2020 Policy Agenda

As part of its ongoing advocacy initiative, NAFTZ monitors and works to advance the following policy issues with the Administration and Congress in 2020.

Policy Agenda

United States-Mexico-Canada Agreement (USMCA)

Harmful provisions in the North American Free Trade Agreement (NAFTA) and its implementing legislation have prevented companies in U.S. FTZs from taking advantage of the intended benefits of both NAFTA and the FTZ program and handicapped their ability to compete with Canadian and Mexican products in the North American market.

 

Export Restrictions – NAFTA included a restriction that required FTZ manufacturers pay U.S. duties on any non-originating (i.e., non-North American) components in products being exported to Canada and Mexico. This restriction is contrary to one of the main intended benefits of the FTZ program – promoting U.S. exports by not imposing any domestic duties on their components used in FTZ manufacturing. Unfortunately, the USMCA also incorporated the NAFTA export restriction on FTZs. NAFTZ has developed a legislative proposal to address that issue as part of the proposed “FTZs for America Act” and is working with allies in Congress to move the bill in 2020.

 

Rules-of-Origin Restrictions – NAFTA’s implementing legislation included a restriction that prevented FTZ manufacturers from using the agreement’s rules of origin to make their products more cost-competitive with Canadian and Mexican products in NAFTA markets. The 2020 USMCA Implementation Act repealed the rule-of-origin restriction on FTZs, but NAFTZ is working with our allies in Congress to prevent the United States Trade Representative from reinstating the restriction through a “technical correction.”

Read the Fact Sheet on USMCA Rules-of-Origin for FTZs

End discriminatory trade-action tariffs on FTZ-manufactured products

NAFTZ will continue to push for legislative and regulatory solutions to the inequitable tariff treatment between U.S.-based manufacturers located inside and outside an FTZ in the assessment of duties under various trade actions (Sections 201, 232, 301, etc.). The first problem arose in the Sec. 201 and 301 trade actions where country-of-origin reporting requirements for entries from an FTZ resulted in some cases in the improper assessment of these duties on the value of all foreign inputs incorporated into products manufactured in an FTZ, including inputs that are not products of a targeted nation or are not merchandise included on the published list of targeted subject merchandise. The second problem is the inconsistent and sometimes conflicting ways in which the trade-action duties are being applied to subject merchandise in privileged-foreign (PF) status when the duty rate is changed or terminated while the merchandise is in an FTZ and not yet entered for consumption. NAFTZ has drafted a legislative solution to these problems in a draft bill called the “FTZs for America Act” and is working with allies in Congress on passage in 2020.

 

Read the FTZs for America Fact Sheet

321/De Minimis

FTZ distributors face a serious threat to their ability to maintain their U.S.-based operations and the jobs of thousands of American workers they employ due to the massive surge of e-commerce and a significant increase in the duty-free de minimis threshold under U.S. law. While shipments from foreign countries benefit from this change in the Sec. 301 de minimis level, that benefit is foreclosed to shipments from U.S. FTZs, which has created a significant incentive to shift U.S.-based e-commerce fulfillment operations for the U.S. market to Canada, Mexico, and other foreign locations. It has also contributed to lower consumer confidence that goods in the e-commerce market meet all federal safety and health standards and other U.S. laws and regulations on imported products than would be the case if Sec. 321 applied equally to U.S. FTZs. NAFTZ is a lead participant in an industry coalition seeking legislative changes to address this increasingly negative impact of existing U.S. law by amending Sec. 321 to allow de minimis entries from U.S. FTZs. This proposal will help keep e-commerce distribution in the United States and lower the risk of illicit trade entering the U.S. market. NAFTZ and the 321 Coalition are diligently working towards prompt Congressional action on this legislative proposal.

 

Read the De Minimis Fact Sheet

 

Read the De Minimis Lobby Letter

Revise Customs Part 146 FTZ regulations

Customs regulations on FTZs have changed little since 1986. In 2018, NAFTZ relaunched an effort with CBP through the Customs Operations Advisory Committee (COAC) to modernize these regulations to account fully for the revolution in CBP automation and sweeping changes in modern global supply-chain management. NAFTZ has worked with CBP and now has a completed working draft that would transform the regulations to meet the 21st century needs of CBP, the FTZ community, and a more globally-integrated U.S. economy. NAFTZ also seeks to protect and expand direct delivery and eliminate the outdated five-day rule and the blanket 216 for manufacturing,manipulation, and exhibition.

