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 105th and 106th Congresses . . . . . . . . . 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 finetuning 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 105th and 106th Congresses, 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. CRS-2 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. CRS-3 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 ForeignTrade 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. CRS-4 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 (on Inverted Tariff Situations) Zone users may choose the lower duty rate when a product is entered into customs territory (for importation) in inverted tariff 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 Elimination Zones eliminate the need for duty drawback. That is, the refunding of 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. CRS-5 Benefit How Costs Can Be Saved Zone to Zone Transfer Zones can transfer merchandise “in-bond” from one zone to another. Customs duties may be deferred until the product’s eventual entry into U.S. customs territory. Customs and Inventory Efficiencies Cost savings (especially cash-flow savings) can occur from zone efficiencies affecting inventory control. These efficiencies include 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.7 While new zones are approved when the Board finds that existing or authorized zones do not adequately serve the “convenience of commerce,”8 subzones can be approved only when a “public benefit” —(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. CRS-6 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)]11. It was given the power to 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%.12 Some have argued that zones were designed originally to be way stations 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. CRS-7 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 ForeignTrade Zones: Adapting to Time and Space. The Maritime Lawyer, Fall, 1980, p. 202. 16 GAO Report, 1984, op. cit., p. 12. CRS-8 In addition, the value of the dollar was quite high in the 1980s, 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 tariffs were later reduced or eliminated by the Uruguay Round of negotiations under the General Agreement on Tariffs and Trade (GATT) in 1994. Figure 1. Growth in Number of and Employment in Zones, 1978-1997 700 400 600 300 500 Employment in Zones 400 200 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 300 Soon businesses figured out that, 200 if they could achieve zone status, they 100 Number of Zones could import components in industries 100 and Subzones with inverted tariff structures, 0 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. foreigntrade 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).”19 The U.S. 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.21 In addition, 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, 18 (...continued) 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. 87). 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.22 The Committee 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 1998.23 Today, instead of being 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 ForeignTrade-Zones Board) can be made on a larger volume of components.24 While the 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 Source of data: U.S. Foreign-Trade Zones Board. See appendix table 6 for listing of zones by state. 25 1-10 zones and subzones 10-20 zones and subzones 20-90 zones and subzones Zone data are taken from U.S. Department of commerce. Foreign-Trade Zones Board. The 59 th 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 Figure 3. Extent to Which Imports Entering Zones are Subsequently Re-Exported, 1978-1997 Exports/Imports % 100 U.S. Zones as Export Zones 80 60 50 40 U.S. Zones as Import Zones 20 0 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 Zones today are primarily import zones, rather than export zones as some observers believe Congress originally anticipated. They are import zones in terms of both zone inputs and zone outputs, even though both the Act itself and the Foreign-Trade Zones Board are currently neutral on this issue. In addition, the fact that most U.S. zones are functionally import zones reflects both the economic maturity (in comparison to developing countries) and the relative strength of the U.S. economy. Source of data: U.S. Foreign Trade Zones Board, Annual Reports, various years. 