October 1, 2004

Memorandum For Foreign-Trade Zone Grantees

From: Dennis Puccinelli
Executive Secretary

Subject: 1. FTZ ANNUAL REPORT - FY 2004
2. TEXTILES AND APPAREL
3. MANUFACTURING INITIATIVE
4. FTZ OFFICE ADDRESS
5. SECURITY
6. EXPORT FIGURES; REPORTING MATTERS; CENSUS; WEB PAGE

1. ANNUAL REPORT - FY 2004
I am writing to remind you about the annual report that is due to the FTZ Board from each zone grantee. The deadline for the FY 2004 report is the usual end-of-January date (1/31/2005). The report format is available on the FTZ Board Web site along with application guidelines and other information on FTZ matters. The FTZ web address is: http://www.trade.gov/ftz

If you wish to obtain a copy of the annual report format from our Web site, we suggest you download the new Word version. (It was written in Times New Roman font - 12 point). We ask that each grantee pass the report format on to each of its subzones and operators. We also ask that you provide subzones and operators sufficient time (i.e., 60 days) to provide complete and accurate information. If you need a paper copy of the format, please call Yvette Morgan of the FTZ Staff at (202) 482-2862, or e-mail her at Yvette Morgan.

For oil refinery subzones, there is an oil refinery annual report format/guideline, which replaces the standard Part V of the annual report format. The guideline is designed to assist oil refinery subzone operators in preparing the report and to improve the overall quality of the information received. It was developed in consultation with representatives of oil refinery subzones. The oil refinery annual report format/guideline is available on our web page.

Several years ago, we moved the due date from the year-end holiday period to January 31 to give grantees more time, and we will consider requests for time extensions (usually 30-60 days) based on special circumstances. Such requests can be made by fax (202 482-0002) or e-mail (Dennis Puccinelli or Claudia Hausler).

I appreciate the effort most grantees have been making to submit their reports on time and to respond to our follow up questions. We ask for your continued attention to this requirement so that we can meet our goals for timely review, publication and distribution of our report to Congress and to zone grantees. Further, compliance in this area is needed if we are to respond to your applications and requests in a timely manner.

2. TEXTILES AND APPAREL
The Department’s Office of Textiles and Apparel (OTEXA) has asked that we remind zone grantees about procedures for handling textile and apparel products shipped in 2004. The following two paragraphs are excerpts from a June 22, 2004, Federal Register notice published by OTEXA, entitled “Shipments of Cotton, Wool, Man-Made Fiber, Silk Blend and Other Vegetable Fiber Textiles and Apparel in Excess of Agreement Limits.” (Notice is available at: http://otexa.ita.doc.gov/fr2004/ovship04.htm ) This notice serves to remind interested parties that charges against the limits subject to U.S. bilateral agreements, the Uruguay Round Agreements Act and the Uruguay Round Agreement on Textiles and Clothing (ATC) are by date of export and not date of entry. Shipments exported in 2004 in excess of agreed limits are in violation of the terms of these agreements. The purpose of this notice is to advise the public that CITA reserves the right under the bilateral agreements, the Uruguay Round Agreements Act and the ATC to deny entry to goods that have been shipped in excess of 2004 limits; or to stage entry in 2005 to merchandise exported during 2004 which exceed the restraint limit(s) established for that period. A properly completed visa, electronic visa (ELVIS) transmission, Guaranteed Access Level (GAL) certification, or exempt certification will be required for all shipments exported in 2004, regardless of the date of entry into the United States.

OTEXA informed us that shipments into zones in 2004 that are entered for consumption in 2005 could be affected. In addition, OTEXA informed us that, later this year, they will be asking zone grantees or operators, through CBP, for information regarding the inventory levels of certain textile products for a few countries by category, in FTZs. For further information, contact Philip J. Martello, Director, Trade and Data Division, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-3400.

3. MANUFACTURING INITIATIVE
As part of a Department of Commerce initiative to aid small and medium-sized manufacturers (SMMs), the FTZ Board is currently taking significant steps to expedite and simplify SMMs' access to FTZ procedures. The Board is now implementing two different sets of procedural changes targeted at benefiting SMM users. The first area of change involves quick processing of applications for certain relatively simple manufacturing activities within existing FTZ space, provided the Board has previously approved the specific tariff situation. The second set of changes seeks to reduce the burden of the FTZ application process through enhanced pre-application counseling for small businesses (less than 500 workers) and simplified guidelines for the types of cases discussed above.

To help expedite handling of some simple manufacturing requests, the FTZ Board has delegated to the Board's Executive Secretary the authority to approve manufacturing for up to two years when the products and inputs are similar to those already approved within the last five years (at the six-digit HTSUS level). To help companies understand whether their products might be eligible for this procedure, a database of eligible inputs and finished products will be on the Board's web site by the end of October - http://www.trade.gov/ftz - with mechanisms to search the database or simply browse. If a particular finished product and its inputs are eligible, the manufacturer can then apply to conduct that activity under FTZ procedures within a nearby foreign-trade zone.

More information on this new procedure will be available on the FTZ web site by the end of October.

