Cutting the Cost of Free Trade
The foreign trade zone concept was developed to encourage international trade by American companies and to preserve American jobs. Its benefits can increase your bottom line and enhance your competitive edge.
Duty payment is deferred on items imported into an FTZ until they leave the FTZ for domestic sale. So you can avoid tying up money in Customs duties on your inventory. Most quota restrictions do not apply to FTZs, so you also can store over-quota items here until needed.
No Duty on Domestic Content or Value Added
The value added to a product in an FTZ (including cost of labor, overhead and profit) are exempt from Customs duties, unlike value added in overseas production operations. The more activities you conduct within a zone, the more you save.
No Duty on Re-Exports and Sales to the U.S. Military or NASA
If you import components or raw materials for manufacturing within an FTZ and export the finished product from the FTZ, your components never enter the domestic market and you never owe duty on them. In addition, no duty is due if the product is sold from an FTZ to the U.S. Military or NASA.
Relief From Inverted Tariffs
In some cases a component item or raw material carries a higher duty rate than the finished product. To eliminate the penalty on American manufacturers of such products, FTZ rules allow participants to pay the duty rate applicable to either the component materials or their finished product, whichever is lower.
No Duty on Rejected or Defective Parts
If your imported merchandise is faulty, you can destroy it or return it for replacement without incurring duties. Outside an FTZ, you would pay double duties - on the defective item and also on the replacement.
No Duty on Waste and Scrap
No duty is charged on most waste and scrap from production operations within an FTZ.
Reduced Processing Time and Fees
Under Weekly Entry procedures, zone users have the option of filing one Customs Entry per week rather than a separate Customs Entry for each entry into the U.S. If you make entry on multiple shipments each week, you will save substantially on processing time and fees.
Reduced Transit Time
"Direct Delivery" allows you to receive repetitive shipments of the same items into an FTZ without a formal Customs release. This eliminates time-consuming documents and physical inspections of every delivery, and can shorten transit time.
FTZ 136 is a member of the not-for-profit National Association of Foreign Trade Zones. The association's web site - www.naftz.org - is a good resource for additional information. For more resources, click here.