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, today’s zones are import zones rather than export zones in that the majority of zone output is imported into the United States, and very little is exported. Figure 2 shows that since 1984, the proportion of total zone output that is exported has averaged about 10-15%. Exports/total zone inputs % 100 80 Zone output that is consumed domestically 60 40 20 Zone output that is exported 0 1997 1996 1995 1994 1993 1992 1991 Source of data: U.S. Foreign Trade Zones Board, Annual Reports, various years. 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 Figures 3 and 4 both show that 1982 is the year when zones reached their pinnacle as export zones. Figure 4. Extent to Which Total Zone Output is Consumed Domestically or Exported 1978-1997 CRS-13 Zones Today are Primarily “Domestic-Trade” Rather Than “Foreign-Trade” Zones 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 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 “foreignDomestic Inputs/ trade” zones. This is because 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 0 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 in Zones, 1984 and 1997 competitive posture of firms in domestic markets. Percent of all zone input accounted for by named industry 70 60 Industry Concentrations in Zones Have Changed 50 40 30 20 1984 1997 23% 25% 10% 5% 5% 1% 2% 1% 0.4% 5% 10 Source of data: 46th and 59th Annual Reports of the Foreign Trade Zones Board. Other Food Products Chemicals Electronics Motor Vehicles 0 Petroleum Refining & Storage Industry concentrations in zones have changed since the mid-1980s, as mentioned previously. Figure 6 shows that in 1984, motor vehicle assembly plants accounted for 60% of all imports into zones, and electronics companies were 64% 60% 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 ForeignTrade 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. 27 (...continued) 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),29 have shifted the perspective on the effects of trade 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.30 Concern over 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 Manufacturers Potential Winners Potential Losers Final assemblers could win to the extent that righting an inverted tariff lets them get components at a lower cost. Components manufacturers could lose to the extent that the product becomes less 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 in assembly operations could win to the extent that FTZ status results in greater profits which may be passed along to workers. Workers Either automation, or plant closings, in components industries from losing sales to importers operating in zones, could put 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 on the community. Communities with new zones may benefit because zones can attract new business into the area. Communities with component manufacturing operations that close may suffer. Consumers To the extent that FTZs help manufacturers reduce prices and those prices are passed along to consumers, consumers could benefit. Consumers may suffer from reduced choices or reduction in quality to the extent that foreign-trade zones encourage the substitution of cheaper imported components or goods for domestically produced ones. Tariff Revenues Total U.S. tariff revenues increase to the extent that increased zone use results in an increased demand for the imported components. Tariff revenues decline by the difference between the tariff on the component and the tariff on the finished product for each 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. 