History of Foreign Trade Zones

Sedgwick County > Community Development > Economic Development > History of Foreign Trade Zones

In 1934, the U.S. Congress passed the Foreign Trade Zones Act "to expedite and encourage foreign commerce." The intent of the Act was to stimulate international trade and create jobs and investment in the U.S. The Act sets out the rules for the authorization of zones and the regulation of activities in foreign trade zones. When the Act was originally passed, foreign trade zones were envisioned as centers for storage and distribution. Since 1934, Congress has passed several amendments to the legislation to enhance the utility of the Foreign Trade Zones program. In addition, several regulatory developments have occurred, which evolved the foreign trade zone program. These legislative and regulatory highlights include:

1950 - an amendment to the Foreign Trade Zones Act that allowed manufacturing and exhibition.

1980 - and amendment to the U.S. Customs Service Regulations that excluded processing costs including labor, overhead and profit occurring in foreign trade zones from valuation for purposes of calculating Customs duty.

1988 - an amendment to the Foreign Trade Zones Act that acknowledged "productibility" as an acceptable Customs accounting method for the petroleum refining industry.

1995 - finalization of the customs foreign trade zone oil refinery regulations standardizing the treatment of petroleum refinery foreign trade zones.

1996 - H.R. 3815 clarifying that the merchandise processing fee is to be assessed only against foreign status merchandise entered into the U.S. Customs territory from a foreign trade zone.

1996 - H.R. 3815 allowed for the deferral of duty on foreign production equipment admitted to the zone until such equipment is completely assembled, installed, tested, and turned on for use in full-scale production.

2000 - Trade and Development Act of 2000 provided for the weekly entry of merchandise for all types of foreign trade zones.

Statistics of Foreign Trade Zones

More than 2,300 firms use foreign trade zones.
More than 330,000 people are employed at facilities operating under foreign trade zone status.
Approximately 62% of merchandise received in foreign trade zones is domestic. Domestic status merchandise is mainly merchandise of domestic origin but includes some foreign-origin goods on which Customs entry and duty payments have been made prior to zone admission
The total value of merchandise moving through foreign trade zones amounts to more than $226 billion annually
Exports from foreign trade zones exceed $15 billion annually
All 50 states, plus Puerto Rico, have established foreign trade zones
There are more than 256 approved general purpose zones and more than 448 approved subzones in the United States