CORPUS CHRISTI, Texas - The Texas Association of Foreign Trade Zones has submitted comments to the U.S. Trade Representative ahead of the USMCA review.
In a letter to Daniel Watson, assistant U.S. trade representative for the Western Hemisphere, Danielle Converse, president of TAFTZ, urges action to remove what the group considers are “outdated barriers” that limit the potential of U.S. Foreign Trade Zones.
“Texas leads the nation in FTZ activity, supporting thousands of jobs and billions in trade. It’s time for trade policy to match that success,” TAFTZ states.
Converse is has been foreign trade zone manager at the Port of Corpus Christi since 2019. Here is her letter to Watson:
November 3, 2025
Mr. Daniel Watson
Assistant U.S. Trade Representative for the Western Hemisphere
Office of the United States Trade Representative
600 17th St NW, Washington, DC 20508
re: USTR Docket No. 2025-0004
Mr. Watson:
On behalf of the Texas Association of Foreign Trade Zones (TAFTZ), we appreciate the opportunity to provide comments in response to 90 Federal Register Notice 44869 regarding the operation of the United States-Mexico-Canada Agreement (USMCA) ahead of its 2026 joint review.
Texas hosts the most active Foreign Trade Zone (FTZ) network in the nation, supporting thousands of manufacturing jobs and generating billions in trade. With more FTZ grantees and higher FTZ volume than any other state, Texas leads in leveraging the FTZ program’s potential. Yet, despite this success, longstanding provisions in USMCA—carried over from the 1992 NAFTA—continue to hinder Texas FTZ manufacturers, placing them at a competitive disadvantage compared to their Canadian and Mexican counterparts. The program’s impact could be far greater if these outdated barriers were removed.
Article 2.5 of USMCA imposes outdated restrictions on duty drawback and duty deferral programs, including FTZs.
These rules require U.S. manufacturers to pay duties on imported components used in FTZ production before exporting finished goods to Mexico or Canada, effectively eliminating the benefits of FTZ participation. While U.S. producers are burdened with these costs, Mexico and Canada have implemented domestic programs—such as Mexico’s PROSEC and Canada’s targeted tariff reductions—that allow their manufacturers to avoid duties on components used in exported goods.
The result: U.S. FTZ manufacturers must pay tariffs their foreign competitors do not, even when producing identical goods. This cost imbalance harms Texas-based manufacturers selling into North America and global markets and undermines the FTZ program’s core purpose: boosting U.S. competitiveness, promoting American jobs and incentivizing manufacturing investment.
The impact is clear:
• 82% of Mexico’s exports go to the U.S., representing 27% of its GDP.
• 72% of Canada’s exports go to the U.S., representing 18% of its GDP.
• Only 33% of U.S. exports go to Mexico and Canada combined, accounting for just 2% of U.S. GDP.
Additionally, a technical amendment to USMCA implementing legislation prohibits FTZ-made goods from qualifying for preferential treatment—even when origin rules are met—if entered into U.S. commerce. This forces Texas FTZ manufacturers to pay duties on component value, while identical goods from Mexico or Canada enter duty-free.
These restrictions are not only harmful, they’re obsolete. Since NAFTA, USTR has recognized the ineffectiveness of such provisions. While the Chile FTA included similar restrictions, no subsequent agreements (e.g., Australia, CAFTA, Korea) have maintained them. It’s time for USMCA to follow suit.
Conclusion:
Texas FTZ manufacturers face a two-fold disadvantage: export duties on goods sent to Mexico and Canada, and import duties on FTZ-made goods sold in the U.S. These provisions directly undermine the Administration’s goals of reshoring and expanding domestic manufacturing. We urge USTR to eliminate Article 2.5 and remove duty deferral restrictions from future USMCA obligations.
TAFTZ welcomes further dialogue and stands ready to participate in workshops or consultations (including our Texas FTZ manufacturers) to develop practical solutions.
Sincerely,
Danielle Converse
President, Texas Association of Foreign Trade Zones (TAFTZ)
