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Standard Summary
Comprehensive overview in 1-2 paragraphs
The CLEAN FTZ Act of 2025 aims to curb illicit international trade linked to foreign free trade zones (non-U.S. zones) by identifying all such zones, evaluating their compliance with an array of international standards, and ranking the countries hosting these zones into four tiers. The bill envisions the U.S. publishing a public list of zones, periodically reassessing them, and then classifying the countries into Tier I–IV based on how well zones in those countries meet standards related to illicit trade, governance, and international guidelines. Depending on the tier, the President could impose sanctions and visa restrictions on individuals or entities facilitating illicit trade in Tier II–IV zones. The Act also directs the government to assist Tier II–IV countries, create reporting channels for abuses, and authorize funding to carry out these provisions. In short, the bill uses a public transparency framework and a tiered sanctions regime to pressure foreign zones to comply with international standards on illicit trade, with penalties and visa restrictions aimed at those who enable such activity.
Key Points
- 1Identification and public listing of non-U.S. free trade zones: Within 2 years, the Commissioner of U.S. Customs and Border Protection (CBP), with several other U.S. officials, must identify and publish a public list of foreign free trade zones, including where they are and who administers them. The list is updated at least annually.
- 2Four-tier country classification: After the list is published, countries are classified into Tier I, II, III, or IV based on:
- 3- Level of illicit activity in zones (narcotics, arms, human trafficking, tobacco, counterfeit goods, wildlife).
- 4- Government efforts to counter illicit trade (penalties, sanctions, screening, sanctions compliance, and adherence to sanctions regimes).
- 5- Compliance with international guidelines and standards (OECD, Revised Kyoto Convention, UNCAC, UN anti-illicit-trade conventions, FATF standards, UNID, WCO guidance, WTO Trade Facilitation, TRIPS, export control regimes, etc.).
- 6- Other relevant standards the Commissioner deems appropriate.
- 7Change in classifications and notification: The classification can be updated if zones show significant progress or decreasing compliance, and governments of countries assigned a tier must be notified within 240 days of classification.
- 8Assistance to lower-tier countries: The Commissioner may provide recommendations and best practices to Tier II–IV countries and help shape U.S. Foreign Commercial Service strategies in those countries. The bill also requires monitoring to determine if sanctions measures should be used to push for greater compliance. A dedicated hotline and secure website would allow operators in zones to report illicit trade or to petition reclassification.
- 9Sanctions and visa restrictions (Tier II–IV): The President can impose blocking measures under the International Emergency Economic Powers Act (IEEPA), and deny or revoke visas for individuals or entities involved in illicit trade within zones in Tier II–IV countries. Violations trigger penalties under IEEPA, including financial restrictions and potential criminal penalties.
- 10Exceptions and enforcement context: There are limited exceptions to visa prohibitions if admitting a person would further important law enforcement objectives or to comply with the UN Headquarters Agreement. The act provides definitional clarity and reiterates the IEEPA-based authorities for implementing sanctions, including currency and banking restrictions.
- 11Funding: Congress would authorize appropriations for the Commissioner to implement the act, with funds available until expended and intended to supplement—not replace—other authorities.
Impact Areas
Primary group/area affected- Foreign free trade zones and their host countries; entities operating within those zones.- U.S. government agencies involved in trade, national security, and sanctions enforcement (CBP, Department of State, Department of the Treasury, USTR).Secondary group/area affected- Foreign nationals and entities that facilitate illicit trade within foreign zones (potential targets for sanctions and visa actions).- U.S. businesses and workers involved in import/export or supply chains that interact with foreign zones; potential need for enhanced due diligence and compliance.Additional impacts- Global trade relations and diplomacy: The public listing and tier-based approach could affect bilateral relations with countries hosting zones, especially Tier II–IV countries.- Compliance and governance: Increased emphasis on international standards and best practices for free zones; potential changes in how foreign zones are perceived and regulated.- Administrative and enforcement costs: New data collection, publishing requirements, monitoring, reporting channels, and sanctions enforcement entail budgetary and operational overhead for U.S. agencies.Free trade zones (FTZs): Designated areas in a foreign country treated, for duties/taxes, as if outside that country’s customs territory. They often exist to promote export-oriented activity and can involve simplified customs procedures.Illicit international trade: Any conduct prohibited by U.S. law or international standards that relates to production, shipment, possession, distribution, sale, or purchase of goods, including activities intended to facilitate such trade.Tier I–IV: A four-tier ranking system for countries hosting FTZs, from full compliance (Tier I) to no compliance and no improvement (Tier IV).IEEPA authorities: U.S. tools to block property, restrict transactions, and impose visa restrictions in response to national security threats or illicit activities.
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