.67, down from $9.91 in 1983
and up from $5.54 in 1985 (ITC Report 1988, p. xix).
Employment effect from zones, in the auto industry: Overall, the ITC found a 3.5%
decline in employment in the auto parts sector for new vehicles, and a 1.6% increase in
employment in the auto assembly industry, between 1983 and 1987. (ITC Report 1988, p. 8-
7).
19 U.S. International Trade Commission. The Implications of Foreign-Trade Zones for U.S.
Industries and for Competitive Conditions Between U.S. and Foreign Firms. USITC
Publication 1496, February, 1984, p. viii.
20 Notes received from Dennis Puccinelli, Executive Director of the U.S. Foreign-Trade
Zones Board, July 16, 1999.
21 U.S. House. Committee on Ways and Means. Subcommittee on Trade. October 24, 1989.
Operation of the Foreign-Trade Zones Program of the United States and its Implications
for the U.S. Economy and U.S. International Trade. Serial 101-56. 442 p. and U.S. House.
Committee on Government Operations. Subcommittee on Commerce, Consumer, and
Monetary Affairs. March 7, 1989. Foreign-Trade Zones. 343 p.

CRS-10
and for failing to operate in a manner consistent with trade policy. The Committee
22
made a number of recommendations to address these perceived weaknesses.
Ultimately, in October 1991, in consultation with congressional committees, the
Board issued new regulations aimed at codifying its existing practice and meeting
congressional criticisms.
In addition to congressional requests to the GAO and the ITC, hearings, and the
report mentioned above, continuing periodic congressional interest in foreign-trade
zones has been part of a broader focus on trade issues. Zone issues have been
addressed by minor amendments to the Foreign-Trade Zones Act and been included
in a number of more inclusive hearings and trade laws over the years. Some of the
amendments have increased the benefits of zone imports and exports.
The Zone System Today
Today, as during the 1980s, zones are predominantly instruments for changing
inverted tariff structures into uniform rate structures. This is the case even though
subzone users may save money in a variety of other ways (listed in table 1) and even
though tariffs overall have declined considerably in the past 15 years, from an average
rate of 5.5% in 1984 to an average rate of 2.0% in 1998. Today, instead of being
23
places where relatively large tariff savings — (i.e., $5-10 per car, for example) can be
made on a few major components, zones are now more typically places where small
savings (i.e., $1-3 per car, using the same industry example, according to the Foreign-
Trade-Zones Board) can be made on a larger volume of components. While th
24
e
auto industry is still a prime beneficiary of zone status, the petroleum industry is the
primary user now, accounting for 64% of the value of all goods entering zones (see
figure 6), with motor vehicles accounting for another 23%. Some of the auto
production operations have moved offshore, and large numbers of petroleum
operations are still applying for zone status.
The importance of trade zones today is evidenced by the following statistics:
Since 1970, the total number of trade zones and subzones combined has grown from
10 to 662, and employment in them has increased from 7,000 to 367,000, as was
shown in figure 1. Nevertheless, zones (including subzones) represent only a small
part of the U.S. economy. The total zone employment accounts for only 0.2% of
total U.S. employment. In addition, all zone inputs (both domestic and foreign — a
total of $178 billion in 1997) represent only a small part — 2% of U.S. gross
domestic product ($8,111 billion in 1997). While the world-wide zone system plays
a large role in international trade, it should be noted that very few imported zone
inputs in these industries enter the U.S. zone system from other zones around the
22 Foreign-Trade Zones (FTZ) Program Needs Restructuring, p. 19-24.
23 Data for 1984 from U.S. Department of Commerce, Bureau of the Census. Highlights of
U.S. Export and Import Trade, FT990/December, 1984, Table 9, p. C-31. Data for 1998
from http://dataweb.usitc.gov.
24 Savings on a particular item may result from the rationalization of inverted tariffs together
with other savings of the types detailed in figure 1.

CRS-11
world. In addition, only a small part of all U.S. imports (6%) enter the United States
through zones in other countries.
25
The map in figure 2 shows the states in which zone and subzone use is
concentrated (darker shading). Zone and subzone use is concentrated primarily in
traditionally heavy industrialized states where there is considerable auto
manufacturing and in coastal states where there is considerable oil importing.
Figure 2. Concentrations of U.S. Foreign-Trade
Zones and Subzones Among States
1-10 zones and subzones
10-20 zones and subzones
Source of data: U.S. Foreign-Trade Zones Board.
20-90 zones and subzones
See appendix table 6 for listing of zones by state.
25 Zone data are taken from U.S. Department of commerce. Foreign-Trade Zones Board. The
59th Annual Report of the Foreign-Trade Zones Board. Employment data are taken from
U.S. Department of Labor. Employment and Earnings (any issue), table B-1. U.S. GDP data
are taken from Economic Report of the President, 1999, p. 342.

CRS-12
Zones Today are Functionally Import Rather Than Export Zones
Zones today are primarily
Figure 3. Extent to Which Imports
import zones, rather than
Entering Zones are Subsequently
export zones as some observers
Re-Exported, 1978-1997
believe Congress originally
anticipated. They are import
zones in terms of both zone
Exports/Imports
%
inputs and zone outputs, even
100
U.S. Zones as Export Zones
though both the Act itself and
80
the Foreign-Trade Zones Board
are currently neutral on this
60
50
issue. In addition, the fact that
40
most U.S. zones are
U.S. Zones as Import Zones
functionally import zones
20
reflects both the economic
0 1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
maturity (in comparison to
developing countries) and the
Source of data: U.S. Foreign Trade Zones Board, Annual Reports, various years.
relative strength of the U.S.
economy.
In terms of zone inputs, today’s zones have lately become “import” zones in
that, in recent years, more goods entering the zones have been subsequently imported
into the United States than exported. In figure 3, export years (1981-95) are those
in which the thick black line remains above the 50% line. Import years (1978-91 and
1996-97) are represented where the line dips below the 50% line. (See appendix table
6 for data supporting figures 3, 4, and 5.)
In terms of zone outputs,
Figure 4. Extent to Which Total Zone Output
today’s zones are import zones
is Consumed Domestically
rather than export zones in that
or Exported 1978-1997
the majority of zone output is
imported into the United States,
and very little is exported.
Exports/total zone inputs
%
Figure 2 shows that since 1984,
100
the proportion of total zone
80
output that is exported has
Zone output that is consumed
60
domestically
averaged about 10-15%.
40
Figures 3 and 4 both show
20
that 1982 is the year when zones
Zone output that is exported
reached their pinnacle as export
0 1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
zones.
Source of data: U.S. Foreign Trade Zones Board,
Annual Reports, various years.

