Grassley Against FTZ Stance on Technical Corrections

Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said that he hopes that a technical fixes bill for USMCA can pass this month, but its passage is hung up on whether goods manufactured in foreign-trade zones should be able to benefit from USMCA if those goods meet the rules of origin.

“I’m a little bit disgusted that this issue is an issue,” Grassley told reporters on a conference call Dec. 8. “It was our intent that the FTZs were left the same as they were under NAFTA.” But, he said, since the FTZs have begun saving money under USMCA, they are lobbying to keep things as they are now. The Congressional Budget Office estimates that FTZs will save $2 billion over 10 years because of the change in treatment from NAFTA.

Six senators, four Republicans and two Democrats, are siding with the FTZs and don't want the technical fixes bill to return their treatment to how it was under NAFTA (see 2012020031). Grassley said he doesn't know where the negotiations on the issue stand.

National Association of Foreign-Trade Zones CEO Erik Autor said that if the treatment of FTZs under NAFTA had carried over to USMCA, his group would still be advocating for its repeal. “This provision was wrong when it was added to the NAFTA implementing legislation and it would be even more wrong now to reinstate it,” he said. “It is bad policy that hurts the ability of U.S.-based manufacturers to compete on equal terms in our own market with imports from Canada and Mexico.”

Just after USMCA took effect, Rep. Kevin Brady of Texas, the top Republican on the Ways and Means Committee, said post-entry refunds of merchandise processing fees would be part of the technical fixes package. In response to a question on whether importers whose products won Section 301 exclusions too late should get relief (see 2012040041), Grassley said, “I just have not had any conversation on it. If it was a hot topic, I would have heard about it.”