Revitalizing Contra Costa County’s Northern Waterfront January 10, 2014

Port of San Francisco Foreign Trade Zone: What it Means for Economic Development along the Northern Waterfront Jim Maloney, Maritime Marketing Manager Port of San Francisco / Foreign Trade Zone No. 3 Public Forum on Revitalizing Contra Costa County’s Northern Waterfront

San Francisco Foreign Trade Zone No. 3 Any company located in San Francisco, San Mateo, Marin, Solano, Contra Costa and portions of Sonoma and Napa Counties can utilize program regardless of local port used (Port of Oakland and SFO Airport ok, for instance) A foreign trade zone is a designated site in or near a U.S. Customs Port of Entry Imported goods are subject to beneficial U.S. Customs procedures Goods are considered outside of U.S. commerce

How an FTZ Operates Secure areas near Ports of Entry Foreign good admitted to zone considered outside U.S. customs territory Duties collected only when goods enter U.S. commerce In FTZ, merchandise may be: manufactured, assembled, exhibited, cleaned, relabeled, repackaged, repaired, stored, tested, destroyed

FTZs Reduce Costs of Business U.S. producers enjoy same access as their foreign competition Duty Elimination on exports and scrap No need for duty drawback Duty Reduction (inverted tariff relief) Example of auto sector Duty Deferral on inventory Cash flow savings BMW Subzone 38A in Spartanburg County, South Carolina

FTZs and Supply Chains Weekly Entry to reduce Merchandise Processing Fee payments  Only available to FTZ users Direct Delivery of admissions— a blanket permit to transfer at the port of entry  Can cut 1 to 2 days off delivery of perishables, other time-sensitive goods  Used by automakers, pharmaceutical companies, clothing retailers Security: FTZs are a C-TPAT “best practice” U.S. Customs and Border Protection, El Paso, TX: “For us, FTZs are as secure as it can get.”

FTZs Adding Jobs and Growth FTZ Board Annual Report for 2012: 174 active zones, 276 active manufacturing/production sites 3,200 companies operate in FTZs 370,000 U.S. residents employed in FTZ or subzone $732 billion in merchandise received, 58% domestically sourced Major users: electronics, automotive, pharmaceutical, petro-chemical, machinery, equipment, clothing, and footwear

FTZ Exports Reach New Record Exports from FTZs reached $70 billion in 2012 FTZ exports have more than doubled since 2009

A Brief History of the FTZ Program Foreign-Trade Zones Act of 1934 intended to “expedite and encourage foreign commerce …” Undoing the damage of Smoot-Hawley Expanded in 1950 to include manufacturing After 1980, only foreign inputs dutiable Further expansion for oil refining, production equipment Weekly Entry in 2000 e214 automation Alternative Site Framework

Streamlined for the 21 st Century New FTZ Board Regulations in 2012  Streamlined application process  Faster approval: 30 days or less for warehouse operations, 120 days or less for production Alternative Site Framework:  Established in 2009  Multi-county “Service Area” in which the zone comes to the company Number of applicants growing, especially for small and medium- sized enterprises

Alternative Site Framework

Top FTZ Commodities Crude & Petroleum Oils Auto Parts & Motor Vehicles Electronic Products & Parts Electrical Equipment & Parts Pharmaceuticals Machinery/Equipment & Supplies Chemicals

Bay Area Companies Using FTZ Chevron Valero Tesla Space Systems/Loral, Inc. Lam Research Corporation Expeditors Intl (approved) Phillips 66 (approved)

Resources For more information: Contact: Jim Maloney, Port of San Francisco/Foreign Trade Zone No or Thank you!