CRS-13
Zones Today are Primarily “Domestic-Trade” Rather Than
“Foreign-Trade” Zones
Zones can also be
Figure 5. Source of Zone Inputs (Domestic
classified today as being
or Foreign) 1978-1997
functionally “domestic-trade”
zones rather than “foreign-
trade” zones. This is because
Domestic Inputs/
Total Inputs
most of the inputs into the
%
100
zones are of domestic origin,
Inputs are Primarily
even though the gains to be
Domestic
80
made from zone status stem
from imports. (See table 1 for a
60
listing of the type of gains to be
50
made from zone status.) Since
40
1983, zone inputs sourced
domestically have accounted for
20
Inputs are
Primarily
more than half, and since 1985
Foreign
they have accounted for about
01978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
75-80% of all zone inputs. (See
figure 5). The fact that the
Source of data: U.S. Foreign Trade Zones Board,
Annual Reports, various years.
percentage of domestically
sourced zone inputs has
declined somewhat in the last few years reflects a greater presence in zones of oil
refining, which uses primarily imported crude, compared to auto assembly, which uses
mostly domestic components.
Calling zones “import” zones rather than “export” zones, and “domestic” zones
rather than “foreign” zones is another way of reiterating what the ITC found in the
1980s: Instead of increasing the competitiveness of U.S. products in foreign markets,
zone status is still being used
(with the support of the Act) to
maintain or improve the
Figure 6. Industry Concentrations of Imports
competitive posture of firms in
in Zones, 1984 and 1997
domestic markets.
Percent of all zone input
accounted for by named industry
70
64% 60%
60
50
Industry Concentrations
1984
40
1997
in Zones Have Changed
23% 25%
30
10%
20
5%
5% 5%
1% 2%
1% 0.4%
Industry concentrations in
10
zones have changed since the
0
& Storage
Petroleum Refining
Motor Vehicles
Electronics
Chemicals
Food Products
Other
mid-1980s, as mentioned
previously. Figure 6 shows
that in 1984, motor vehicle
assembly plants accounted for
60% of all imports into zones,
Source of data: 46th and 59th Annual Reports of the
and electronics companies were
Foreign Trade Zones Board.

CRS-14
the second greatest users of zones. By 1997, many electronics and auto assembly
plants had relocated abroad, and petroleum refining had become the dominant zone
user. Today, the two industries account for 87 % of all zone inputs.
The Future of Zones
Overall, most tariffs have continued to be reduced to very low levels in the
United States, through numerous trade agreements or establishment of free-trade
areas. This would arguably point to an accompanying reduction in the use of trade
zones. Inverted tariffs will lose their significance when all duties are near the same
level. In addition, the nominal cost savings of duty deferral in a country with low
tariff rates, like the United States, would make zone status an unnecessary
administrative burden in addition to its reduced effect as a protectionist device.26
Similarly, the gradual phasing out of quotas will also diminish demand for zone use.
However, at the same time, computers are facilitating zone use by making it
easier for corporations to search through tariffs on all imported parts that potentially
go into making a certain item, in order to identify those that represent an inverted
tariff structure. Computers also make it easier to keep track of quota fulfillment and
to calculate final tariffs owed on a large and diverse array of small imported
components. Thus, smaller savings from zone use, including logistical and
administrative savings, may be relatively more important than they once were.
Applications for zone or subzone status are still being approved. In 1997, the
U.S. Foreign-Trade Zones Board approved 8 new general-purpose zones and 37 new
subzones — consistent with the rate over the past several years — increasing the total
number of zones by 3.5% and subzones by 9.5%
Thus, even though businesses may be reaping smaller savings per imported item
used in zones, they may be able, in some cases to expand the number of items on
which they save money. In addition, international competition has become sufficiently
great in recent years that even very small savings from zone status, through duty
reduction, deferred duty payment, duty exemption, tax savings, quota storage, or
other means outlined in table 1 can make important contributions to U.S.
competitiveness.
Policy Issues Relating to Zones
Many of the zone-related policy issues that were prominent ten years ago are
less important today, because the circumstances that surround them have changed:27
26 Kanellis, William G. Reining in the Foreign-Trade Zones Board: Making Foreign-
Trade Zone Decisions Reflect the Legislative Intent of the Foreign-Trade Zones Act of 1934.
Northwestern Journal of International Law and Business, Spring, 1995, p. 635.
27 The major issues of the late 1980s were documented in the GAO and ITC reports
(continued...)

CRS-15
In the 10 years since the GAO, ITC, and congressional studies were conducted,
foreign-trade zones have become much less an issue of congressional focus than they
were. This has occurred, in part because congressional interest has shifted from the
employment and competitive effects of zone status to increased importation of
manufactured goods and the effect this is having on U.S. jobs and the U.S. economy
in the long run. Economists argue that with increased trade, everybody wins;
however, dislocation of workers in various sectors has become an important
congressional concern.
Is the Congressional Intent of the Foreign-Trade Zones Program
Being Met?
The answer to a question on whether the congressional intent on zones is being
met depends on whether one judges congressional intent at the time of passage of the
U.S. Foreign-Trade Zones Act, or as it has evolved over the past 65 years.
Some of the pre-passage debate suggested hope that the zones would boost
exports rather than imports. In addition, while the preamble of the act emphasized the
promotion of trade without reference to either exports or imports, section 3 of the
Act did strictly prohibit manufacturing in zones (sec. 3). This language is consistent
with arguments that manufacturing was prohibited in order to discourage the
importation of cheaper components which would compete with domestically
produced components.
Amendments to the Act over the years, however, have reflected a gradual shift
in congressional intent toward greater acceptance of zones for handling imports. The
1950 amendment permitted manufacturing in zones, thus reversing the original
exclusion. In addition, certain other amendments, including a 1990s amendment
providing for evaluation of products upon importation from a zone, make specific
reference to imports (sec. 81c, of title 19 of the U.S. Code) .
28
Therefore, one could conclude that the congressional intent as it has evolved
over the years is being met. In addition, the shifting of congressional focus on the
zone issue from major oversight and evaluation to minor tinkering reflects an apparent
acceptance of the U.S. zone system as it stands today.
(...continued)
27
previously mentioned, and also in U.S. Library of Congress. Foreign-Trade Zones and the
U.S. Automobile Industry, by Gwenell L. Bass, and Lenore Sek. CRS Report 88-659E,
October 14, 1988.
28 Any program that specifically promoted exports to the detriment of imports could violate
WTO rules against export subsidies.

CRS-16
Have Foreign-Trade Zones Helped or Hurt U.S. Workers and
Businesses?
The question about whether zones have helped or hurt U.S. workers is seen
differently in the 1990s than in the 1980s. Some employment effects from trade with
Mexico and Canada since the North American Free Trade Agreement (NAFTA) went
into effect and from trade with developing countries generally and under the General
System of Preferences (GSP), have shifted the perspective on the effects of trad
29
e
zones on U.S. jobs.
By way of comparison, in the 1980s, there was some alarm that increased use
of U.S. foreign-trade zones was leading to the loss of U.S. jobs. The International
Trade Commission estimated that for the four-year period 1983-1987, trade zones
reduced overall employment in the auto industry by a net 1.9%. This represents a
gain in the auto assembly sector and a loss in the auto parts sector. Concern over
30
the effect of zones on employment, however, has been eclipsed in recent years by
concern over the effect of trade agreements [especially the North American Free
Trade Agreement (NAFTA)] on employment. A difference in the order of magnitude
on a particular industry is shown in the following example: In the 1990s, over a five
and one-half year time period after NAFTA went into effect, increased trade with
Mexico and Canada led to a 5.3% job loss in the apparel sector.
31
Thus, small benefits from avoiding the higher tariff rates in industries with
inverted tariffs (differentials which are continually shrinking) may seem less important
today than they did a decade ago. In addition, in the 1980s, trade zones were viewed
as a way of encouraging U.S. manufacturing plants to remain in the United States
rather than relocate abroad. Today, the potential cost savings from using zone status
to avoid the penalties of an inverted tariff (which may be only a percent or two) seem
small compared to the potential cost savings which some businesses can obtain by
relocating a labor-intensive plant to Mexico or some other country with a preferential
system (i.e., GSP, CBERA, or Andean), and thus saving large amounts from wage
differentials.32
29 The General System of Preferences provides duty-free treatment under specific conditions
for 142 developing countries.
30 A FTZ Board letter to the file documenting a March 3, 1988 meeting with the ITC
economist who developed the economic model which was the basis for the ITC findings
indicates that the model was meant to provide estimates rather than definitive numbers on jobs
gained or lost as a result of zone procedures.
31 For 1983-87 data for the motor vehicle transportation sector (SIC 37), see ITC Report,
1988, p. 8-7, and U.S. Department of Labor, Bureau of Labor Statistics. Employment,
Hours, and Earnings United States 1981-93, bulletin 2429. For data on the apparel sector
(SIC 23), see NAFTA: Estimates of Job Effects and Industry Trade Trends After 4 ½ Years,
by Mary Jane Bolle. CRS Report 98-783E, p. 8, and Employment, Hours, and Earnings
United States 1990-95, Bulletin 2465.
32 The Caribbean Basin Economic Recovery Act (CBERA), applying to 27 Caribbean
nations, and the Andean Initiative (applicable to imports from Bolivia, Ecuador, Colombia,
and Peru) are similar to the GSP in that they offer duty-free treatment under specific
(continued...)

