September 30, 2005

Memorandum for Foreign-Trade Zone Grantees

From: Dennis Puccinelli
Executive Secretary

Subjects: FTZ Annual Report - FY 2005; New – List of Zones on FTZ Web Site Expanded; Initiative for Small- and Medium-Sized Manufacturers; Temporary Manufacturing Authority; FTZ Office Address; Security; CBP- 214 Automation, Census; Export Figures, Reporting Matters, Sunset

1. ANNUAL REPORT - FY 2005
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 2005 report is the usual end-of-January date (1/31/2006). 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:

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@ita.doc.gov.

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@ita.doc.gov or Claudia_Hausler@ita.doc.gov).

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. NEW – LIST OF ZONES ON FTZ WEB SITE EXPANDED
The list of zones on our web page has been expanded in several ways. The most important change for zone grantees is that there is now an opportunity for each zone to have a link to its own web site appear on the FTZ Board’s list of zones and contact persons. The web site link is only for the web page of the zone or zone grantee, not for private parties. Zone grantees can also request that we add an email address for their contact persons. Our web page is a busy one and we believe these changes will assist zones in their marketing efforts. Please note that to have your web site link and/or your email address added to your zone information on our web page, you must email us regarding these changes or additions (Elizabeth_Whiteman@ita.doc.gov).

We also ask that you take this opportunity to check the information on your zone that appears on our web site under our list of zones to ensure that it is up to date. Please inform us by email of any changes.

3. INITIATIVE FOR SMALL- AND MEDIUM-SIZED MANUFACTURERS
As you may have heard, the Department of Commerce's initiative last year to reduce burdens for small- and medium-sized manufacturers included a foreign-trade zone component. As a result, we have developed certain new procedures and tools designed to improve access to FTZ procedures for small- and medium-sized manufacturers (SMM). The main new procedure involves a streamlined process for requesting temporary/interim manufacturing authority for eligible zone users. (See Item # 4 below.) We have also developed forms designed for SMMs to request manufacturing authority in zones or subzones for less complex situations. There is a new page on the FTZ web site entitled "FTZ Manufacturing Toolbox - Designed for Small- & Medium-Sized Manufacturers" that has more information on the tools/guidelines for small- and medium-sized manufacturers. A link to this page can be found on the home page of the FTZ Board's web site: http://www.trade.gov/ftz.

4. TEMPORARY MANUFACTURING AUTHORITY
We have a new procedure to provide temporary manufacturing authority to eligible zone users. Temporary/Interim Manufacturing (T/IM) authority can be approved within existing zones and subzones for a period of up to two years. We expect the processing time for a T/IM case to be 90 days. T/IM authority is intended for use by companies while they have a case pending for permanent manufacturing authority or for circumstances where permanent authority is not needed. Additional information on T/IM, including the application form and a database of eligible products, is also available on our website.

5. 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, which is 7 blocks north of the main Commerce building. 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.)

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

6. SECURITY
Once again, I wish to remind you that security continues to be a top priority. We ask all of you to continue working closely with your local U.S. Customs and Border Protection (CBP) port director. FTZ grantees and operators have a special responsibility to take extra care to ensure security within their zone project. Grantees should monitor their operators. Both 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.

7. CBP – 214 AUTOMATION; CENSUS
214 Automation. The Customs and Border Protection (CBP) has recently announced that they plan to conduct a voluntary test program to allow the submitting of electronic CF-214s - Foreign Trade Zone (FTZ) admission applications. The Electronic FTZ admission application test program will commence no earlier than September 30, 2005, continuing for approximately six months. The Electronic FTZ admission application test program is limited to electronic FTZ admissions for merchandise reported to CBP via air, sea and rail manifest. The CBP plans to implement a future phase of this test that will allow electronic FTZ admission for merchandise reported to CBP via truck manifest as soon as an approved electronic data interchange system exists for these transmissions.

Please refer to the Federal Register Notice located in Vol. 70, No. 160 / Friday, August 19, 2005 / Notices. The Federal Register Notice can be accessed online at:

http://www.customs.ustreas.gov/xp/cgov/toolbox/legal/recent_federal_register_notices/

If you plan to be a part of the Electronic FTZ admission applicant test program, you should contact your CBP port director, as well as Census’s Data Collection Coordination Branch at 301-763-2259.

Census. The U.S. Census Bureau of the Department of Commerce, along with Customs and Border Protection of the Department of Homeland Security celebrated the 10-year anniversary of the Automated Export System (AES) on July 5th, 2005. The collection of this data is essential because it is used to compile export statistics for the monthly balance of trade figures. Now, after 10 years, 95 percent of all eligible export information from approximately 17,000 filing companies a month is collected through AES. Furthermore, the Security Assistance Act of 2002 gives the Secretary of Commerce the authority to issue regulations requiring electronic filing of all export information covered by Title 13, Chapter 9. Provisions in this law also provide for penalties for late filings, failure to file and for reporting false or misleading information.

For questions concerning mandatory filing of AES, please contact the AES Branch at 1-800-549-0595. As indicated above, also contact the Census if you plan to participate in CBP’s electronic 214 pilot.

8. EXPORT FIGURES; REPORTING MATTERS; SUNSET PROVISION
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.

Sunset Provision. This is another reminder that both zones and subzones are subject to automatic termination under the lapse provision. (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 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 by an underscore (“_”), plus “@ita.doc.gov”.