32 (...continued) conditions. 33 These arguments were largely drawn from GAO and ITC reports. CRS-18 a An example showing the potential magnitude of such tariff 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.34 Today, 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 35 Bass and Sek, op. cit., p. 11. 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 105th and 106th 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 105th Congress, included a foreign-trade zone 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 106th Congress, 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 106th Congress, 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 105th Congress would have 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 105th Congress H.R. 1875 would have allowed the entry of peanut 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 106th Congress 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 foreigntrade 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. 105th Congress 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 C C C Apply to the U.S. Foreign-Trade Zones Board, Import Administration, U.S. Department of Commerce, Washington, D.C. 20230 (202) 482-2862. 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. Applications are rather involved, and the approval process is somewhat lengthy. General Purpose Zone applications take about 18 and Subzone applications about 12 months. 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 C C C C C C C C 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. Zone sites must be in or near U.S. Customs ports of entry (listed at 19 CFR Part 101). 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. Operations are conducted as public utilities, with published rates. Zone projects should be coordinated at the state level for consistency with economic development plans. Applicants must have a suitable plan including provisions for facilities and financing. Need for the proposed zone must be shown in terms of the local economy and overall economic development objectives. Zone manufacturing is reviewed under “public interest” criteria for consistency with trade policy and net positive economic effects. Zones should help create, not just divert employment from region to another. 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 C C Subzones are normally private plant sites that usually cannot be accommodated within an existing general-purpose zone. Subzones can be approved only when a “public benefit” resulting in a “positive economic effect” is demonstrated 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 $billions, and percent) Data for Figure 4 — Data for Figure 3 — Data for Figure 5 — Exports ($billions) Exports as % of Mdse. Received in Zones (%) Exports from Zones/ Imports Into Zones (%) Domestic Inputs/Total Inputs (%) 0.63 0.24 30 38 21 0.43 1.09 0.35 23 32 28 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 Mdse Received in Zone ($billions) Domestic Inputs ($billions) Foreign Inputs ($billions) 1978 0.81 0.17 1979 1.52 1980 Source of data: U.S. Foreign-Trade Zones Board. CRS-24 Appendix Table 6. List of Zones and Subzones, by State STATE ZONE# SUBZONE # YEAR APPROVED LOCATION BUSINESS INDUSTRY Mobile Huntsville Birmingham Anniston Montgomery Dothan Mobile Huntsville Mobile Foley Tuscaloosa Dothan Madison Mobile . Tuscaloosa. Mobile Cnty. Tuscaloosa ADDSCO Chrysler Degussa Peavey Mercedes-Benz Sony MagneTec Zeneca ZFIndustries Coastal JVC America shipbuilding auto electronics methhionine electronics motor vehicles magnetic & lighting ballasts ag. chemicals auto axles oil refining videotape prds. 88 88 89 95 96 96 96 96 97 97 97 Flowline pipeline insulation 93 Conair Wal-Mart Intel SGS-Thompson Abbott Mfg. PETsMART Sumitomo Sitix Microchip Meadowcraft small appliance distribution semiconductors semiconductors infant formula warehouse/distrib semionductor semiconductors