CRS-17
Table 2. Potential Winners and Losers From Zone Use33
Potential Winners
Potential Losers
Manufacturers
Final assemblers could win to the extent
Components manufacturers could lose to
that righting an inverted tariff lets them get
the extent that the product becomes less
components at a lower cost.
competitive with imported components.
Components manufacturers could win to
the extent that they can automate, become
more competitive with imports, and
thereby save on production costs.
Workers
Workers in assembly operations could win
Either automation, or plant closings, in
to the extent that FTZ status results in
components industries from losing sales to
greater profits which may be passed along
importers operating in zones, could put
to workers.
workers out of jobs.
Workers in “losing” industries could win to
the extent that job loss encourages them to
upgrade skills, which could them lead to
higher paying jobs.
Community
Any zone effects could have ripple effects
Communities with component
on the community. Communities with new
manufacturing operations that close may
zones may benefit because zones can
suffer.
attract new business into the area.
Consumers
To the extent that FTZs help manufacturers
Consumers may suffer from reduced
reduce prices and those prices are passed
choices or reduction in quality to the extent
along to consumers, consumers could
that foreign-trade zones encourage the
benefit.
substitution of cheaper imported
components or goods for domestically
produced ones.
Tariff Revenues
Total U.S. tariff revenues increase to the
Tariff revenues decline by the difference
extent that increased zone use results in an
between the tariff on the component and
increased demand for the imported
the tariff on the finished product for each
components.
item imported into a zone, times the
number of items.
a
Tax Revenues
Total U.S. tax revenues increase to the
extent that increased zone use results in an
increased demand for the product and in
greater earnings for each worker producing
goods in zones. Increased tax revenues
would come from increases in U.S. income
tax collections brought about by increased
profits and wages, federal excise taxes, and
state and local taxes of the types affected by
increased business.
(...continued)
32
conditions.
33 These arguments were largely drawn from GAO and ITC reports.

CRS-18
An example showing the potential magnitude of such tariff
a
revenue loss is an ITC finding that zone use reduced
overall tariff revenues by 3% for 1986. Overall customs duties of $1,216 million represented an overall duty savings
of nearly $39 million on the U.S. economy from foreign-trade zone use in 1986. This represents a total loss of about
3% of tariff revenues for 1986. Source of duty savings: 1988 ITC report, op. cit. Source of overall duties: Highlights
of U.S. Export and Import Trade, op. Cit., 1986.
In addition, the question of whether zones have helped or hurt U.S. businesses
invites a mixed response. Table 2 shows typical winners and losers from zone use.
Certainly businesses that have applied for and achieved zone status have benefitted. On
the other hand, once one business in an industry achieves zone status, others are forced
to follow suit to remain competitive. As a result, once auto assembly plants
started getting zone status, virtually all others in the industry followed suit. Today,
34
this is occurring in the oil refining industry.
On the other hand,zone regulations require that U.S. zone activity have a net
positive effect for U.S. businesses and workers. In addition, the 1991 regulations
applicable to the Foreign-Trade Zones Board specifically require that the Board
disallow any actions that would circumvent U.S. trade policy or programs developed
by the administration and Congress. In keeping with this policy, the Board has
disapproved applications that proposed to use the Foreign-Trade Zones program to
circumvent sugar, milk, textile and apparel quota programs in an attempt to prevent
situations where there are “losers” (businesses or workers).
Does the Zone System Set U.S. Trade Policy by Circumventing
Congress and U.S. Trade Negotiators?
It can be argued that the U.S. zone system sets trade policy by circumventing
Congress and U.S. trade negotiators. The decision to lower tariffs is thus shifted from
the traditional method involving Congress and U.S. negotiators to an alternative
method involving the U.S. Foreign-Trade Zones Board and its approval of the use of
zones by representatives of various industries. However, as mentioned, the gradual
decline of tariffs from an average rate of 5.5% to 2.0% between 1984 and 1998 has
somewhat diminished the influence of the Foreign-Trade Zones Board on U.S.
effective tariff rates. In addition, the Foreign-Trade Zones Board is adamant that if it
perceives that zone status in an industry (usually the assembly sector) will harm the
components sector, it will deny or limit zone status. Industries where zone status has
been denied or limited for this reason include textiles, steel, pigments, TV tubes, ink,
ethanol, chain saws, lawn mowers and agricultural products (e.g. dairy and sugar, and
orange juice.)35
34 Bass and Sek, op. cit., p. 11.
35 From a telephone conversation with Dennis Puccinelli, Executive Director of the U.S.
Foreign-Trade Zones Board on May 21, 1999.

CRS-19
Legislation Relating to Zones
In the last ten years, legislative issues relating to zones have shifted from the
macro to the micro level. Instead of being focused on how zones affect the U.S.
economy, they are now more focused on whether zone policy should be used to help
specific industries.
Nor does foreign-trade zone legislation in the 105 and 106
th
th Congresses attempt
to reverse the evolutionary changes which have affected U.S. foreign-trade zones. The
current legislative proposals are much more narrowly focused on changing trade policy
for various industries and promoting economic development. Bills relating to the
foreign-trade zone system fall into four categories: technical corrections relating to
zones; bills to help achieve trade objectives through zones (i.e. legislation relating to
steel, peanut butter, or tobacco products); legislation to assist zone expansion or
promote economic development; and legislation to support specific programs (i.e.,
space exploration). (See table 3 on major zone legislation).
P.L. 105-303, enacted in the 105 Congress, included a foreign-trade zon
th
e
provision to further encourage the development of the commercial space industry. It
clarifies that payloads launched from trade zones shall be considered exports (not
imports) with regards to customs entry.
Technical Corrections Relating to Zones
In the 106 Congr
th
ess, Sec. 2405 of P.L. 36, signed by the President on June 25,
1999 (S. Report 106-2) makes technical corrections to various trade laws. It
provides, among other things, that the Secretary of the Treasury shall include
commercial importation data for foreign-trade zones in the new program automating
customs procedures (the National Customs Automation Program) — which is
currently undergoing both construction and funding difficulties.
Legislation to Achieve Trade Objectives For Specific Industries

A number of bills relating to U.S. foreign-trade zones in the 106 Congress
th
,
would accomplish trade objectives by affecting the way certain imports are treated.
H.R. 975, passed by the House on March 17, 1999, (H. Report 106-52) provides for
a reduction in steel imports. It requires a steel notification certificate before steel is
entered into the U.S. customs territory of the United States.
Other legislation in the 105 Congress would have
th
related to the tobacco industry
by providing for an increase in taxes on tobacco products which enter the United
States through a foreign-trade zone (H.R. 1229), and prohibiting the manufacturing
of tobacco products in or forwarding them through foreign-trade zones, or selling them
in or to duty-free shops (H.R. 3738.)
Also in the 105 Congress H.R. 1875 would have allowed the entry of peanu
th
t
butter and paste from Mexican peanuts through foreign-trade zones without being
subject to the tariff rate quota.

