Do you import raw materials and goods from overseas? Do you buy these goods in bulk and then resell them? Do you add value to the imported components or raw material before they are sold again? If you answered yes to any of the above, then a Foreign Trade Zone (FTZ) might save your company money and give it a competitive advantage.
The purpose of an FTZ is to stimulate international trade and create jobs and investment in the United States rather than abroad. In the U.S., an FTZ is a defined geographic space that is next to or within a short commuting distance from an official U.S. port of entry. U.S. Customs and Border Protection supervise the Zones, but do not run them. The space is secured and operated as a public good under a license agreement with the U.S. federal government. In foreign countries, FTZs are typically referred to as Free Trade Zones. Both U.S. and foreign goods can be moved into a Zone for storage, exhibition, assembly, manufacturing and/or processing.
There are multiple benefits to using an FTZ, but each company must research which specific benefits would apply on a case-by-case basis. In doing so, they must consider: 1) what is being imported; 2) the volume and frequency of the imports; 3) will the imported goods be changed into something else; 4) whether the final good will be exported or enter U.S. customs territory; 5) what is the normal duty rate, if any, of the imported good, etc. Generally speaking, an FTZ will provide the most savings to a company that imports a high volume of goods, the goods are not typically duty-free, and many of the goods will ultimately be exported out of the U.S. to the end user. Continue reading