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FOREIGN TRADE ZONE PROGRAM SUPPORTS ECONOMY LOCALLY AND NATIONALLY

San Jose ranks 18 in 195 FTZs in US

Post Date:12/16/2019 3:30 PM

A newly released federal report highlights the value of the Foreign Trade Zone program to businesses in the San Jose region and across the nation.

 The Foreign Trade Zones Board Annual Report to the U.S. Congress of 2018 FTZ activity shows a significant increase in the value of merchandise in Foreign Trade Zones, both foreign and domestic, exceeded $793 billion, an increase of $124 billion from 2017.

 In the San Jose region, four companies – Space Systems Loral, Lam Research, Tesla, and the RK Logistics Group – operated as Foreign Trade Zones during the year of the most recent report (Bloom Energy began operations as a Foreign Trade Zone this year).  The San Jose Foreign Trade Zone ranked 18th in exports among the 195 FTZs nationwide, and several thousand workers are employed within the San Jose area’s  FTZs.

 San Jose Foreign Trade Zone #18 was established in 1974 and supports the City and region’s economic development.  The City of San Jose is Grantee of the FTZ.  The Service Area includes San Jose and the cities and towns in Santa Clara County, Santa Cruz, Scotts Valley, Fremont, Hayward, Newark and Union City.

 A Foreign Trade Zone is territory in the U.S. considered to be in international commerce and outside of U.S. Customs.  Duties and tariffs on foreign merchandise admitted into a Foreign Trade Zone are delayed, reduced or eliminated.  FTZs are not exclusive for foreign merchandise.  In fact, domestic merchandise accounts for a significant level of Foreign Trade Zone activity.

Foreign Trade Zones enhance manufacturing in the U.S. and maintain and expand employment for U.S. workers.  The FTZ keeps jobs in the U.S. that might be more vulnerable to being shifted outside of the U.S.  In 2018, 63 percent or $504 billion in FTZ activity was for production or manufacturing, compared to $289 billion in warehousing and distribution.  U.S. produced merchandise or domestic status inputs account for $497 billion in FTZ activity companied to $296 billion of foreign merchandise or foreign status inputs.  The report highlights that Foreign Trade Zones support U.S. production and merchandise made in the U.S.

 In 2018 there were 195 active Foreign Trade Zones across the U.S. and Puerto (including 17 in California), with 330 active production sites.  Over 3,300 businesses used Foreign Trade Zones, with over 440,000 workers employed within FTZs.  The Foreign Trade Zones Board of the U.S. Department of Commerce and U.S. Customs and Border Protection are the key federal agencies overseeing the Foreign Trade Zone program.

 For more information about the Foreign Trade Zone Annual Report or the FTZ program, please contact Joe Hedges, International Affairs Manager, at joe.hedges@sanjoseca.gov.

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