CRS-20
Legislation to Assist Zone Expansion or Promote Economic
Development
Other bills would aim to promote economic development by directing the U.S.
Foreign-Trade Zones Board to grant approval for new or expanded zones. In the 106th
Congress, H.R. 465 would direct the Board on behalf of the municipal airport of
Chico, California. H.R. 5401 would make this direction for zones on Indian territory.

CRS-21
Table 3. Some Major Zone Legislation of the 106th and 105th Congresses
106 Congress
th
P.L 106-36: H.R. 435/S. 262 (S.Report 106 -2) made technical changes to various trade laws. It also
included a provision (Sec. 2405) which stated that not later than Jan. 1, 2000, the Secretary of the
Treasury shall provide for the inclusion of commercial importation data for foreign-trade zones under
the National Customs Automation Program. On June 7, 1999, the House agreed to Senate amendment,
roll call #168.
Passed the House March 17, 1999: H.R. 975 (Visclosky). H.Report 106-52 provides for a
reduction in the volume of steel imports. For steel brought into the United States through a foreign-
trade zone, requires a steel notification certificate before the merchandise is entered into the customs
territory of the United States.
Other Bills:
H.R. 465 (Herger) directs the Foreign-Trade Zones Board to expand Foreign-Trade Zone No. 143 to
include an area of the municipal airport of Chico, California.
S. 401 (Campbell, Nighthorse), Sec. 205 provides for business development and trade promotion for
Native Americans. Directs the U.S. Foreign-Trade Zones Board to consider on a priority basis and
expedite processing of any application aiming to establish a foreign-trade zone on Indian territory,
including any designated an empowerment zone or enterprise community.
105 Congress
th
Enacted: H.R. 1702 (Sensenbrenner, P.L. 105-303, Oct. 28, 1998: To encourage the development of a
commercial space industry in the United States, and for other purposes. Sec.102: Clarifies that a
launch vehicle is not, because of launch or reentry, an export or import. However, payloads launched
pursuant to foreign-trade zone procedures shall be considered exports with regard to customs entry.
This means that if any part of the launch vehicle or its payload is imported (for example part of the
fuel), no tariffs are payable.
Other Bills
H.R. 1875 (Crane) would amend the U.S. Harmonized Tariff Schedule to allow entry of peanut butter
and paste from Mexican peanuts in foreign-trade zones without being subject to the tariff rate quota.
H.R. 1319 (Royce), Sec. 204 would abolish the Department of Commerce and transfer the U.S.
Foreign-Trade Zones Board to the Department of the Treasury. The U.S. Trade Representative would
replace the Secretary of Commerce on the Foreign-Trade Zones Board.
H.R. 1229 (Ackerman), Sec. 301 provides for an increase in taxes on tobacco products, cigarette
papers, or cigarette tubes entered into a customs territory from a foreign-trade zone.
H.R. 3738 (Doggett), Sec. 407: prohibits against the sale of tobacco products in or to duty-free shops
or forwarding through or manufacturing in foreign-trade zones.
S. 1415 (McCain): Section 1147 is similar to the provision in H.R. 3738.

CRS-22
Appendix
The appendix includes information on how to apply for zone status, data supporting
figures 3, 4, and 5, and lists, zones and subzones, by state.
Appendix Table 4. Information Pertaining to Zone or Subzone Application
How To Apply for Zone or Subzone Status
C
Apply to the U.S. Foreign-Trade Zones Board, Import Administration, U.S. Department of
Commerce, Washington, D.C. 20230 (202) 482-2862.
C
Basic requirements for foreign-trade zone applications are found in 15 CFR Part 400, available at
the U.S. Foreign-Trade Zones Board website:
http://www.ita.doc.gov/import_admin/records/ftzpage/ftzhome.html.
C
Applications are rather involved, and the approval process is somewhat lengthy. General Purpose
Zone applications take about 18 and Subzone applications about 12 months.
C
After application approval is granted by the Foreign-Trade Zones Board, before operations can
take place, approval to activate the zone must be obtained from the Customs Port Director.
Zone Status:
C
Zone status is typically granted to state or local agencies or public type corporations (i.e., port
authorities or economic development agencies), which may contract out operations.
C
Zone sites must be in or near U.S. Customs ports of entry (listed at 19 CFR Part 101).
C
Zones are operated under the day-to-day supervision of the U.S. Customs Service. Overhead costs
include reimbursement to Customs for services. See regulations at 19 CFR Part 146.
C
Operations are conducted as public utilities, with published rates.
C
Zone projects should be coordinated at the state level for consistency with economic development
plans.
C
Applicants must have a suitable plan including provisions for facilities and financing.
C
Need for the proposed zone must be shown in terms of the local economy and overall economic
development objectives.
C
Zone manufacturing is reviewed under “public interest” criteria for consistency with trade policy
and net positive economic effects.
C
Zones should help create, not just divert employment from region to another.
C
There must be convincing evidence of a need for zone services. Letters of intent from firms
expecting to be the first zone users should be included in the application.
Subzone Status:
C
Subzones are normally private plant sites that usually cannot be accommodated within an existing
general-purpose zone.
C
Subzones can be approved only when a “public benefit” resulting in a “positive economic effect” is
demonstrated
C
Subzone applications include: company background, product description, industry background,
zone benefits to the company and public, impact on the domestic industry and environment.
Source of the above information: websites of the U.S. Foreign-Trade Zones Board (listed above), the
U.S. Customs Service: http://www.customs.ustreas.gov/imp-exp2/comm-imp/ftz/ftstart.htm, and the
National Association of Foreign-Trade Zones: http://www.imex.com/naftz.html.