4. FTZ OFFICE ADDRESS - Reminder
This is a reminder that the office of the Foreign Trade Zones staff is now located in the Franklin Court Building - Suite 4100W. Please note that we have two addresses depending on the method of delivery. One address is for letters and packages sent by package delivery companies and the other address is for letters and packages sent through the U.S. Postal Service. (Note the different zip codes.) U.S. mail will be sent to the main Commerce building and brought to us by courier. Visitors should come to the first address, which is about 7 blocks north of the main Commerce Building.

1. Submissions Via Package Delivery Companies:
Foreign Trade-Zones Board
U.S. Department of Commerce
Franklin Court Building - 4100W
1099 14th St. NW, Washington, D.C. 20005

2. Submissions Via the U.S. Postal Service:
Foreign Trade-Zones Board
U.S. Department of Commerce
FCB - Suite 4100W
1401 Constitution Ave. NW
Washington, D.C. 20230

5. SECURITY
Once again, I wish to remind you that security continues to be a top priority. Customs is now part of the U.S. Department of Homeland Security as U.S. Customs and Border Protection. Though all of you will continue to work with your local Customs and Border Protection (CBP) port director as before, there is a greater focus on security. FTZ grantees and operators have a special responsibility to take extra care to ensure security within their zone project. Grantees and operators should be aware of all parties using the zone and of all activities occurring within the zone, conducting periodic inspections of active zone facilities. They should contact their CBP port director if they have any concerns. We ask that FTZ grantees and operators review and follow the guidelines in the security bulletin published by CBP and posted on our web page (http://ia.ita.doc.gov/ftzpage/customs.html)

6. EXPORT FIGURES; REPORTING MATTERS; CENSUS; WEB PAGE
Export Figures for Annual Report. As we mentioned last year, the export figures you provide as part of your annual report should be based on the zone operator’s knowledge of destination. This means that, for FTZ reporting purposes, grantees or operators, to the best of their knowledge, should report as exported any merchandise that is eventually exported, even though the merchandise may leave the zone on a consumption entry prior to export. We are aware that some subzone operators are electing to make entry for consumption for duty-free products when they leave the zone, even though some products are later exported. If the products are later exported by the company or an affiliate, or used as the basis for a drawback claim, the products must be reported as exports, under the "Forwarded, To Foreign Countries" heading. Such data may be estimated or derived from existing annual data. In general, the figures for the FTZ annual report can be derived from existing data, including data available from an operator’s Customs inventory system, which tracks foreign status merchandise, and existing company information.

Narrative Section for Annual Report. The narrative section of the annual report has been getting greater attention because it is the section where zones and subzones describe how FTZ status is contributing to the positive economic effects that were the basis of approval. I urge you to focus on this section. You may answer the questions in a single narrative format that can be attached to the report and updated year to year. This may be easier than answering each question individually.

Census. As we have mentioned previously, statistical data on merchandise admitted into foreign trade zones must be reported to the U.S. Census Bureau (Census Bureau) on a CF-214A or electronically via the Automated Foreign Trade Zone Reporting Program (AFTZRP), and all merchandise exported must be reported on a Shippers Export Declaration (SED) or electronically through AES/AES Direct. (For the new SED, see: http://www.census.gov/foreign-trade/regulations/forms/new-7525v.pdf) I want to draw particular attention to the Census Bureau's AFTZRP. Arrangements have been made with the Customs and Border Protection (CBP) to allow for direct reporting to the Census Bureau of statistical data on goods admitted into FTZs. Companies electing to submit their statistical data directly to the Census Bureau will provide the data via the File Transfer Encryption System (FTP). FTP utilizes the internet and the Pretty Good Privacy Encryption software which makes this system an easy-to-use internet-based system that is free, fast, and the most secure way of submitting your CF-214A statistical data to the Census Bureau. Additional information can be found on http://www.census.gov/aftzrp.

Also, CBP and the Census Bureau have developed a free internet-based system called AESDirect for filing SED information electronically to the Automated Export System (AES). Additional information concerning AESDirect can be found on www.aesdirect.gov. I believe each of these programs will not only improve the timeliness and accuracy of our trade data but also improve reporting efficiency for zone users as we move toward full automation. If you have any questions concerning AFTZRP, please contact the Data Collection Coordination Branch at 301-763-2259. For questions concerning AES, please contact the AES Branch at 1-800-549-0595.

Lapse. Subzones are subject to the lapse provision individually. (See Lapse Guidelines on our web page.) We are asking that grantees track their subzones with respect to the lapse provision and report to us any subzones that become affected by the lapse provision. (Contact: Claudia Hausler (202) 482-2862). We also ask that you list such subzones that have lapsed in your annual report.

FTZ Web Page. We are planning to complete a major revision to our web page over the next few months to make it easier to use. If you have any comments or suggestions, or changes to your zone contact information, please contact Liz Whiteman.

FTZ Staff. For those of you that have not had the opportunity to visit the FTZ Board staff recently, I would like to provide you with an updated list of our staff members. Our e-mail addresses are first and last names, separated with an underscore (“_”), plus “@ita.doc.gov”.