patio furniture 91 93 94 96 96 96 97 98 98 Little Rock 16 Forrest City Sanyo microwave ovens 350 West Helena Cedar Chemical ag. chemicals 376 El Dorado Mid States Pipe steel pipe fab. 82 96 97 ALABAMA 82 83 98 211 222 233 116 137 159 293 329 334 336 351 368 382 392 ALASK 108 159 160 195 232 Valdez St. Paul Anchorage Fairbanks Kodiak 256 Fairbanks ARIZON 48 60 75 139 174 219 221 197 250 269 323 353 354 375 420 427 Pima Nogales Phoenix Sierra Vista Pima Yuma Mesa Glendale Buckeye Chandler Phoenix Casa Phoenix Phoenix Chandler/Te Yuma ARKANSAS 14 CALIFORNIA 3 18 50 San San Jose Long Beach STATUS: (Active unless otherwise indicated) CRS-25 STATE ZONE# SUBZONE # 56 143 153 191 202 205 226 230 1 25 30 54 56 147 178 233 276 332 380 385 398 400 408 412 419 YEAR APPROVED LOCATION BUSINESS INDUSTRY Oakland W. San Diego Palmdale Los Angeles Port Merced Stockton San Long Beach San Jose San Diego Fremont Benecia Perris Pasadena Garden Auburn Los Angeles Sacramento Dixon El Segundo Richmond Fremont San Jose Lilli Ann Toyota Olympus National Steel & NUMMI Mazda National RV Datatape Alps Mfg. C. Ceronix MMM Hewlett-Packar Gymboree Checron Chevron Cirrus Logic Hewlett-Packar aparel truck beds med. equip. shipyard auto auto motor home/RV tape recording computer etc. video monitors pharmaceuticals computer-related apparel/toys oil refining98 oil refining integrated circuit computer etc. 63 83 83 84 84 89 90 92 94 98 97 97 98 98 98 98 98 Apple Storage Artesym data proc. equip electronic storage elec. power 92 92 98 pharmaceuticals 90 apparel auto -pharmaceuticals oil refinery 84 84 84 94 96 COLORADO 112 123 El Paso Denver 226 Fountain 234 Boulder 415 Broomfield CONNECTICUT 71 75 162 208 Windsor Bridgeport North Haven New London 174 West Haven Miles DELAWARE 99 41 42 47 286 340 Wilimington Wilmington Newark Wilmington Newark Newastle FLORID 25 32 43 64 65 79 135 136 166 Broward Miami Orlando Jacksonville Panama City Tampa Palm Beach Brevard Homestead J. Schoeneman Chrysler Ge. Motorsauto Zeneca Star Enterprise STATUS: (Active unless otherwise indicated) CRS-26 STATE ZONE# SUBZONE # 169 180 193 198 209 213 215 217 218 LOCATION BUSINESS INDUSTRY YEAR APPROVED 204 231 277 281 355 407 411 426 Manatee Miami Pinellas Volusia & Flagler Counties Palm Beach County Fort Myers Sebring Oscala St. Lucie County Cocoa Flite Melbourne American Tampa Reilly Dairy Tampa Group Ft. Federal-Mogul Miani Hewlett-Packar Broward CITGO BrevardCou Harris Corp machinery telecom./compute dairy prds. electronics vehicle parts dist. computer etc. petrol. storage telecommunicatio 91 92 94 94 97 98 98 98 24 46 70 149 296 299 330 346 347 Atlanta Savannah Brunswick Atlanta La Grange Hapeville Coweta Dougherty Bulloch Chatham Columbus Columbus GM Goetze Gasket Ford Yamaha Merck Wal-Mart CITGO Pratt& Whitney Precision auto auto gaskets auto golf carts/water pharmaceuticals distribution oil refining United aircraft engine 83 84 85 98 95 95 96 96 96 2 57 95 72 138 364 Honolulu Oahu Honolulu Kahului Honolulu Oahu Oahu Tesoro Hawaii Kerr Pacific Maui pineapple Dole Chevron Gasco refinery -food food oil refining oil refining 70 95 86 85 88 97 UNR-Leavitt Caterpillar Ford Power Power Power Chrysler steel pipe fab.83 tractor auto packaging packaging packaging auto 83 85 86 87 87 87 87 STATUS: (Active unless otherwise indicated) GEORGIA 26 104 144 Lapsed HAWAII 9 IDAHO 192 Meridian 22 31 114 133 146 176 Chicago Granite City Peoria Milan Lawrencevill Rockford Chicago Peoria Chicago Du Page Du Page Kane Belvidere ILLINOI 22 60 89 98 99 100 104 Lapsed expired 91 expired 91 expired 91 transferred 93 CRS-27 STATE ZONE# SUBZONE # YEAR APPROVED LOCATION BUSINESS INDUSTRY 112 113 114 154 155 220 222 224 243 275 306 312 314 361 386 401 403 405 Flora Salem Peoria Galesburg Herrin Effingham Dundee Loves Park N. Chicago Des Plaines Manhattan Will County Robinson Madison Marengo Will County obile County Kankakee N. Am. Lighting N. Am. Lighting Mitsubishi Maytag Maytag Fedders Milk Clinton Abbott Sanofi Amoco UNO-VEN Marathon Shell