WYDEN: New GAO Report Raises Questions About Risks, Costs of Foreign Trade Zones

Study Finds Little is Known About Program Benefitting Importers

Washington, D.C. – Finance Committee Ranking Member Sen. Ron Wyden, D-Ore., welcomed the release of a report by the Government Accountability Office (GAO), that found Foreign Trade Zones (FTZs) provide companies with savings from import duties, customs fees and other costs, while little is known about the risks FTZs pose to compliance with U.S. trade laws.

FTZs allow importers to avoid or reduce import duties, some taxes and customs fees with the goal of creating U.S. jobs. But GAO’s report found that Customs and Border Protection (CBP) has not adequately assessed the risk FTZs pose to the enforcement of trade laws that protect U.S. companies and businesses.

"It is clear that FTZs are a good deal for companies that import materials from abroad. But we don’t know whether these duty-free zones are a good deal for American jobs or American taxpayers,” Wyden said. “Americans need to know if FTZ are effective at creating jobs, and whether operators are complying with all laws on imports into the United States. This report revealed that there are gaps in our understanding of both those issues. I look forward to discussing the report's recommendations with CBP."

Wyden requested the report to review the tax, duty and other savings for companies operating in FTZs, their economic impact, and whether CBP is adequately responding to compliance risks posed by FTZs.

The FTZ program was established to provide benefits to companies that import foreign goods for distribution or manufacturers to encourage operations in the United States. GAO found that little is known about FTZ's economic impact and the impact on employment in particular. GAO also found that CBP has not assessed compliance risks across the FTZ program and therefore cannot analyze and respond to that risk. Uncertainty about risk may impact revenue collection for the FTZ program, which accounted for about 11 percent, or $245 billion, of imports in 2015.

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