A new federal report to the U.S. Congress highlights the continued value of the Foreign Trade Zone program to the local, state and national economy – and also shows the impact of the COVID-19 pandemic in 2020 to U.S. companies, particularly in the manufacturing sector.

The Foreign Trade Zones Board Annual Report to Congress for Foreign Trade Zone activity in 2020 shows shipments into FTZs across the U.S. and Puerto Rico declined 18 percent to $625 billion.  According to the federal report, San Jose Foreign Trade Zone activity ranged from $10 to $25 billion, including $500 to $750 million in warehouse and distribution activity.

Foreign Trade Zones are sites in the U.S., such as a warehouse or a company manufacturing facility, with approved status as being outside of U.S. Customs.  A key benefit of operating a company as a Foreign Trade Zone is the ability to delay, reduce or eliminate U.S. Customs duties on imported merchandise that is admitted into the Foreign Trade Zone.

Manufacturing or production operations in Foreign Trade Zones accounted for $341 billion in activity.  FTZs are not exclusive for foreign merchandise.  In 2020, domestic merchandise accounted for 74 percent of shipments into production or manufacturing FTZs.  This highlights the critical role of Foreign Trade Zones in strengthening U.S. manufacturing and job growth.  FTZs are also critical to U.S. exports, with companies operating as a Foreign Trade Zone accounting for over $94 billion in U.S. exports in 2020.

The City of San Jose is the grantee of Foreign Trade Zone 18 and works with the U.S. Department of Commerce Foreign Trade Zones Board and U.S. Customs and Border Protection to administer the FTZ for San Jose and the region.  The primary service area of Foreign Trade Zone 18 is San Jose and Santa Clara County, Santa Cruz, Scotts Valley, Fremont, Hayward, Union City and Newark.

The impact of Foreign Trade Zones can be seen across the nation.  In 2020 there were 195 active Foreign Trade Zones in the U.S. and Puerto (including 17 in California), with 347 active production sites operated by companies.  Over 3,400 businesses used Foreign Trade Zones, with over 470,000 workers employed within FTZs.

In the San Jose region, – Maxar Space, Lam Research, Tesla, RK Logistics Group, Bloom Energy, and Enovix operate as Foreign Trade Zones and the application for Roambee Corporation was recently approved.

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