Sens. Tim Scott of South Carolina and Katie Britt of Alabama introduced the companion legislation to address a persistent policy gap. Under current rules, businesses operating within U.S. Foreign-Trade Zones must pay duties on inputs before exporting finished goods to regional partners, even when those items qualify for preferential treatment. This leaves U.S. companies at a distinct disadvantage compared to Canadian and Mexican manufacturers, who utilize national programs like Mexico’s PROSEC to eliminate similar costs.

Annual trade between the three nations reaches roughly $1.8 trillion, making the efficiency of cross-border supply chains vital for domestic industrial growth. Jeff Tafel, president of the National Association of Foreign-Trade Zones, noted that the bill restores the original intent of the 1934 program, which was designed to encourage domestic production rather than punish businesses for operating within designated zones. Industry leaders, including Jaxon Lang, CEO of South Carolina-based AFL, argue that the change is essential for maintaining a level playing field and driving continued investment in American jobs. The House version of the proposal currently awaits review by the Ways and Means Committee.