Nissan Mobil Oil Shell Henkel auto components auto components auto appliances appliances room air animal feed cathode ray tubes pharmaceuticals pharmaceuticals crude storage oil refining oil refining oil refining97386 engines oil refining oil refining989 vitamin E 88 88 88 89 89 92 92 92 92 94 95 95 95 97 97 98 89 98 50 73 74 75 90 91 92 127 148 179 180 239 244 246 249 252 305 333 379 Indianapolis South Bend Burns Clark Evansville Fort Wayne Kokomo Indianapolis Lafayette Clinton Indianapolis Kokomo New Castle Lafayette Lafayette Indianapolis South Bend Midlebury Greenwood Evansville Elkhart Bartholome Whiting Indianapolis Rushville GM Eli Lilly Eli Lilly Eli Lilly Chrysler Chrysler Chrysler Caterpillar Subaru-Isuzu Alpine EWI Coachmen Endress& Mead Johnson Fairmont POnkyo Amoco Thompson Fugitsu auto electronics pharmaceuticals pharmaceuticals pharmaceuticals auto auto components auto tractor engines auto audio equip. auto parts vehicles instruments pharmaceuticals manufactured accoustical prods. oil refining electronics auto audio 84 85 85 85 86 86 86 88 89 90 90 92 92 92 93 93 95 96 97 Polk County Davenport Cedar 55 Forest City Winnebago 156 Newton Maytag auto appliances 84 89 Kansas City Sedgwick 84 Kansas 274 McPherson Abbott Labs auto pharmaceuticals 85 94 STATUS: (Active unless otherwise indicated) lapsed INDIAN 22 31 114 133 146 176 lapsed IOWA 107 133 175 KANSA 17 161 lapsed CRS-28 STATE ZONE# SUBZONE # LOCATION YEAR APPROVED BUSINESS INDUSTRY Equilon oil refining 97 37 43 86 87 111 177 182 359 365 Jefferson County Campbell Georgetown Clark Louisville Ford Jefferson GE Jefferson Lexmark Scott Toyota Walton Clarion Harrodsburg Hitachi Boyd Marathan Campton Ascent lift trucks auto home appliances typewriters & auto auto audio auto parts oil refining elec./electronic 84 84 85 86 87 90 90 97 97 120 134 150 193 194 195 196 210 212 223 261 297 310 318 337 343 348 373 404 418 New Orleans Calcasieu Parish St. Charles Shreveport Baton Gramercy Trans-American Lake Conoco Lake Citgo Avondale Avondale Westwego Avondale Harvey Avondale New Orleans Avondale Lafourche N.Am.Shipbuild Shreveport AT&T New Orleans Equitable Convent Star Enterprise Lafourche LOOP Garyville Marathon St. Bernard Chalmette Plaquemine BP St. Charles Shell Oil Baton Exxon St. Bernard Murphy Oil Lockport Halter Marine Lockport Bollinger oil refining 88 oil refining 88 oil refining shipbuilding shipbuilding shipbuilding shipbuilding shipbuilding telecommunicatio shipbuilding oil refining crude oil oil refining oil refining oil refining oil refining oil refining oil refining shipbuilding shipbuilding 88 88 89 91 91 91 91 91 91 93 94 95 95 95 96 96 96 97 98 98 Bangor Madawaska Waterville 202 Madawaska Northern cosmetics 91 Prince Geoge's County BWI Airport Baltimore 61 Sparrow's Bethlehem 307 Walkersville Rotorex steel rotary 85 95 356 Butler STATUS: (Active unless otherwise indicated) KENTUCKY 29 47 LOUISIANA 2 87 124 145 154 MAINE 58 179 186 MARYLAND 63 73 74 MASSACHUSETTS 27 28 Boston New lapsed CRS-29 STATE ZONE# SUBZONE # YEAR APPROVED LOCATION BUSINESS INDUSTRY 7 31 32 105 117 118 119 183 184 185 186 187 188 189 410 Holyoke Fall River Quincy Lawrencevill Framingham New Avondale Randolph Norwood Needham New Waltham Freetown Boston Cambridge Quincy Sterlingwale General Lawrence GM Codman &Shur. Codman & Codman & Polaroid Polaroid Polaroid Polaroid Polaroid Polaroid Polaroid Mass. Heavy apparel shipyard textiles auto surgical surgical surgical camera camera camera camera camera camera camera shipbuilding 80 89 84 87 88 88 88 91 91 91 91 91 91 91 98 10 13 19 28 29 36 48 49 67 94 101 103 123 129 130 131 161 162 163 164 165 216 303 362 377 390 Sault Ste. Marie Battle Creek Detroit Flint Kent/Ottawa/Muskegon St. Clair Romeo Ford Detroit Chrysler Wayne Ford Wixom Ford Dearborn Ford Springfield Clark Ypsilanti GM Pontiac GM Sterling Chrysler Flat Rock Mazda Flint GM Trenton Chrysler Midland Dow Detroit GM Orion GM Lansing GM Detroit Chrysler Trenton Chrysler Detroit Chrysler Detroit Chrysler Detroit