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FTZs Highlight Growth in US Distribution and Manufacturing C reated in 1934 by President Roosevelt during the Great Depression, the U.S. Foreign- Trade Zone program has built a solid reputation among the federal government's many economic development programs. It has withstood the test of time and benefited thousands of U.S.-based companies through deferral, elimination and reduction of customs duties. In 1950, the U.S. Foreign-Trade Zone Board, an agency of the Department of Commerce responsible for administering the program, authorized manufacturing and exhibition of products in foreign-trade zones. This decision sparked considerable interest among U.S. manufacturers as an opportunity to import raw materials and assemble products domestically while increasing export opportunities. In 1977, Volkswagen established the first FTZ auto-assembly plant, in Westmoreland County, Pennsylvania. Within two years it was producing 1,000 automobiles and employed more than 5,000 workers. This operation provided a model for other automobile makers and suppliers to use the FTZ program and retain more U.S. manufacturing jobs. Some of these successful auto facilities include BMW, Ford, Honda, Hyundai Motors, Kia Motors, Mercedes Benz, Nissan, Toyota and, most recently, Tesla Motors in California. In 2014, the phenomenal growth in FTZ manufacturing accounted for more than 12,300 vehicle and vehicle parts makers, and it helped stimulate a recovery in American manufacturing. The use of FTZs has spread to other industries, such as machinery and equipment, consumer electronics, pharmaceuticals and petrochemicals, becoming committed advocates for the program. Expansion to other industries was spurred, in part, by a change in the U.S. Customs and Border protection regulations in the 1980s allowing domestic value and materials to be excluded from dutiable value. The diversity of zone users is visible across the U.S. economy: Communications: Cell phones, satellite communication systems, printers and personal computers. Home Products: Microwave ovens, tableware, toys, watches, cosmetics, fragrances, jewelry, footwear, tableware and sportswear. Work Products: Thermostats, power tools, ink cartridges, office equipment, security systems and forklifts. Transportation: ATVs, automobiles, auto parts, tractors, trucks, ships, space launch vehicles and aircraft. Energy: Refined petroleum products, solar power panels and wind powered generators. In 1986, the FTZ program underwent various regulatory changes that established an audit-inspection system eliminating the need for on-site U.S. Customs and Border Protection officers and enhancing the ability of zones to self-manage while maintaining direct operational accountability to Customs. Two years earlier, the National Association of Foreign-Trade Zones successfully pushed By Jose Quinonez 50 THE JOURNAL OF COMMERCE www.joc.com SEPTEMBER 5.2016 SPECIAL ADVERTISING SECTION OF THE JOURNAL OF COMMERCE