Two pilots for FTZ Scope of Authority are being reviewed by the FTZ Board

As presented at NAFTZ’s Annual Conference last month in Los Angeles, the Foreign-Trade Zones Board is considering revisions to some aspects of the scope of authority.

NAFTZ has been working closely with the FTZ Board staff to advise in the drafting of language that would allow retroactive updating of an FTZ user’s scope of authority, and would enhance the ability of users to stay compliant.

One proposal by the FTZ Board would require the use of 8-digit HTS rather than commercial description when defining scope. The second concept is related to retrospective production notification. The working group comprised of NAFTZ members developed a draft of pilot concept guidelines and it was closely in line with the draft written by the FTZ Board.

In a recent NAFTZ Scope of Authority webinar, highlights presented were…..

Current practice of basing scope on a description supplemented by a 6-digit HTS number would move to an optional pilot of framing requested scopes based on an 8-digit HTS number. Consider a couple of key points:

  1. While this might feel like an ominous process, it does lead to both the Operator/User and the FTZ Board being able to better determine what is in and out of scope.
  2. This pilot would be optional and apply to new zone participants. It would only become mandatory through regulatory revisions.

The second concept deals with retroactive production notification. Current practice requires advance approval from the Board to engage in productions. NAFTZ realized that production authority changes are a big concern for companies that have been authorized for a while.

Some highlights included in the language of the proposed pilot are:

  1. The company would have to submit a retroactive production notification request to the Board within 90 days of the commencement of the new foreign-status inputs.
  2. New foreign status inputs could be admitted in Non-privileged Foreign (NPF) status but only used in Privileged Foreign (PF) status.
  3. Inputs subject to AD/CVD orders or quotas would be ineligible for foreign status use until after the FTZ Board completes its action.
  4. Companies can request interim authority while the Board is reviewing the request within its 120 day period allowed to do so. If at the end of that review process, the Board approves with no restrictions, the company could then produce using the inputs in NPF status.

Production of new finished products would continue to require advance approval and are not eligible for the retrospective process. And the Board could restrict a company’s use of a foreign-status input until the request has been approved.

This concept also would ultimately require a regulatory change. Regulatory changes do not appear to be imminent at this point and the NAFTZ welcomes feedback from current members in the Industry.

The webinar and NAFTZ’s work with the FTZ Board is evidence of the association working hard for its members. Indigo Trade Solutions is proud to be a member and pleased to share this industry information. Whether you are a grantee, zone operator or interested in a zone activation, membership in the association provides a wealth of information and resources. You can review membership options, costs and benefits on the NAFTZ Membership page.