The U.S. International Commission (USITC) today released a report on the operation of the U.S. Foreign-Trade Zones (FTZ) program and similar programs (FTZ-type programs) in Canada and Mexico, as well as the impacts of these programs on employment and the cost-competitiveness of products of firms operating in U.S. FTZs.
The investigation, Foreign Trade Zones (FTZs): Effects of FTZ Policies and Practices on U.S. Firms Operating in U.S. FTZs and Under Similar Programs in Canada and Mexico, was requested by the U.S. Trade Representative in a letter received on December 14, 2021.
As requested, the USITC, an independent, nonpartisan, factfinding federal agency, reported on the operations of U.S. FTZs and FTZ-type programs, and the effects of relevant policies and practices on employment and the cost-competitiveness of goods produced in U.S. FTZs. As part of its investigation, the Commission conducted a survey of firms producing in U.S. FTZs and used the questionnaire results in its quantitative and qualitative analyses. Per the request, the report includes:
An overview of economic activity in FTZs operating in the United States, Canada, and Mexico, including but not limited to employment, leading sectors, shipments, exports, and foreign direct investment in FTZs;
An overview of current FTZ policies and practices in the United States, Canada, and Mexico;
An analysis of the cost-competitiveness effects of current FTZ policies and praRead Morectices in the United States, Canada, and Mexico, including effects on relative production costs and U.S. employment; and
Case studies on the impact of U.S. FTZs and FTZ-type programs on the automotive, upholstered furniture manufacturing, petroleum refining, pharmaceutical manufacturing, and warehousing and distribution industries.
Detailed highlights of the Commission's findings can be found in the report's Executive Summary.
Findings include:
Central features of the U.S. FTZ program and FTZ-type programs in Canada and Mexico are the special tariff treatments, principally duty deferral, duty exemption, duty reduction, and duty drawback.
The cost-competitiveness effects of the U.S. FTZ program and FTZ-type programs in Canada and Mexico are impacted by multiple factors, including the design of the programs, national tariff regimes and applicable rates of duty, other trade policies, and material sourcing and destination markets for firms’ shipments.