 

Read the Rewrite of Part 146 Policy Brief

 

Read the Expansion of Blanket 216 Policy Brief

ACE programming for the FTZ e214 admission

A milestone in the ITDS single-window initiative occurred in 2017 with integration of the e214 FTZ admission process from the legacy Automated Commercial System (ACS) software platform into ACE. The next step is to add Partner Government Agencies (PGAs) message sets into the e214 through ACE for those PGAs needing their compliance data for FTZ goods before entry from a zone into U.S. Customs territory while ensuring the future viability of the FTZ direct-delivery procedure for program stakeholders. NAFTZ continues to work with the PGAs and CBP to facilitate this process and adopt a viable compliance process that fulfills the PGAs’ enforcement mandate while minimizing unnecessary burdens on FTZ filers.

Facilitate transition of FTZs to the Automated Commercial Environment (ACE)

As foreign-trade zones process over 10 percent of total U.S. merchandise imports, the International Trade Data System (ITDS) “single-window” initiative to ensure full and timely integration of all FTZ compliance data onto the ACE platform is vital for the efficiency of international commerce across America’s borders. NAFTZ continues to work with U.S. Customs and Border Protection (CBP) and Congress to secure sufficient funding, set trade-enhancing objectives with realistic deadlines, and provide adequate opportunity for software testing.

 

Read the ACE Policy Brief

Revise the FTZ Board’s “production scope of authority” regulations

Current regulations do not allow FTZ operator/user companies sufficient flexibility to quickly modify their approved list of imported components and/or finished products in response to changing demands of global competition. NAFTZ continues to urge the FTZ Board to introduce changes to allow use of six-digit Harmonized Tariff Schedule (HTS) numbers to define the scope of production authority (versus written commercial description), and a retrospective notification process to allow companies to maintain full compliance and keep assembly lines in operation.

 

Read the Scope of Authority Policy Brief

Illicit Trade

With increasing attention focused on the problem of illicit trade, partially due to the explosion in global small-package delivery, NAFTZ will continue to work with the Organization for Economic Cooperation and Development (OECD), the World Free Zones Organization (WFZO), and the U.S. Congress on efforts todevelop global best practices and models, including the U.S. FTZ program’s enforcement and compliance system, to reduce the risk of illicit trade transiting free-trade zones in other countries and entering U.S. commerce.

Trusted Trader Programs

NAFTZ seeks recognition in CBP’s physical-security guidelines of FTZ supply-chain security requirements and enhanced benefits to FTZ operator/users with trusted-trader status under the Customs-Trade Partnership Against Terrorism(C-TPAT) and/or Importer Self-Assessment (ISA) programs.

 

Read the TEAM Policy Brief

How do I get Involved?

Our members play an important role in our advocacy efforts. Here are some ways that you can contribute:

Keep up to date on the industry

Our email blasts inform members of breaking developments in FTZ regulations and our monthly Zones Reports contain a section devoted to regulatory changes and policy developments that affect the FTZ community.

Participate in the Grantee or Operator/User Roundtable discussions

At our Spring Seminars and Annual Conferences, we host roundtable discussions to receive input on what issues are of greatest importance for our Grantees and Operators.

Take part in Congressional Visits/Congressional Updates

As part of our annual Legislative Summit, the NAFTZ encourages members to visit their elected Senators and Representatives on Capitol Hill, to share the impact of the FTZ program in their home states and districts. This allows members a first-hand opportunity to tell the story of how FTZs contribute to the U.S. economy and to educate Congress about issues affecting business. The NAFTZ encourages its members to update elected Senators and Representatives on the positive investment and employment in zone projects on a direct continuing basis.

Join a Committee, Working Group, or Task Force

Members are presented with ongoing opportunities to shape and engage in our policy work. Our Committees meet regularly to discuss concerns and recommend action by the NAFTZ.

Our Working Groups are organized around major policy or issue areas and they meet on an ongoing basis. The working groups are to designed to help us think long-term; identify new opportunities; and to mobilize members to address specific issues. We have recently had several very active working groups formed to address the ACE transition of specific PGA’s. Task forces bring members together on a short-term basis to gather insights, expertise, and information to meet a particular policy challenge. We have a very active ACE Taskforce for example.

Contact Jarmila Zapata if you are interested in participating on a working group or task force.