CRS-23
Appendix Table 5. Data Supporting Figures 3, 4, and 5
(In $billions, and percent)
Data for
Data for
Figure 4
Figure 3
Data for
—
—
Figure 5
Exports as
Exports
—
Mdse
% of Mdse.
from Zones/
Domestic
Received in
Domestic
Foreign
Received in
Imports Into
Inputs/Total
Zone
Inputs
Inputs
Exports
Zones
Zones
Inputs
($billions)
($billions)
($billions)
($billions)
(%)
(%)
(%)
1978
0.81
0.17
0.63
0.24
30
38
21
1979
1.52
0.43
1.09
0.35
23
32
28
1980
2.60
0.89
1.71
0.69
27
40
34
1981
3.02
1.03
1.99
0.93
31
47
34
1982
3.40
1.32
2.08
1.54
45
74
39
1983
6.51
3.61
2.90
1.67
26
58
55
1984
15.00
10.50
4.50
2.65
18
59
70
1985
24.75
19.01
5.74
3.89
16
68
77
1986
40.19
31.07
9.12
4.87
12
53
77
1987
48.95
38.42
10.52
5.40
11
51
78
1988
58.65
44.56
14.10
7.22
12
51
76
1989
76.27
57.51
18.76
10.75
14
57
75
1990
90.06
70.64
19.42
11.59
13
60
78
1991
84.44
66.42
18.02
10.48
12
58
79
1992
98.69
78.39
20.30
11.65
12
57
79
1993
103.97
80.16
23.81
11.65
11
49
77
1994
119.57
93.61
25.96
17.37
15
67
78
1995
143.51
114.37
29.14
16.94
12
58
80
1996
168.62
125.68
42.94
17.09
10
40
75
1997
177.85
121.16
56.69
16.93
10
30
68
Source of data: U.S. Foreign-Trade Zones Board.

CRS-24
Appendix Table 6. List of Zones and Subzones, by State
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
ALABAMA
82
Mobile
83
Huntsville
98
Birmingham
211
Anniston
222
Montgomery
233
Dothan
116 Mobile
ADDSCO
shipbuilding
88
137 Huntsville
Chrysler
auto electronics
88
159 Mobile
Degussa
methhionine
89
293 Foley
Peavey
electronics
95
329 Tuscaloosa
Mercedes-Benz motor vehicles
96
334 Dothan
Sony
magnetic &
96
336 Madison
MagneTec
lighting ballasts
96
351 Mobile .
Zeneca
ag. chemicals
96
368 Tuscaloosa. ZFIndustries
auto axles
97
382 Mobile Cnty. Coastal
oil refining
97
392 Tuscaloosa
JVC America
videotape prds.
97
ALASK
108
Valdez
159
St. Paul
160
Anchorage
195
Fairbanks
232
Kodiak
256 Fairbanks
Flowline
pipeline insulation
93
ARIZON
48
Pima
60
Nogales
75
Phoenix
139
Sierra Vista
174
Pima
219
Yuma
221
Mesa

197 Glendale
Conair
small appliance
91
250 Buckeye
Wal-Mart
distribution
93
269 Chandler
Intel
semiconductors
94
323 Phoenix
SGS-Thompson semiconductors
96
353 Casa
Abbott Mfg.
infant formula
96
354 Phoenix
PETsMART
warehouse/distrib
96
375 Phoenix
Sumitomo Sitix semionductor
97
420 Chandler/Te Microchip
semiconductors
98
427 Yuma
Meadowcraft
patio furniture
98
ARKANSAS
14
Little Rock
16 Forrest City Sanyo
microwave ovens
82
350 West Helena Cedar Chemical ag. chemicals
96
376 El Dorado
Mid States Pipe steel pipe fab.
97
CALIFORNIA
3
San
18
San Jose
50
Long Beach

CRS-25
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
56
Oakland
143
W.
153
San Diego
191
Palmdale
202
Los Angeles
205
Port
226
Merced
230
Stockton
1 San
Lilli Ann
aparel
63
25 Long Beach Toyota
truck beds
83
30 San Jose
Olympus
med. equip.
83
54 San Diego
National Steel & shipyard
84
56 Fremont
NUMMI
auto
84
147 Benecia
Mazda
auto
89
178 Perris
National RV
motor home/RV
90
233 Pasadena
Datatape
tape recording
92
276 Garden
Alps Mfg.
computer etc.
94
332 Auburn
C. Ceronix
video monitors
98
380 Los Angeles MMM
pharmaceuticals
97
385 Sacramento Hewlett-Packar computer-related
97
398 Dixon
Gymboree
apparel/toys
98
400 El Segundo
Checron
oil refining98
98
408 Richmond
Chevron
oil refining
98
412 Fremont
Cirrus Logic
integrated circuit
98
419 San Jose
Hewlett-Packar computer etc.
98
COLORADO
112
El Paso
123
Denver
226 Fountain
Apple
data proc. equip
92
234 Boulder
Storage
electronic storage
92
415 Broomfield
Artesym
elec. power
98
CONNECTICUT
71
Windsor
75
Bridgeport
162
North Haven
208
New London
174 West Haven Miles
pharmaceuticals
90
DELAWARE
99
Wilimington
41
Wilmington
J. Schoeneman apparel
84
42 Newark
Chrysler
auto
84
47 Wilmington
Ge. Motorsauto --
84
286 Newark
Zeneca
pharmaceuticals
94
340 Newastle
Star Enterprise oil refinery
96
FLORID
25
Broward
32
Miami
43
Orlando
64
Jacksonville
65
Panama City
79
Tampa
135
Palm Beach
136
Brevard
166
Homestead

CRS-26
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
169
Manatee
180
Miami
193
Pinellas
198
Volusia & Flagler Counties
209
Palm Beach County
213
Fort Myers
215
Sebring
217
Oscala
218
St. Lucie County
204 Cocoa
Flite
machinery
91
231 Melbourne
American
telecom./compute
92
277 Tampa
Reilly Dairy
dairy prds.
94
281 Tampa
Group
electronics
94
355 Ft.
Federal-Mogul
vehicle parts dist.
97
407 Miani
Hewlett-Packar computer etc.
98
411 Broward
CITGO
petrol. storage
98
426 BrevardCou Harris Corp
telecommunicatio
98
GEORGIA
26
Atlanta
104
Savannah
144
Brunswick
24 Atlanta
GM
auto
83
46 La Grange
Goetze Gasket
auto gaskets
84
Lapsed
70 Hapeville
Ford
auto
85

149 Coweta
Yamaha
golf carts/water
98
296 Dougherty
Merck
pharmaceuticals
95
299 Bulloch
Wal-Mart
distribution
95
330 Chatham
CITGO
oil refining
96
346 Columbus
Pratt& Whitney United
96
347 Columbus
Precision
aircraft engine
96
HAWAII
9
Honolulu
2 Oahu
Tesoro Hawaii
refinery
70
57 Honolulu
Kerr Pacific
--
95
95 Kahului
Maui pineapple food
86
72 Honolulu
Dole
food
85
138 Oahu
Chevron
oil refining
88
364 Oahu
Gasco
oil refining
97
IDAHO
192
Meridian
ILLINOI
22
Chicago
31
Granite City
114
Peoria
133
Milan
146
Lawrencevill
176
Rockford
22 Chicago
UNR-Leavitt
steel pipe fab.83
83
Lapsed
60 Peoria
Caterpillar
tractor
85
89 Chicago
Ford
auto
86
98 Du Page
Power
packaging
87
expired 91
99 Du Page
Power
packaging
87
expired 91
100 Kane
Power
packaging
87
expired 91
104 Belvidere
Chrysler
auto
87
transferred 93

CRS-27
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
112 Flora
N. Am. Lighting auto components
88
113 Salem
N. Am. Lighting auto components
88
114 Peoria
Mitsubishi
auto
88
154 Galesburg
Maytag
appliances
89
lapsed
155 Herrin
Maytag
appliances
89
220 Effingham
Fedders
room air
92
222 Dundee
Milk
animal feed
92
224 Loves Park
Clinton
cathode ray tubes
92
243 N. Chicago
Abbott
pharmaceuticals
92
275 Des Plaines Sanofi
pharmaceuticals
94
306 Manhattan
Amoco
crude storage
95
312 Will County
UNO-VEN
oil refining
95
314 Robinson
Marathon
oil refining
95
361 Madison
Shell
oil refining97386
97

