1. San Francisco Foreign Trade Zone #3

2. What is a Foreign Trade Zone? Designated areas in or near a U.S. Customs Port of entry Designated areas in or near a U.S. Customs Port of entry Goods brought into the zone with special customs procedures Goods brought into the zone with special customs procedures Considered as outside of U.S. commerce Considered as outside of U.S. commerce Allows for foreign and domestic merchandise to engage in international trade-related activities Allows for foreign and domestic merchandise to engage in international trade-related activities Promotes U.S. participation in trade and commerce Promotes U.S. participation in trade and commerce

3. Why Companies use Foreign Trade Zones Weekly Customs entry savings Weekly Customs entry savings Duty deferral until import is delivered from zone Duty deferral until import is delivered from zone Duty elimination on waste, scrap, and yield loss Duty elimination on waste, scrap, and yield loss Duty elimination on rejected or defective parts Duty elimination on rejected or defective parts Duty elimination on domestic content or value added, including labor, overhead and profits Duty elimination on domestic content or value added, including labor, overhead and profits

4. Why Companies use Foreign Trade Zones Duty elimination on sales to the U.S Military or NASA Duty elimination on sales to the U.S Military or NASA Duty elimination on re-exports Duty elimination on re-exports Relief from inverted tariffs Relief from inverted tariffs

5. Foreign Trade Zones allow imported merchandise to be: Cleaned Cleaned Calibrated Calibrated Relabeled Relabeled Sampled Sampled Mixed Mixed Inspected Inspected Commingled Commingled Salvaged Salvaged Destroyed Destroyed Manufactured Manufactured Assembled Assembled Manipulated Manipulated Processed Processed Repaired Repaired Stored Stored Sold Sold Consolidated Consolidated Tested Tested

6. Why use San Francisco’s Foreign Trade Zone #3? San Francisco is an international hub for: Clean/Green Technology Clean/Green Technology IT and Digital Media IT and Digital Media Biotech, Life Science and Health Care Biotech, Life Science and Health Care Venture Capital Visionaries Venture Capital Visionaries Local resources: The Mission Bay Biotech Cluster The Mission Bay Biotech Cluster Proposed Clean Technology Campus Proposed Clean Technology Campus ChinaSF ChinaSF

7. Geographic Scope of FTZ #3 General Purpose Zones: 60 miles or 90 minutes driving distance from Port 60 miles or 90 minutes driving distance from Port San Francisco and San Mateo Counties San Francisco and San Mateo CountiesSubzones: No geographic restrictions No geographic restrictions Oakland and San Jose also have FTZs

8. Recent Activities Reorganized Foreign Trade Zone Reorganized Foreign Trade Zone Applied for new Alternative Site Framework Program (ASF) Applied for new Alternative Site Framework Program (ASF) Application accepted late 2010 Application accepted late 2010 Valero Energy Corporation has applied for Subzone for Benicia Refinery Valero Energy Corporation has applied for Subzone for Benicia Refinery Developed Web page at sfport.com Developed Web page at sfport.com

9. Marketing Strategies “Take Foreign Trade Zone to the Cargo” “Take Foreign Trade Zone to the Cargo” Outreach to other agencies Outreach to other agencies Office of Economic & Workforce DevelopmentOffice of Economic & Workforce Development SFO AirportSFO Airport ChinaSFChinaSF Port of Redwood CityPort of Redwood City Outreach to Business Community Outreach to Business Community Importers/Exporters/Manufacturers/DistributorsImporters/Exporters/Manufacturers/Distributors Chambers of CommerceChambers of Commerce Economic Development OfficesEconomic Development Offices Advertising/Marketing Presence Advertising/Marketing Presence

10. Tax Incentives SF Clean Technology Payroll Tax Exemption SF Clean Technology Payroll Tax Exemption SF Enterprise Zone (EZ) Payroll Tax Credit SF Enterprise Zone (EZ) Payroll Tax Credit SF Biotechnology Payroll Tax Exemption SF Biotechnology Payroll Tax Exemption California Enterprise Zone (EZ) Tax Credits & Incentives California Enterprise Zone (EZ) Tax Credits & Incentives

11. Tax Incentives California New Jobs Tax Credit California New Jobs Tax Credit Federal Work Opportunity Tax Credit (WOTC) Federal Work Opportunity Tax Credit (WOTC) Federal Historic Preservation Tax Credit Federal Historic Preservation Tax Credit Federal Renewal Community (RC) Tax Credits & Incentives Federal Renewal Community (RC) Tax Credits & Incentives