 Understanding Foreign-Trade Zones Foreign-Trade Zones (FTZs) were created to neutralize irrational U.S. tariff structures on products used by manufacturers operating in the United States and keep U.S. businesses competitive with businesses operating offshore or overseas. Though the benefits of operating in an FTZ vary, they are substantial, and are certainly worth investigating. The following information is meant to provide insight into FTZs in general and into FTZ #149 in particular. What Is A Foreign-Trade Zone? Authorized by the Foreign-Trade Zone Act of 1934, FTZs exist within the boundaries of the United States, but are considered to be outside of U.S. customs territory. These areas were designed to increase the use of American labor and to stimulate capital investment by allowing activity to occur within the U.S. prior to application of U.S. customs laws. The benefits of using an FTZ include duty deferral, lower duty rates, duty elimination on defective or damaged materials and waste or scrap materials, management of quota restrictions, and the possibility of tax and licensing savings. How Do These Benefits Apply To My Company? As one of the primary benefits of using an FTZ, duty deferral allows companies to defer paying duty on imported merchandise until the merchandise leaves the FTZ and enters the commerce of the United States. For merchandise admitted into and re-exported from an FTZ, no duty is assessed. An FTZ user that assembles or manufacturers in a zone can apply to the Foreign-Trade Zones Board for authorization to elect to pay duties on imported components either at the duty rate applicable to the components or at the duty rate applicable to the finished product. If the duty rate on the finished product is lower than the components, an FTZ provides lower overall duties. Quota restrictions can generally be managed by admitting goods into a FTZ. Over-quota merchandise can usually be held in a zone until the next quota period begins, and may often be used as a component part of a product that is not over quota. Some marking restrictions can also be avoided by bringing goods into an FTZ. Export savings can be realized by moving domestic goods into an FTZ due to the fact that they are treated as already being exported upon entering a zone. Consequently, exporters can accelerate drawbacks by moving goods to be exported into a zone. Additionally, defective merchandise is treated as exported and subject to drawback. Savings are also available through the exemption of state or local taxes on merchandise admitted in an FTZ due to federal preemption. For example: State and local ad valorem tax is not applicable to foreign origin or foreign destination goods in an FTZ. What Does FTZ #149 have To Offer? FTZ #149 exists within the boundaries of Port Freeport and provides manufacturer-shippers with duty deferred, in-transit storage and assembly of products for import and no duty assessment on products re-exported. Sites within the district have been set aside for this purpose and general light manufacturing. Available real estate and warehouse space, combined with an energetic and skilled local labor force make FTZ #149, an excellent choice for manufacturers exporting to other countries or serving U.S. markets. |