386 Marengo
Nissan
engines
97
401 Will County
Mobil Oil
oil refining
98
403 obile County Shell
oil refining989
89
405 Kankakee
Henkel
vitamin E
98
INDIAN
22
Indianapolis
31
South Bend
114
Burns
133
Clark
146
Evansville
176
Fort Wayne
50 Kokomo
GM
auto electronics
84
73 Indianapolis Eli Lilly
pharmaceuticals
85
74 Lafayette
Eli Lilly
pharmaceuticals
85
75 Clinton
Eli Lilly
pharmaceuticals
85
90 Indianapolis Chrysler
auto
86
lapsed
91 Kokomo
Chrysler
auto components
86
92 New Castle
Chrysler
auto
86
127 Lafayette
Caterpillar
tractor engines
88
148 Lafayette
Subaru-Isuzu
auto
89
179 Indianapolis Alpine
audio equip.
90
180 South Bend EWI
auto parts
90
239 Midlebury
Coachmen
vehicles
92
244 Greenwood
Endress&
instruments
92
246 Evansville
Mead Johnson
pharmaceuticals
92
249 Elkhart
Fairmont
manufactured
93
252 Bartholome POnkyo
accoustical prods.
93
305 Whiting
Amoco
oil refining
95
333 Indianapolis Thompson
electronics
96
379 Rushville
Fugitsu
auto audio
97
IOWA
107
Polk County
133
Davenport
175
Cedar
55 Forest City Winnebago
auto
84
156 Newton
Maytag
appliances
89
lapsed
KANSA
17
Kansas City
161
Sedgwick
84 Kansas
auto
85
274 McPherson
Abbott Labs
pharmaceuticals
94

CRS-28
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
356 Butler
Equilon
oil refining
97
KENTUCKY
29
Jefferson County
47
Campbell
37 Georgetown Clark
lift trucks
84
lapsed
43 Louisville
Ford
auto
84
86 Jefferson
GE
home appliances
85
87 Jefferson
Lexmark
typewriters &
86
111 Scott
Toyota
auto
87
177 Walton
Clarion
auto audio
90
182 Harrodsburg Hitachi
auto parts
90
359 Boyd
Marathan
oil refining
97
365 Campton
Ascent
elec./electronic
97
LOUISIANA
2
New Orleans
87
Calcasieu Parish
124
St. Charles
145
Shreveport
154
Baton
120 Gramercy
Trans-American oil refining 88
88
134 Lake
Conoco
oil refining 88
88
150 Lake
Citgo
oil refining
89
193 Avondale
Avondale
shipbuilding
91
194 Westwego
Avondale
shipbuilding
91
195 Harvey
Avondale
shipbuilding
91
196 New Orleans Avondale
shipbuilding
91
210 Lafourche
N.Am.Shipbuild shipbuilding
91
212 Shreveport
AT&T
telecommunicatio
91
223 New Orleans Equitable
shipbuilding
93
261 Convent
Star Enterprise oil refining
94
297 Lafourche
LOOP
crude oil
95
310 Garyville
Marathon
oil refining
95
318 St. Bernard
Chalmette
oil refining
95
337 Plaquemine BP
oil refining
96
343 St. Charles
Shell Oil
oil refining
96
348 Baton
Exxon
oil refining
96
373 St. Bernard
Murphy Oil
oil refining
97
404 Lockport
Halter Marine
shipbuilding
98
418 Lockport
Bollinger
shipbuilding
98
MAINE
58
Bangor
179
Madawaska
186
Waterville
202 Madawaska Northern
cosmetics
91
MARYLAND
63
Prince Geoge's County
73
BWI Airport
74
Baltimore
61 Sparrow's
Bethlehem
steel
85
307 Walkersville Rotorex
rotary
95
MASSACHUSETTS
27
Boston
28
New

CRS-29
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
201
Holyoke
7 Fall River
Sterlingwale
apparel
80
terminated 89
31 Quincy
General
shipyard
89
32 Lawrencevill Lawrence
textiles
84
105 Framingham GM
auto
87
117 New
Codman &Shur. surgical
88
118 Avondale
Codman &
surgical
88
119 Randolph
Codman &
surgical
88
183 Norwood
Polaroid
camera
91
184 Needham
Polaroid
camera
91
185 New
Polaroid
camera
91
186 Waltham
Polaroid
camera
91
187 Freetown
Polaroid
camera
91
188 Boston
Polaroid
camera
91
189 Cambridge
Polaroid
camera
91
lapsed
410 Quincy
Mass. Heavy
shipbuilding
98
MICHIGAN
16
Sault Ste. Marie
43
Battle Creek
70
Detroit
140
Flint
189
Kent/Ottawa/Muskegon
210
St. Clair
10 Romeo
Ford
tractor
81
13 Detroit
Chrysler
auto
82
19 Wayne
Ford
auto
83
28 Wixom
Ford
auto
83
29 Dearborn
Ford
auto
83
36 Springfield
Clark
lift trucks
84
terminated 91
48 Ypsilanti
GM
auto
84
49 Pontiac
GM
auto
84
67 Sterling
Chrysler
auto
85
94 Flat Rock
Mazda
auto
86
101 Flint
GM
auto
87
103 Trenton
Chrysler
auto
87
123 Midland
Dow
chemical
88
lapsed
129 Detroit
GM
auto
88
130 Orion
GM
auto
88
131 Lansing
GM
auto
88
161 Detroit
Chrysler
auto
89
162 Trenton
Chrysler
auto
89
terminated 92
163 Detroit
Chrysler
auto
89
164 Detroit
Chrysler
auto
89
165 Detroit
Chrysler
auto
89
216 Zeeland
Mead Johnson
--
92
303 Wyandotte
BASF
vitamins/plastics
95
362 Detroit
Marathon
oil refining
97
377 Sturgis
Abbott
infant formula
97
390 Kentwood
Diesel
fuel injection
97
MINNESOTA
51
Duluth
119
Minneapolis/St. Paul
248 St. Peter
Davisco
dairy prds.
93
251 Apple Valley Wirsbo
polyethylene
93
255 Howard
Am. Feeds &
animal feeds
93
264 Preston
Wisconsin
infant formula
94

CRS-30
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
345 Lindstrom
Plastic
in-line skates
96
414 Redwood
Artesyn
elec. power
98
MISSISSIPPI
92
Harrison
158
Vicksburg/Jackson
115 Escatawpa
Moss Pt.
shipbuilding
88
190 Pascagoula Ingalis
shipbuilding
91
237 Harrison
Avondale Ent.
shipbuilding
92
271 Corinth
Cortelo USA
phone & computer
94
279 Meridian
Peavey Elec.
audio/acoustical
94
300 Pascagoula Chevron
oil refining
95
MISSOURI
15
Kansas City
102
St. Louis
225
Springfield
20 St.Louis
Chrysler
auto
83
23 Claycomo
Ford
auto
83
40 Hazelwood
Ford
auto
84
64 Kansas
--
auto
93
132 Wentzville
GM
auto
88
151 Kirksville
Ortech
auto components
89
152 Kansas City Bayer
ag. chemicals
89
160 Kansas City Kawasaki
engine parts
89
181 Grandview
Metcals
sink processing
90
lapsed
278 Jefferson
Florsheim
shoes
94
MONTANA
88
Great Falls
187
Toote
190
Butte-Silver Bow
NEBRASKA