Chrysler Zeeland Mead Johnson Wyandotte BASF Detroit Marathon Sturgis Abbott Kentwood Diesel tractor auto auto auto auto lift trucks auto auto auto auto auto auto chemical auto auto auto auto auto auto auto auto -vitamins/plastics oil refining infant formula fuel injection 81 82 83 83 83 84 84 84 85 86 87 87 88 88 88 88 89 89 89 89 89 92 95 97 97 97 248 251 255 264 Duluth Minneapolis/St. Paul St. Peter Davisco Apple Valley Wirsbo Howard Am. Feeds & Preston Wisconsin dairy prds. polyethylene animal feeds infant formula 93 93 93 94 201 STATUS: (Active unless otherwise indicated) terminated 89 lapsed MICHIGAN 16 43 70 140 189 210 MINNESOTA 51 119 terminated 91 lapsed terminated 92 CRS-30 STATE ZONE# SUBZONE # LOCATION YEAR APPROVED BUSINESS INDUSTRY Plastic Artesyn in-line skates elec. power 96 98 115 190 237 271 279 300 Harrison Vicksburg/Jackson Escatawpa Moss Pt. Pascagoula Ingalis Harrison Avondale Ent. Corinth Cortelo USA Meridian Peavey Elec. Pascagoula Chevron shipbuilding shipbuilding shipbuilding phone & computer audio/acoustical oil refining 88 91 92 94 94 95 20 23 40 64 132 151 152 160 181 278 Kansas City St. Louis Springfield St.Louis Claycomo Hazelwood Kansas Wentzville Kirksville Kansas City Kansas City Grandview Jefferson auto auto auto auto auto auto components ag. chemicals engine parts sink processing shoes 83 83 84 93 88 89 89 89 90 94 Kawasaki motorcycles & 80 Porsche auto 84 Portsmouth 18 Portsmouth Nashua 33 Colebrook Manchester 232 Newington ABB office equip apparel industrial/nuclear 83 84 92 Morris Newark/Elizabeth Salem/Millvi Mercer Lakewood 35 Edison Ford 85 Linden GM 107 Hazlet Int'l Flavors auto auto -- 84 85 87 345 Lindstrom 414 Redwood STATUS: (Active unless otherwise indicated) MISSISSIPPI 92 158 MISSOURI 15 102 225 Chrysler Ford Ford -GM Ortech Bayer Kawasaki Metcals Florsheim lapsed MONTANA 88 187 190 Great Falls Toote Butte-Silver Bow NEBRASKA 19 59 Omaha Lincoln 8 Lincoln NEVAD 89 126 NEW HAMPSHIRE 81 Clark Sparks 52 Reno NEW JERSEY 44 49 142 200 235 lapsed CRS-31 STATE ZONE# SUBZONE # 108 109 153 298 319 321 331 363 372 383 416 YEAR APPROVED LOCATION BUSINESS INDUSTRY Union S. N. Rahway Linden Gloucester Gloucester Perth Gloucester East Bridgewater Int'l Flavors Int'l Flavors Squibb Merck Bayway Mobil Oil CITGO Chevron Coastal Eagle Conair Hewlett-Packar --pharmaceuticals pharmaceuticals oil refining oil refining oil refining oil refining Oil refining warehouse/distrib computer-related 87 87 89 95 95 95 96 97 97 97 98 pharmaceuticals 84 office equip -electronics auto --auto photography auto electronics shoes pharmaceuticals gear production tableware chem. 90 84 85 85 86 86 87 88 91 93 94 95 95 95 electronics lawnmowers 86 90 STATUS: (Active unless otherwise indicated) lapsed lapsed NEW MEXICO 110 194 197 Albuquerqu Rio Rancho Dona Ana 58 Albuquerqu SP NEW YORK 1 23 34 37 52 54 90 109 111 118 121 141 172 26 59 63 66 93 96 106 133 213 258 273 292 302 322 NY City Buffalo Niagara Orange Suffolk Clinton Onondaga Jefferson County JFK Intl. Airport Ogdensburg Albany Monroe Oneida Webster Xerox Waltertown NYAirbrake Cortland Smith-Carona N. GM NY City Jack Young Chatauqua CPS Corp. Onodaga Chrysler Rochester Eastman Kodak Rochester ITT New Bally Rensselaer Sanophi Rochester Gleason Corp. Sherrill & Oneida Rensselaer BASF NORTH 57 66 67 93 214 230 Mecklenburg County Wilmington Morehead Raleigh Lenoir Fuilford, Forsuth,, etc. 88 Mecklenbur IBM 173 Alamance Honda lapsed lapsed expired 96 lapsed lapsed CRS-32 STATE ZONE# SUBZONE # 219 227 230 283 328 335 378 NORTH DAKOTA 103 YEAR APPROVED LOCATION BUSINESS INDUSTRY Kernersville Raleigh/Dur Wake Wilson Goldsboro Whitsett Yadkinville Deere-Hitachi IBM Mallinckrodt Merck R.G. Barry Lucent Unifi hydraulic info processing pharmaceuticals pharmaceuticals footwear & telecommunicatio polyester yarn 92 92 92 94 96 96 97 GE Honda Jeep Ford GM GM Honda Cooper Tire & Nine West GM GM Chrysler Chrysler Chrysler Chrysler Giant Products Wascator Mfg. W.C. Wood Ford Lincoln Electric Consolidated