New Bill Proposes Ranking Foreign Trade Zones: Countries Could Face U.S. Sanctions Based on Illicit Trade Levels

This bill, the CLEAN FTZ Act of 2025, sets up a new system for the U.S. government to monitor and evaluate foreign free trade zones (FTZs) – those special areas in other countries treated as outside their normal customs territory. Within two years, U.S. Customs and Border Protection (CBP) has to create and publish a list of these zones globally. The core idea is to crack down on illegal activities like trafficking and smuggling that might be happening within them.

Ranking the Zones: How the U.S. Plans to Grade Global Trade Hubs

Once the list is made, the real action starts within 180 days: CBP, working with other agencies, will classify each country with FTZs into one of four tiers. Think of it like a report card based on how well they fight illicit international trade – defined as anything breaking U.S. law or international standards (Section 4(b)(3)). Tier I countries are the gold standard, fully compliant. Tier IV countries are those seen as not complying and not making efforts.

The grading criteria look at things like levels of crime (drugs, arms), how effective the country's government is at stopping illegal trade (including enforcing sanctions and screening goods), and whether they follow guidelines from big international groups like the OECD and World Customs Organization (Section 4(b)). These rankings aren't permanent; countries can move up or down based on annual reviews, and the U.S. has to tell each country its score.

Carrots and Sticks: Assistance vs. Sanctions

The bill offers help and potential penalties based on these tiers. For countries landing in Tiers II, III, or IV, the U.S. can offer advice and best practices to help them clean up their zones (Section 5(a)). There will also be a public hotline and secure website for anyone (even folks in those countries) to report illegal trade happening in these zones (Section 5(d)).

But there's a hammer, too. Section 6 gives the President the authority – based on "credible evidence" – to impose economic sanctions and visa restrictions on foreign individuals or companies involved in illegal trade within Tier II, III, or IV countries. This could mean freezing assets in the U.S., blocking financial transactions, denying U.S. visas, or even revoking existing ones. These are serious tools pulled from the International Emergency Economic Powers Act (IEEPA).

What This Means on the Ground

So, what's the real-world impact? If you run a business that imports goods, you might eventually need to pay attention to the tier ranking of the countries your suppliers operate in, especially if they use FTZs. Sanctions on a key foreign partner could disrupt your supply chain overnight. For individuals from Tier II, III, or IV countries, getting a U.S. visa for work, study, or travel could become more complicated if they or their associates are flagged under this law.

The effectiveness hinges on how consistently and fairly these tiers are assigned and how the "credible evidence" standard for sanctions is applied. While the goal is to curb illegal activity like counterfeit goods or smuggled resources, the broad authority granted could potentially impact legitimate trade or be influenced by factors beyond just compliance. The reporting hotline could be a useful tool, but also carries the risk of misuse if not managed carefully.