The reshoring push of the US administration has breathed new life into the country’s free trade zones (FTZs) programme. After years of flagging activity, the country’s 197 FTZs, which have special status outside the US customs territory and thus benefit from incentives to stimulate imports and exports, experienced a record-breaking 2022: the total value of exports touched a new high of more than $160bn and the number of employees exceeded 500,000 for the first time. 

The National Association of Foreign Trade Zones (NAFTZ), which represents the different stakeholders in the FTZ ecosystem, is reaping the benefits of it. Shannon Fura, who was appointed chair of NAFTZ on September 13, and Jeff Tafel, who has served as president since January 2022, sat down with fDi Intelligence to discuss the FTZs’ current drivers of growth and the main advocacy priorities that are on the association’s table. 

Q: FTZs experienced record levels of activity in 2022. What have been the main drivers of this growth? 

SF: Companies have been taking a holistic view of  their supply chains. They have been looking at ways to move sourcing and production closer to market, with the US/China rivalry and the friendshoring push playing into that. That is why we have seen companies looking at the programme, even coming back to the programme. They are realising that the US is a great hub-and-spoke system to export to critical markets in the Americas or Europe. 

Q: Do you see any emerging industry showing interest in the programme? 

SF: Certainly electric vehicle batteries and technology are new areas of huge interest. Manufacturers of next-generation technologies are really taking a step back and saying: “We really need to re-examine our production. How can we use the FTZ programme and move some sourcing away from China and bring it here?” 

Q: During the pandemic, supply chain resilience came to the fore. Has this also affected FTZ activity one way or another? 

SF: We have seen companies trying to entice suppliers to move here to establish closer operations and develop clusters of operations within easy reach of main facilities. 

Q: How has this movement of suppliers affected NAFTZ?

JT: The association saw its membership soar to 772 as of September 2023, up by 10% from a year earlier and close to an all-time high of 815 in 2018. As a result, we are seeing a lot more attention to the FTZ programme and the association. Now I spend quite some time taking our advocacy efforts to the next level.

Q: What are your current priorities in terms of advocacy? 

JT: Sometimes FTZs have been unintentionally forgotten and not included in pieces of legislation. We try to have a greater presence in Washington and educate about FTZs. Also with US businesses, so many of them are not aware FTZs are a tool to increase their operations. We have passed 500,000 people working in FTZs. If we could overcome these educational bottlenecks, that number would rise and the original vision of FTZs would materialise: keep jobs here while we produce for the rest of the world.

This article first appeared in the October/November 2023 print edition of fDi Intelligence