FOREIGN-TRADE ZONES A BRIGHT SPOT IN U.S. ECONOMIC RECOVERY, STUDY SHOWS

National Association of Foreign-Trade Zones Reports Substantial Growth in Merchandise Received and Goods Exported. International Automotive Manufacturing Leads Zone Export Growth.

Texas Leads All States in Zone Activity. Congressman Kevin Brady, Chairman of House Trade Subcommittee, Praises Strong Zone Participation by Texas Businesses.

Washington, D.C. July 18, 2012 – Impressive growth in merchandise received in, and exports from, foreign-trade zones outpaced comparable growth in the overall U.S. economy as the nation struggled to recover from the depths of recession in 2009-10, according to a comprehensive report released today by the National Association of Foreign-Trade Zones (NAFTZ).

The report documents that in Fiscal Year 2010 (the last full year for which complete zone data are available) the combined value of merchandise received by FTZs in the United States and Puerto Rico grew by 24 percent from the previous year, to a total of $534.3 billion. During the same period, FTZ exports totaled $34.8 billion, a 23-percent increase that outpaced the 16 percent growth in exports generated by the overall U.S. economy.

“Export growth is a critical component for our national economic recovery,” said NAFTZ President Daniel Griswold. “This report documents how market-leading firms are using the foreign-trade zone tool to boost exports and profits despite continued sluggish economic conditions.”

The State of Texas led all states in the four main foreign-trade zone metrics measured by the report: value of merchandize received ($161.1 billion), number of firms operating in zones (393), zone exports ($7.2 billion) and employment (51,085).

Congressman Kevin Brady (R-Texas), Chairman of the House Ways and Means Trade Subcommittee, welcomed the news. “Foreign-trade zones provide American businesses with a valuable strategic tool to compete effectively in the global marketplace,” said Brady. “I am pleased that so many Texas businesses are taking advantage of the foreign-trade zone program to create jobs and increase exports.”

The international automotive sector led the way with $11 billion worth of FTZ exports in 2010. Through the FTZ program, auto companies can access parts and raw materials around the world at more competitive prices, reducing costs and making the United States a more competitive location for manufacturing motor vehicles for domestic sale and export.

Other major industries in zone manufacturing include petroleum, refining, pharmaceuticals, machinery and equipment. Zone users range from small and medium-sized companies to Fortune 500 and international corporations with widely recognized brand names.

U.S. Department of Commerce figures released July 11 indicate that automotive exports continue to outpace overall export growth. The monthly report “U.S. International Trade in Goods and Services” reveals that while exports of all goods from January to May 2012 ($649.9 billion) grew by 5.9 percent from the comparable period in 2011 ($611.4 billion), exports of automotive vehicles, parts and services grew by 14.3 percent, from $53.4 billion to $61.0 billion. Various reports and company announcements confirm that much of this export activity is FTZ-related.

The 2012 Impact of Foreign-Trade Zones on the 50 States and Puerto Rico is an expanded version of an annual report compiled by NAFTZ from material submitted by zone grantees to the Foreign-Trade Zones Board.

Created in 1934 and updated earlier this year by a comprehensive new set of expedited regulations, the FTZ program’s main objective is “the creation and maintenance of employment through the encouragement of operations in the United States which, for customs reasons, might otherwise have been carried on abroad.” FTZs consist of General Purpose Zones (GPZs), which accommodate multiple users in a warehouse district or industrial park typically located in or near a port of entry; and subzones, which serve a single company often operating a manufacturing facility.

Foreign-trade zones provide a valuable tool to private industry by allowing companies to defer payment of tariffs on imported goods and materials until such time as they actually enter U.S. commerce. If the finished product is exported to foreign markets, no tariff is due. Frequently, the tariff rate charged on finished goods is lower than the rate on raw materials and parts. FTZs remove manufacturers’ incentive to locate production offshore and contribute to keeping good jobs in the United States. These provisions allow U. S. companies to compete in the global marketplace on a level field with companies operating so-called “free trade” zones.

“Foreign-trade zone tools and procedures give many companies the opportunity to become profitable in a tough competitive environment,” said Daniel Griswold. “They may not be the right solution for every industry, but the record is clear that when employed strategically, they can be a boon to U.S. manufacturing and exports. The National Association of Foreign-Trade Zones stands ready to assist U.S. firms in evaluating this important business asset.”

Copies of the complete report Impact of Foreign-Trade Zones on the 50 States and Puerto Rico may be downloaded from the NAFTZ website. Printed copies are available by order.

About NAFTZ

The National Association of Foreign-Trade Zones is a not-for-profit trade association of 650 members representing public and private organizations involved in the foreign-trade zones program, including state and local governments, economic development organizations, distribution and warehouse firms, corporations engaged in exporting and importing, and legal services and professional consulting firms. FTZs play an important role in facilitating international trade and increasing the global competitiveness of U.S.-based companies by maintaining the cost competitiveness of U.S.-based operations with their foreign-based competitors. Over 2,400 U.S. companies and 320,000 American workers participate in the FTZ economy. NAFTZ is the primary voice of communities and industries that utilize the FTZ program, including zone grantees, operators and users.

Top 15 States* in Key Foreign-Trade Zone Metrics

* Includes Puerto Rico

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FOR MORE INFORMATION:
Brian Hannigan, Smith Dawson & Andrews
202-835-0740 brianh@sda-inc.com
Brian Picone, NAFTZ
202-331-1950 bpicone@naftz.org

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