New Trade Bill Creates Global Report Card for Foreign Free Trade Zones, Threatens Sanctions on Non-Compliant Countries

The “CLEAN FTZ Act of 2025” (Containing and Limiting the Extensive Abuses Noticed in Free Trade Zones Act) is essentially a massive new grading system for global trade zones. If you’re a business owner importing goods, or just a consumer who cares about where stuff comes from, this bill matters. It mandates that U.S. Customs and Border Protection (CBP), alongside four other top agencies, must first identify and publish a public list of every international free trade zone (FTZ) outside the U.S. within two years (SEC. 3). After that, they have 180 days to put every country hosting these zones into one of four tiers based on how well they fight “Illicit International Trade”—which is defined broadly as illegal cross-border activity, from counterfeiting to money laundering (SEC. 2, SEC. 4).

The Global Trade Zone Report Card

This tier system is the heart of the bill, acting as a public report card on compliance. Countries land in Tier 1 if their zones meet all required international standards, or Tier 4 if they meet none and aren't even trying (SEC. 4). The standards are tough, covering everything from customs transparency (Kyoto Convention) to anti-money laundering rules (FATF). The goal is to incentivize better behavior globally by making non-compliance public. For example, if a country is known for moving a lot of counterfeit electronics through its FTZ, and the government isn't doing enough to stop it, they’ll likely land in Tier 3 or 4.

The Sanctions Hammer: Visa Bans and Asset Freezes

For countries that fall into Tiers 2, 3, or 4, the U.S. government gets a heavy new tool. Section 6 authorizes the President to impose serious penalties on any foreign person (individual or company) found to be organizing, financing, or significantly supporting illicit trade in those lower-tier zones. The penalties are immediate and severe: the President can completely freeze and block any assets belonging to that person or company if those assets are in the U.S. or controlled by a U.S. person. They can also slap a visa ban on the individual, effectively barring them from entering the U.S. (SEC. 6(b)). This is a big deal because it uses the powerful International Emergency Economic Powers Act (IEEPA) to target individuals, not just countries, for trade violations.

Who Feels This Change?

If you’re a U.S. company that relies on supply chains passing through a foreign FTZ, you need to pay attention to these tier rankings. If your supplier’s country drops to Tier 3 or 4, the risk that their partners or directors could suddenly face frozen assets or visa bans goes up dramatically. This could cause serious supply chain disruptions. On the flip side, if you're a legitimate small business competing against cheap counterfeit imports, this bill could be a huge win, as it gives the U.S. new leverage to choke off the flow of illegal goods at the source.

The Catch: Broad Authority and Vague Progress

While the intent to fight illicit trade is clear, the mechanism grants significant, potentially broad, executive power. The tier classification relies on subjective judgment calls—like whether a country is making “real, significant progress” (Tier 2) or only “some effort” (Tier 3) (SEC. 4). This leaves room for political discretion in ranking countries. Furthermore, the authority to freeze assets and ban visas is sweeping, applying to anyone who provides “major assistance” to illicit trade. This means the U.S. government can effectively disrupt the business dealings of foreign individuals and companies based on findings related to trade zone activity, using powers that typically handle national security threats (SEC. 6). The bill also requires the establishment of a public hotline and secure website for businesses to report illegal trade in any zone, which could become a crucial source of intelligence—or a tool for competitors (SEC. 5).