FTZ Board Revises Proposal for Site-Designation and Management Framework
09/13/08 07:12 PM
On September 11, 2008, the
Foreign-Trade Zones (FTZ) Board published a notice in the Federal Register
that modifies its
proposal to make available an alternative framework for designation
and management of the general purpose FTZ sites. In response to the
comments received to an earlier notice, the key proposal revisions
include allowance for a special transitional phase for each grantee
applying to transfer to the alternative framework, elimination of a
general initial limit on the number of “usage-driven” sites,
elimination of an “anchor” site concept, and the sunset limits
duration flexibility for “magnet” sites – with five years
established as a minimum rather than a fixed standard.
The FTZ Board proposed framework includes:
Under the proposed plan, existing FTZ grantees will have the option to reorganize their FTZ by incorporating the proposed elements. Comments on this proposal are due by October 31, 2008.
The FTZ Board proposed framework includes:
- The “service area,” housing general-purpose FTZ sites, is required to comply with the adjacency requirement of the FTA Board’s regulations (60 miles / 90 minutes driving time from Customs Port of Entry boundaries), the enabling legislation, and the grantee organization’s charter. The FTZ Board evaluation of the proposed service area could potentially involve the convenience of commerce factor.
- An initial limit of up to 2,000 acres of designated FTZ space within the service area. Acreage within the 2,000-acre limit not applied to specifically designated sites would effectively be “reserve” acreage available for future FTZ designation.
- The usefulness of the 2,000 available acres would be enhanced by emphasizing “floating” or, available for activation, acreage within an individual site’s boundaries.
- Designation of a limited number of “magnet” sites selected by the grantee for ability and readiness to attract multiple FTZ uses.
- Possible designation of “usage-driven” sites to serve companies which are not located in a magnet site but which are ready to pursue conducting activity under FTZ procedures.
- Unlike magnet sites, usage driven sites could be designated through the current minor boundary modification (MBM) mechanism in addition to FTZ Board action.
- No specific limit on the number of usage-driven sites.
- Regarding numbers of magnet sites, the framework would reflect a general goal of focusing each FTZ on six or fewer simultaneously existing magnet sites.
- Magnet sites and usage-driven sites would be subject to “sunset” time limits, which would self-remove FTZ designation from a site not used for FTZ purposes before the site’s sunset date. For magnet sites, the default sunset period would be five years with sunset based on whether a site had been activated with CBP. For a usage-driven site, the sunset limit would require within five years of approval admission into the site of foreign non-duty paid material for a bona fide customs purpose.
- Magnet sites and usage-driven sites would also be subject to ongoing “recycling” where activation at a site during the site’s initial sunset period would serve to push back the sunset date by another five years (the sunset test would then apply again).
- An optional five year transitional phase would be available for grantees of zones with existing configurations that differ from the general parameters envisioned in the proposal.
- For the transitional phase for a particular zone, the grantee would have the option of requesting usage-driven designation for any site where a single entity is conducting FTZ activity.
- The five-year transition period for a specific grantee would begin with approval of the grantee’s reorganization application by the FTZ board.
- The transitional phase for any zone would be limited by the defining 2,000 acre limit inherent in the proposed framework.
Under the proposed plan, existing FTZ grantees will have the option to reorganize their FTZ by incorporating the proposed elements. Comments on this proposal are due by October 31, 2008.