For other versions of this document, see http://wikileaks.org/wiki/CRS-RL30268 ------------------------------------------------------------------------------ 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 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 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 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. 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 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. CRS-5 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.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 Foreign- Trade 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, Figure 1. Growth in Number of and making cheaper imports even more Employment in Zones, 1978-1997 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 under the General Agreement on 500 Employment in Tariffs and Trade (GATT) in 1994. Zones 400 200 300 Soon businesses figured out that, if they could achieve zone status, they 100 200 Number of Zones could import components in industries and Subzones 100 with inverted tariff structures, 0 0 assemble them together with domestic 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 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)."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. 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.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 Foreign- Trade-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 1-10 zones and subzones 10-20 zones and subzones Source of data: U.S. Foreign-Trade Zones Board. See appendix table 6 for listing of zones by state. 20-90 zones and subzones 25 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 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 though both the Act itself and U.S. Zones as Export Zones 80 the Foreign-Trade Zones Board are currently neutral on this 60 issue. In addition, the fact that 50 40 most U.S. zones are functionally import zones 20 U.S. Zones as Import Zones reflects both the economic 0 maturity (in comparison to 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 developing countries) and the relative strength of the U.S. Source of data: U.S. Foreign Trade Zones Board, Annual Reports, various years. 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 domestically averaged about 10-15%. 60 40 Figures 3 and 4 both show that 1982 is the year when zones 20 reached their pinnacle as export 0 Zone output that is exported 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 % zones are of domestic origin, 100 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 more than half, and since 1985 Primarily Foreign they have accounted for about 0 1978 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 Industry Concentrations 50 1984 40 in Zones Have Changed 30 23% 25% 1997 10% 20 5% 5% Industry concentrations in 1% 2% 1% 0.4% 5% 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, and electronics companies were Source of data: 46th and 59th Annual Reports of the 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. 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 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. 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 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 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 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. 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 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 ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL30268