Mr. Coffee Picker Pier 1 Ben Venue BP Oil Motch Marathon pioneer Abbott Globe Lucent Clark USA jet engines motorcycles auto auto auto auto car/motorcycle tires shoes electric motors auto parts auto parts auto parts auto parts auto parts industrial pumps washing machines freezers motor vehicles arc welding equip. food small appliance medical distribution pharmaceuticals oil refining machinery oil refining auto audio infant formula ferroalloys telecommunicatio oil refining 79 79 84 84 85 87 87 88 88 89 89 89 89 89 89 90 91 92 93 93 93 94 94 96 96 96 96 97 97 97 98 98 98 Grand Forks OHIO 8 40 46 100 101 138 151 181 5 6 34 44 65 102 110 121 128 157 158 166 167 168 169 170 203 236 254 257 259 268 280 325 326 338 344 358 366 387 417 424 425 Toledo Cleveland Butler Dayton Clinton Franklin Findlay Akron/Canto Hamilton Union City Toledo Lorain Lordstown Norwood Shelby Findlay Cincinnati Dayton Kettering Dayton Perrysburg Sandusky Van Wert Toledo Richwood Ottawa Avon Lake Euclid/Ment McComb Bedford Valley View Grove City Bedford Toledo Euclid Stark/Allen Springboro Columbus Beverly Columbus Lima OKLAHOMA 53 106 164 Rogers Oklahome Muskogee STATUS: (Active unless otherwise indicated) CRS-33 STATE ZONE# SUBZONE # 227 LOCATION Durant 51 Oklahome 240 Oklahome 394 Lincoln BUSINESS INDUSTRY GM auto Ted Davis Mfg. voice aoil motors ARCO Pipe crude oil YEAR APPROVED STATUS: (Active unless otherwise indicated) 84 92 98 OREGO 45 132 184 206 9 171 207 221 247 Portland Coos Klamath Medford-Jackson County Multnomah Beall Pipe Portland AIM Portland Alcatel Pendleton Continental Tualatin Tofle USA fiberoptic cable food stainless steal 80 90 91 92 92 3 4 21 142 282 285 342 369 Pittston Allegheny County Philadelphia Berks Westmorela VW Harrisburg Olivetti Landsdale Ford Allegheny Verosol USA West Point Merck Riverside Merck Philadelphia Sun Company Delaware Tosco auto typewriters, auto window shade pharmaceuticals pharmaceuticals oil refining oil refining 77 78 83 89 94 94 96 97 15 217 218 245 266 267 294 295 316 317 360 371 384 423 Mayaguez Guyanabo Ponce Penuelas Humacao Barceloneta Caguas Barceloneta Cidra Arecibo Barceloneta Guayama Carolina San Juan Skagit Cnty. Cidra San Juan oil refining pharmaceuticals pharmaceuticals pharmaceuticals pharmaceuticals pharmaceuticals pharmaceuticals pharmaceuticals pharmaceuticals pharmaceuticals pharmaceuticals oil refining concentrate pharmaceuticals 82 92 82 92 94 94 95 95 95 95 97 97 97 98 auto auto electronics 84 91 deactivated 83 lapsed PENNSYLVANIA 24 33 35 147 PUERTO RICO 7 61 163 RHODE ISLAND 105 CORCO Bristol-Myers Bristol-Myers Searle Searle SB Pharmco Merck Merck IPR IPR Baxter Caribe PR Sun oil PepsiCo Pfizer Providence SOUTH 21 38 127 Dorchester Cnty Spartanburg Cnty West 53 Charleston Porsche 208 Anderson AUTECS deactivated 81 CRS-34 STATE ZONE# SUBZONE # LOCATION BUSINESS 235 Goose Haarmann & 272 Spartanburg BMW 399 Goose Bayer Corp SOUTH DAKOTA 220 INDUSTRY YEAR APPROVED chemicals auto rubber 92 94 98 truck/auto microwave ovens energy energy microwave ovens auto -pharmaceuticals industrial typewriters/word room equip. parts dist. 82 83 84 84 84 90 91 95 95 95 95 98 Sioux Falls TENNESSEE 77 78 134 148 204 223 14 27 38 39 45 175 192 289 301 308 311 413 Memphis Nashville Chattanoog Knoxville Tri-City Memphis Symnra Lebanon Hartsville Phipps Memphis Maury Cnty. Hawkins Bristol Carter Cnty. Bartlett Columbia Ripley Nissan Toshiba TVA Nuclear Global Power Sharp Saturn Form Rite SmithKline Soemens Brother Ind. Columbia Komatsu TEXAS 12 36 39 62 68 80 84 94 95 96 97 113 115 116 117 122 149 150 155 156 165 168 171 178 183 196 199 234 McAllen Galveston Dallas/Fort Worth Brownsville El Paso San Antonio Harris Webb Starr County Maverick Val Verde County Ellis County Beaumont Jefferson County Orange Corpus Freeport El Paso Victoria & CalhounCounties Weslaco Midland Dallas/Fort Worth Liberty Presidio Austin Fort Worth Texas City Gregg 62 Jefferson Bethlehem 76 Corpus Ch. Coastal St. 85 oil refining STATUS: (Active unless otherwise indicated) CRS-35 