IMPORTERS FOUND KEY USERS OF FOREIGN TRADE ZONES

IMPORTERS FOUND KEY USERS OF FOREIGN TRADE ZONES

Critics of the U.S. foreign trade zone program complain that current zone usage clashes with the original intent of program.

Arguing that Congress intended the zones only, or at least primarily, for exports and/or transshipments to foreign ports, the critics urge the program's administrators to restrict zone usage to manufacturing activity for export only.According to those in favor of the zones, however, the 1934 act that created the zones was intended to facilitate all foreign commerce and to allow U.S. producers to compete in increasingly international markets.

Supporters and opponents of the zones offered comments on the program for a study completed this month by the U.S. International Trade Commission.

The study, The Implications of Foreign Trade Zones for U.S. Industries and for Competitive Conditions Between U.S. and Foreign Firms, was requested by the Committee on Ways and Means, U.S. House of Representatives.

A 1984 commission study on the same subject found major concerns about injury to domestic companies that do not use zones, resulting from duty savings by importers using the zones.

According to the new study, manufacturing and assembling domestic and foreign materials and components for import into the United States has become the dominant activity of the zones. Only one-tenth of zone shipments represent exports or transshipments to foreign ports, the report said.

Foreign trade zones were established by the Foreign-Trade Zones Act of 1934 for the purpose of expediting and encouraging foreign commerce.

The act was amended in 1950 to permit manufacturing, and in 1952 to allow special-purpose zones or sub zones.

A 1980 Treasury decision removed the cost of processing merchandise in zones from the dutiable value of the merchandise.

The zones are secured areas under U.S. Customs supervision. They are considered outside the customs territory of the United States.

Importers may move merchandise into zones for storage, exhibition, manufacture, or other legal operations. Customs does not collect import duties on merchandise until the merchandise leaves the zones and enters U.S. Customs territory.