On May 18, the National Association of Foreign-Trade Zones sent a letter to Robert Lighthizer requesting a meeting to discuss upcoming NAFTA negotiations. The letter opens with a congratulatory note to Lighthizer on his recent confirmation as the United States Trade Representative (USTR) and expresses strong support for the Administration’s goal to “expand U.S. exports, U.S. manufacturing, and U.S. employment.” Specific incentives that FTZs provide for companies manufacturing and operating in the U.S. rather than in foreign countries are highlighted such as duty deferral, duty elimination, and duty reduction. In light of these significant benefits, FTZ-based manufacturers are still facing “unbalanced duty competition from imports.” Above all, the NAFTZ seeks revisions on NAFTA rules on drawback and duty deferral to “ensure FTZ manufacturers can compete on equal terms with companies in Canada and Mexico.” The NAFTZ has asked for Lighthizer to keep these issues in mind during the renegotiation process. In conjunction with these efforts, the NAFTZ will also be submitting comments to the USTR in advance of June 12 deadline. The NAFTZ will continue to monitor the NAFTA renegotiation closely.
FOR IMMEDIATE RELEASE
May 18, 2017
NAFTZ Sends Letter to Lighthizer Calling for Revisions to NAFTA
Dear Ambassador Lighthizer:
On behalf of the National Association of Foreign-Trade Zones (NAFTZ), we offer our congratulations on your confirmation as United States Trade Representative. We strongly support the Administration’s goal to expand U.S. exports, U.S. manufacturing, and U.S. employment. We believe the U.S. Foreign-Trade Zone (FTZ) program can play an important role in achieving those objectives.
As you prepare for renegotiation of NAFTA, we want to highlight certain NAFTA provisions that currently place U.S.-based companies operating in FTZs at a competitive disadvantage to Canadian and Mexican firms.
The FTZ program provides incentives for companies to manufacture and operate in the United States, rather than in foreign countries. These include:
• Duty Deferral – U.S.-based companies operating in an FTZ may delay payment of customs duties until goods are transferred out of the zone and into U.S. Customs territory;
• Duty Elimination – No Duties are paid on merchandise exported from an FTZ to a foreign country, which simplifies management of a company’s cash flow;
• Duty Reduction – FTZ users may elect to pay duty at either the rate applied to the foreign inputs used or the rate for the finished product – whichever is lower – thereby reducing customs duty burdens for U.S.-based manufacturers in FTZs.
Notwithstanding these benefits, some FTZ-based manufacturers still face unbalanced duty competition from imports. Specifically, U.S. manufacturers are currently denied similar duty treatment on components used in zone-based production to that provided producers in NAFTA-partner countries for certain imported components.
In addition, NAFTZ also seeks revisions of the NAFTA rules on drawback/duty deferral, to ensure FTZ manufacturers can compete on equal terms with companies in Canada and Mexico, which have rules relieving their manufacturers from duty on certain goods destined for export.
As you approach renegotiation of NAFTA, we ask you to keep these issues in mind to ensure FTZ-based manufacturers can remain competitive in the U.S. and global marketplaces.
We request the opportunity to meet with you as soon as possible to discuss these issues and possible remedies. Thank you for your consideration.
About the National Association of Foreign-Trade Zones
Now in its 31st year, The National Association of Foreign-Trade Zones is a trade association of more than 600 members representing public and private organizations involved in the foreign-trade zones program. NAFTZ is the primary voice of communities and industries that utilize the FTZ program, including zone grantees, operators and users.
For More Information Contact:
Senior Manager of Communications & Member Services
202-331-1950, ext. 224