19
Omaha
59
Lincoln
8 Lincoln
Kawasaki
motorcycles &
80
NEVAD
89
Clark
126
Sparks
52 Reno
Porsche
auto
84
NEW HAMPSHIRE
81
Portsmouth
18 Portsmouth Nashua
office equip
83
33 Colebrook
Manchester
apparel
84
232 Newington
ABB
industrial/nuclear
92
NEW JERSEY
44
Morris
49
Newark/Elizabeth
142
Salem/Millvi
200
Mercer
235
Lakewood
35 Edison
Ford
auto
84
85 Linden
GM
auto
85
107 Hazlet
Int'l Flavors
--
87
lapsed

CRS-31
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
108 Union
Int'l Flavors
--
87
lapsed
109 S.
Int'l Flavors
--
87
lapsed
153 N.
Squibb
pharmaceuticals
89
298 Rahway
Merck
pharmaceuticals
95
319 Linden
Bayway
oil refining
95
321 Gloucester
Mobil Oil
oil refining
95
331 Gloucester
CITGO
oil refining
96
363 Perth
Chevron
oil refining
97
372 Gloucester
Coastal Eagle
Oil refining
97
383 East
Conair
warehouse/distrib
97
416 Bridgewater Hewlett-Packar computer-related
98
NEW MEXICO
110
Albuquerqu
194
Rio Rancho
197
Dona Ana
58 Albuquerqu SP
pharmaceuticals
84
NEW YORK
1
NY City
23
Buffalo
34
Niagara
37
Orange
52
Suffolk
54
Clinton
90
Onondaga
109
Jefferson County
111
JFK Intl. Airport
118
Ogdensburg
121
Albany
141
Monroe
172
Oneida
26 Webster
Xerox
office equip
90
59 Waltertown
NYAirbrake
--
84
lapsed

63 Cortland
Smith-Carona
electronics
85
66 N.
GM
auto
85
93 NY City
Jack Young
--
86
lapsed
96 Chatauqua
CPS Corp.
--
86
expired 96
106 Onodaga
Chrysler
auto
87
lapsed
133 Rochester
Eastman Kodak photography
88
213 Rochester
ITT
auto electronics
91
lapsed
258 New
Bally
shoes
93
273 Rensselaer
Sanophi
pharmaceuticals
94
292 Rochester
Gleason Corp.
gear production
95
302 Sherrill &
Oneida
tableware
95
322 Rensselaer
BASF
chem.
95
NORTH
57
Mecklenburg County
66
Wilmington
67
Morehead
93
Raleigh
214
Lenoir
230
Fuilford, Forsuth,, etc.

88 Mecklenbur IBM
electronics
86
173 Alamance
Honda
lawnmowers
90

CRS-32
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
219 Kernersville Deere-Hitachi
hydraulic
92
227 Raleigh/Dur IBM
info processing
92
230 Wake
Mallinckrodt
pharmaceuticals
92
283 Wilson
Merck
pharmaceuticals
94
328 Goldsboro
R.G. Barry
footwear &
96
335 Whitsett
Lucent
telecommunicatio
96
378 Yadkinville
Unifi
polyester yarn
97
NORTH DAKOTA
103
Grand Forks
OHIO
8
Toledo
40
Cleveland
46
Butler
100
Dayton
101
Clinton
138
Franklin
151
Findlay
181
Akron/Canto
5 Hamilton
GE
jet engines
79
6 Union City
Honda
motorcycles
79
34 Toledo
Jeep
auto
84
44 Lorain
Ford
auto
84
65 Lordstown
GM
auto
85
102 Norwood
GM
auto
87
110 Shelby
Honda
car/motorcycle
87
121 Findlay
Cooper Tire &
tires
88
128 Cincinnati
Nine West
shoes
88
157 Dayton
GM
electric motors
89
158 Kettering
GM
auto parts
89
166 Dayton
Chrysler
auto parts
89
167 Perrysburg
Chrysler
auto parts
89
168 Sandusky
Chrysler
auto parts
89
169 Van Wert
Chrysler
auto parts
89
170 Toledo
Giant Products industrial pumps
90
203 Richwood
Wascator Mfg.
washing machines
91
236 Ottawa
W.C. Wood
freezers
92
254 Avon Lake
Ford
motor vehicles
93
257 Euclid/Ment Lincoln Electric arc welding equip.
93
259 McComb
Consolidated
food
93
268 Bedford
Mr. Coffee
small appliance
94
280 Valley View
Picker
medical
94
325 Grove City
Pier 1
distribution
96
326 Bedford
Ben Venue
pharmaceuticals
96
338 Toledo
BP Oil
oil refining
96
344 Euclid
Motch
machinery
96
358 Stark/Allen
Marathon
oil refining
97
366 Springboro
pioneer
auto audio
97
387 Columbus
Abbott
infant formula
97
417 Beverly
Globe
ferroalloys
98
424 Columbus
Lucent
telecommunicatio
98
425 Lima
Clark USA
oil refining
98
OKLAHOMA
53
Rogers
106
Oklahome
164
Muskogee

CRS-33
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
227
Durant
51 Oklahome
GM
auto
84
240 Oklahome
Ted Davis Mfg. voice aoil motors
92
394 Lincoln
ARCO Pipe
crude oil
98
OREGO
45
Portland
132
Coos
184
Klamath
206
Medford-Jackson County
9 Multnomah
Beall Pipe
80
deactivated 83
171 Portland
AIM
90
lapsed
207 Portland
Alcatel
fiberoptic cable
91
221 Pendleton
Continental
food
92
247 Tualatin
Tofle USA
stainless steal
92
PENNSYLVANIA
24
Pittston
33
Allegheny County
35
Philadelphia
147
Berks
3 Westmorela VW
auto
77
4 Harrisburg
Olivetti
typewriters,
78
deactivated 81
21 Landsdale
Ford
auto
83
142 Allegheny
Verosol USA
window shade
89
282 West Point
Merck
pharmaceuticals
94
285 Riverside
Merck
pharmaceuticals
94
342 Philadelphia Sun Company
oil refining
96
369 Delaware
Tosco
oil refining
97
PUERTO RICO
7
Mayaguez
61
Guyanabo
163
Ponce
15 Penuelas
CORCO
oil refining
82
217 Humacao
Bristol-Myers
pharmaceuticals
92
218 Barceloneta Bristol-Myers
pharmaceuticals
82
245 Caguas
Searle
pharmaceuticals
92
266 Barceloneta Searle
pharmaceuticals
94
267 Cidra
SB Pharmco
pharmaceuticals
94
294 Arecibo
Merck
pharmaceuticals
95
295 Barceloneta Merck
pharmaceuticals
95
316 Guayama
IPR
pharmaceuticals
95
317 Carolina
IPR
pharmaceuticals
95
360 San Juan
Baxter Caribe
pharmaceuticals
97
371 Skagit Cnty. PR Sun oil
oil refining
97
384 Cidra
PepsiCo
concentrate
97
423 San Juan
Pfizer
pharmaceuticals
98
RHODE ISLAND
105
Providence
SOUTH
21
Dorchester Cnty
38
Spartanburg Cnty
127
West
53 Charleston
Porsche
auto
84
208 Anderson
AUTECS
auto electronics
91