STATE ZONE# SUBZONE # 77 78 79 80 81 82 83 122 124 125 135 136 139 140 141 143 144 145 176 198 199 200 201 205 206 209 211 214 215 225 241 242 260 262 263 265 287 288 290 291 309 313 315 320 324 327 339 341 349 357 374 381 388 389 395 396 402 409 LOCATION BUSINESS INDUSTRY Corpus Ch. Corpus Ch. Corpus Ch. Corpus Ch. Corpus Ch. Corpus Ch. Corpus Ch. Athens Victoria Victoria Corpus Nueces Weslaco Weslaco Weslaco Corpus Ch. Houston Houston LaPorte Houston San Antonio San Antonio San Antonio Calhoun Houston Nueces Arlington Houston Houston Harris Austin Harris Harris Port Arthur Wylie Houston Houston Houston Tx City Freeport Jefferson Jefferson/Li Freeport Harris Mansfield San Angelo Texas City Harris Jefferson Texas City Jefferson Brazoria Richardson Dallas Brazoria Texas City Harris Harris Koch Refining Trifinery Gulf Marine Berry CC Distributing Compressors Hitox Harvey Inds. Safety Railway Safety Steel Citgo Valero McManus FGulf De Bruyn Sundor Reynolds Hughes Tool Texas Steel DuPont United General Bausch & Lomb Colin Medical Friedrich A/C & Alcoa Gulf Coast Koch Refining GM Calero Refining Goodman Mfg. Shaffer Dell Computer Tuboscope Shell Oil Star Enterprise Sanden Dril-Quip Hydril Tadiran Amoco BASF Fina Mobil Oil JHoffnam-LaRo Crown Central Pier1 R.G. Barry Marathon Exxon Clark Valero USDOE Oil Phillips Fossil Partners B&F System Seaway Seaway Lyondell-Citgo Equistar oil refining oil refining oil refininh ----TVs freight car repair freight car repair oil refining oil refining food processing food processing food processing alumina drilling tools heat-treat oil hydrofluoric acid hand tools sunglasses medical equip, air conditioners alumina/aluminum oil refining oil refining auto oil refining -oil drilling equip. electronics steel tube prds. oil refining oil refining auto a/c oil field equip oil field equip telecom. prds. oil refining chemicals oil refining oil refining pharmaceuticals oil refining distribution footwear & oil refining oil refining oil refining oil refining crude oil shortage oil refining watches, etc. consumer prds. crude oil crude oil oil refining petrochemicals YEAR APPROVED 95 85 85 85 85 85 85 88 88 88 88 88 88 88 89 88 89 89 90 91 91 91 91 91 91 91 91 91 91 92 92 92 93 93 93 94 95 95 95 95 95 95 95 95 96 96 96 96 96 97 97 97 97 97 98 98 98 98 STATUS: (Active unless otherwise indicated) expired 91 expired 91 lapsed lapsed lapsed CRS-36 STATE ZONE# SUBZONE # LOCATION YEAR APPROVED BUSINESS INDUSTRY Ultrak Amoco closed circuit TV petrochemicals 98 98 Pedigree Wyeth apparel 82 90 146 228 229 253 284 305 367 406 Suffolk Wash. Dulles Intl. Airport Culpeper Richmond Va. Beach Stihl Culpeper ITT Teves Culpeper Rochester Newport NN Elkton Merck & Co Whiting Amoco Altavista Abbott Richmond Hewlett-Packar chain saw/power auto brake comp. cable shipbuilding pharmaceuticals oil refining formula/nutritional computer-related 89 92 92 93 94 95 97 98 126 191 270 370 Seattle Everett Tacoma Cowlitz Whatcom Whatcom Whatcom Whatcom Grays Yakima Moses Lake Tacoma Olympia Spokane Tacoma Hoquiam Arlington Skagit Cnty. shipbuilding -wood building oil refining 88 91 94 97 auto engines 98 auto piston rings auto auto electronics 81 81 85 85 421 Lewisville 422 Brazoria STATUS: (Active unless otherwise indicated) UTAH 30 Salt Lake VERMONT 55 91 Burlington Newport 17 St. Albans 172 Georgia VIRGINI 20 137 185 207 lapsed WASHINGTON 5 85 86 120 128 129 130 131 173 188 203 212 216 224 WEST VIRGINIA 228 229 Tacoma Boat. Lamb-Grays West-Coast Equilon Wood/Jackson Counties Charleston 397 Buffalo Toyota WISCONSIN 41 167 11 12 68 69 Milwaukee Brown Kenosha Manitowac Janesville Oak Creek Chrysler Muskegon GM GM lapsed CRS-37 STATE ZONE# SUBZONE # 71 97 238 352 391 393 WYOMING 157 Casper LOCATION BUSINESS INDUSTRY Sturgeon Milwaukee Blue Hudson Osceola Plymouth Bay Ambrosia Stauffer Robin Mfg. Polaris Sargento Foods shipbuilding -cheese prods small engines small engines cheese prcessing YEAR APPROVED 85 87 92 96 97 98 STATUS: (Active unless otherwise indicated) expired 91