A Subzone is a single firm site designated for a special purpose,
typically manufacturing, under Zone procedures. A Zone Grantee
may apply for Subzone status on behalf of a firm when the operations
of the firm cannot be accommodated within the existing General
Purpose Zone. The application must demonstrate that a significant
public benefit will result from the use of Zone procedures by
the firm on whose behalf the proposed Subzone is established.
The Foreign-Trade Zones Board evaluates the Subzone application
based on the net economic benefit to the U.S. economy. Approval
of Subzone status has little to do with real estate. Subzone status
and the specific benefits granted are dependent upon the specific
operations to be conducted under Zone status. The applicant must
demonstrate that the proposed use of Zone procedures is in the
public interest; that is, that Subzone status for the firm will
result in a significant economic benefit for the U.S. economy.
"ABC Company will save money," does not meet this test.
In determining the appropriate Grantee for a firm wishing designation
as a Subzone, preference is given to the Grantee of the nearest
Zone project within the state.
The application itself consists of a letter of transmittal, an
executive summary, and five exhibits. These elements are outlined
below with some parenthetical tips or commentary where pertinent.
be currently dated and signed by officer of Grantee organization
of Zone authority requested; e.g. Subzone status for the purpose
of manufacturing widgets
Subzone site and facilities
1 -- Legal Authority to Apply
copy of state enabling legislation (check to make sure its
of pertinent sections of Grantees charter or organization
copy of Grantee resolution authorizing execution of the Letter
of Transmittal and submission of the application
2 -- Site Description
of proposed site or sites
of proposed site or sites with appropriate legal descriptions;
legal jurisdiction of site or sites (if multiple sites, label
each, i.e. "Site 1," "Site 2," etc.)
relationship to the nearest Customs port of entry
of facilities, including current or proposed buildings, production
units and/or storage facilities
of existing or proposed site qualifications (zoning, etc.)
of current or proposed activities
of transportation facilities or access
3 -- Operation and financing
ownership or right of use by the Subzone user
automation (A specific statement that the user will utilize
Customs automated procedures for FTZs when such procedures
are developed must be included.)
operating costs (FTZ administrative costs)
time schedule for construction and/or activation
4 -- Economic Justification
description (HTS #s of inputs and finished products, production
benefits to company
benefits (Will FTZ procedures positively affect U.S. economy?
Will FTZ procedures help the company displace offshore economic
on Domestic Industry (Whose loss will be the Subzone users
of the Public Zone (Why cant the operation be accommodated
within the General Purpose Zone?)
Impact (Indicate local zoning and the status of any applications
for construction approvals; discuss any land-use issues: discuss
whether the FTZ operation change any physical aspects of the
plant site or its operations; discuss whether Subzone status
is a precondition for the proposed activity or construction
at the plant.)
5 -- Maps
and state maps indicating Subzone site or sites
drawing of Subzone site or sites with boundaries in red (Include
dimensions and metes and bounds if not included in Exhibit 2.)
(or equivalent) map of each proposed site
if the Subzone will produce 1 or 2 classes of finished products
if the Subzone will produce 3 or more classes of finished products
and Processing by the Foreign-Trade Zones Board
order to be approved by the Foreign-Trade Zones Board, a Subzone
application goes through the following review and process:
and Prefiling Review
Upon receipt of the application the Foreign-Trade Zones Board
staff reviews it for sufficiency. If the application is deficient,
it will be returned to the applicant within 20 days. If the application
is found to be sufficient, then the Board formally files the application,
assigns it a docket number, and notifies the applicant. This normally
occurs within 45 days of submission.
The Foreign-Trade Zones Board publishes public notice of the application
in the Federal Register and assigns an examiner (an internal staff
member) to the case.
Filing in the Federal Register triggers the public comment period.
During the public comment period (normally 60 to 90 days) interested
parties may submit comments to the Board in support of, or in
opposition to, the application.
If negative comments are received, then the applicant has up to
15 days after the close of the public comment period during which
it may submit rebuttal comments to the Board. (Sometimes public
comment periods may be extended or re-opened in order to allow
the various parties to reach a common understanding regarding
the issues surrounding the application.)
The Board may arrange for a public hearing if it deems one necessary;
however, for Subzone applications public comment and rebuttal
is usually conducted by written correspondence.
The application is reviewed by the Foreign-Trade Zones Board examiner
within the Department of Commerce, and by a representative of
the Treasury Department, usually the office of the U.S. Customs
Service having jurisdiction over the area served by the Grantee
of the proposed Subzone.
Report and Recommendation
The examiners report (comments of the Department of Commerce
staff and local office of U.S. Customs) is prepared and submitted
to the Executive Secretary of the Foreign-Trade Zones Board. This
normally occurs within 120 days of the close of the public comment
If the report is unfavorable, then the applicant (Grantee) will
be notified (within 5 days of the reports submission) and
the applicant will be given 30 days in which to respond with addition
evidence to justify the applications approval.
If the report is favorable, then the application is sent to the
Treasury Department and to the office of the Assistant Secretary
of Commerce for Import Administration for final review.
Upon review and approval within the Departments of Commerce and
Treasury, the Foreign-Trade Zones Board issues a Board Order and
publishes the decision in the Federal Register and notifies the
applicant (Grantee) of the applications approval.
Typically, Subzone applications take about 12 months for processing
and review. Applications that are opposed may take longer. In
certain instances, Subzone applications may be reviewed and processed
on an expedited basis.