CRS-34
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
235 Goose
Haarmann &
chemicals
92
272 Spartanburg BMW
auto
94
399 Goose
Bayer Corp
rubber
98
SOUTH DAKOTA
220
Sioux Falls
TENNESSEE
77
Memphis
78
Nashville
134
Chattanoog
148
Knoxville
204
Tri-City
223
Memphis
14 Symnra
Nissan
truck/auto
82
27 Lebanon
Toshiba
microwave ovens
83
38 Hartsville
TVA Nuclear
energy
84
39 Phipps
Global Power
energy
84
45 Memphis
Sharp
microwave ovens
84
175 Maury Cnty. Saturn
auto
90
192 Hawkins
Form Rite
--
91
289 Bristol
SmithKline
pharmaceuticals
95
301 Carter Cnty. Soemens
industrial
95
308 Bartlett
Brother Ind.
typewriters/word
95
311 Columbia
Columbia
room
95
413 Ripley
Komatsu
equip. parts dist.
98
TEXAS
12
McAllen
36
Galveston
39
Dallas/Fort Worth
62
Brownsville
68
El Paso
80
San Antonio
84
Harris
94
Webb
95
Starr County
96
Maverick
97
Val Verde County
113
Ellis County
115
Beaumont
116
Jefferson County
117
Orange
122
Corpus
149
Freeport
150
El Paso
155
Victoria & CalhounCounties
156
Weslaco
165
Midland
168
Dallas/Fort Worth
171
Liberty
178
Presidio
183
Austin
196
Fort Worth
199
Texas City
234
Gregg
62 Jefferson
Bethlehem
85
76 Corpus Ch.
Coastal St.
oil refining

CRS-35
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
77 Corpus Ch.
Koch Refining
oil refining
95
78 Corpus Ch.
Trifinery
oil refining
85
79 Corpus Ch.
Gulf Marine
oil refininh
85
80 Corpus Ch.
Berry
--
85
81 Corpus Ch.
CC Distributing --
85
expired 91
82 Corpus Ch.
Compressors
--
85
expired 91
83 Corpus Ch.
Hitox
--
85
122 Athens
Harvey Inds.
TVs
88
124 Victoria
Safety Railway
freight car repair
88
lapsed
125 Victoria
Safety Steel
freight car repair
88
lapsed
135 Corpus
Citgo
oil refining
88
136 Nueces
Valero
oil refining
88
139 Weslaco
McManus
food processing
88
140 Weslaco
FGulf De Bruyn food processing
88
141 Weslaco
Sundor
food processing
89
143 Corpus Ch.
Reynolds
alumina
88
144 Houston
Hughes Tool
drilling tools
89
145 Houston
Texas Steel
heat-treat oil
89
176 LaPorte
DuPont
hydrofluoric acid
90
198 Houston
United General hand tools
91
199 San Antonio Bausch & Lomb sunglasses
91
lapsed
200 San Antonio Colin Medical
medical equip,
91
201 San Antonio Friedrich A/C & air conditioners
91
205 Calhoun
Alcoa
alumina/aluminum
91
206 Houston
Gulf Coast
oil refining
91
209 Nueces
Koch Refining
oil refining
91
211 Arlington
GM
auto
91
214 Houston
Calero Refining oil refining
91
215 Houston
Goodman Mfg.
--
91
225 Harris
Shaffer
oil drilling equip.
92
241 Austin
Dell Computer
electronics
92
242 Harris
Tuboscope
steel tube prds.
92
260 Harris
Shell Oil
oil refining
93
262 Port Arthur
Star Enterprise oil refining
93
263 Wylie
Sanden
auto a/c
93
265 Houston
Dril-Quip
oil field equip
94
287 Houston
Hydril
oil field equip
95
288 Houston
Tadiran
telecom. prds.
95
290 Tx City
Amoco
oil refining
95
291 Freeport
BASF
chemicals
95
309 Jefferson
Fina
oil refining
95
313 Jefferson/Li Mobil Oil
oil refining
95
315 Freeport
JHoffnam-LaRo pharmaceuticals
95
320 Harris
Crown Central
oil refining
95
324 Mansfield
Pier1
distribution
96
327 San Angelo
R.G. Barry
footwear &
96
339 Texas City
Marathon
oil refining
96
341 Harris
Exxon
oil refining
96
349 Jefferson
Clark
oil refining
96
357 Texas City
Valero
oil refining
97
374 Jefferson
USDOE Oil
crude oil shortage
97
381 Brazoria
Phillips
oil refining
97
388 Richardson
Fossil Partners watches, etc.
97
389 Dallas
B&F System
consumer prds.
97
395 Brazoria
Seaway
crude oil
98
396 Texas City
Seaway
crude oil
98
402 Harris
Lyondell-Citgo
oil refining
98
409 Harris
Equistar
petrochemicals
98

CRS-36
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
421 Lewisville
Ultrak
closed circuit TV
98
422 Brazoria
Amoco
petrochemicals
98
UTAH
30
Salt Lake
VERMONT
55
Burlington
91
Newport
17 St. Albans
Pedigree
apparel
82
172 Georgia
Wyeth
90
VIRGINI
20
Suffolk
137
Wash. Dulles Intl. Airport
185
Culpeper
207
Richmond
146 Va. Beach
Stihl
chain saw/power
89
lapsed
228 Culpeper
ITT Teves
auto brake comp.
92
229 Culpeper
Rochester
cable
92
253 Newport
NN
shipbuilding
93
284 Elkton
Merck & Co
pharmaceuticals
94
305 Whiting
Amoco
oil refining
95
367 Altavista
Abbott
formula/nutritional
97
406 Richmond
Hewlett-Packar computer-related
98
WASHINGTON
5
Seattle
85
Everett
86
Tacoma
120
Cowlitz
128
Whatcom
129
Whatcom
130
Whatcom
131
Whatcom
173
Grays
188
Yakima
203
Moses Lake
212
Tacoma
216
Olympia
224
Spokane
126 Tacoma
Tacoma Boat.
shipbuilding
88
191 Hoquiam
Lamb-Grays
--
91
270 Arlington
West-Coast
wood building
94
370 Skagit Cnty. Equilon
oil refining
97
WEST VIRGINIA
228
Wood/Jackson Counties
229
Charleston
397 Buffalo
Toyota
auto engines
98
WISCONSIN
41
Milwaukee
167
Brown
11 Kenosha
Chrysler
auto
81
12 Manitowac
Muskegon
piston rings
81
68 Janesville
GM
auto
85
69 Oak Creek
GM
auto electronics
85
lapsed

CRS-37
STATUS: (Active
YEAR
unless otherwise
STATE
ZONE# SUBZONE #
LOCATION
BUSINESS
INDUSTRY
APPROVED
indicated)
71 Sturgeon
Bay
shipbuilding
85
97 Milwaukee
Ambrosia
--
87
expired 91
238 Blue
Stauffer
cheese prods
92
352 Hudson
Robin Mfg.
small engines
96
391 Osceola
Polaris
small engines
97
393 Plymouth
Sargento Foods cheese prcessing
98
WYOMING
157
Casper