Foreign Trade Zone Benefits

Through utilization of an FTZ, imported material avoids any Customs duties under the following scenarios: Merchandise which is imported into the U.S. for admission into a Foreign-Trade Zone and later re-exported from the Zone is never assessed any Customs duties.
Reject, Scrap, and "Consumed" Merchandise: Imported merchandise which is admitted into a Zone and then rejected, scraped, or consumed in the Zone, is not assesses any Customs duties whatsoever. Duties are reduced significantly for all merchandise which is scrapped through a manufacturing operation in a Foreign-Trade Zone, and then sold from the Zone as commercial scrap material. Imported merchandise which is admitted into a Zone and then shipped to another U.S. Foreign-Trade Zone can be shipped duty-free to the receiving Zone with the receiving Zone's concurrence. As a duty-free transfer, Zone-to-Zone shipments allow both the shipping Zone and the receiving Zone to reduce their duty exposure. Duties are eliminated completely on imported components which are transshipped through several Zones and eventually re-exported. While duties are eventually assessed on imported merchandise shipped to U.S. locations from Foreign-Trade Zones, these duties are deferred while the merchandise remains in the Zone. The time that duty is paid is moved from the date of importation to the date of shipment from the Zone. The cost-of-money savings on the duty deferral can be significant for large-volume distributors, or operations with long inventory turnover periods. If a distribution facility is importing in large quantities, holding inventory for long periods of time, or is facing high duty rates, by using a Zone that facility can improve its cash-flow and money management by deferring payment of duties until the time they are removed from the Zone--much closer to the time of actual sale. A manufacturer can sometimes take special advantage of an FTZ to reduce tariff exposure. If the manufacturer is producing a final product which, if imported, would be subject to a lower duty rate than the rate(s) currently being paid on the imported components, then the imported-component rates can be reduced to the final product rate upon making entry of the final product from the Zone into the U.S. If other components are assessed rates lower than that of the final product, the importer has the option of fixing those rates at their lower levels.
Through utilization of a Zone, the manufacturer will be able to reduce the rate on Components A and B from 10% and 6% respectively to the final product rate of 3.5% while "fixing" the rate of Component C at "Free." In states that assess taxes on business inventories, all imported merchandise, and even domestic merchandise when held for export, can be stored in a Foreign-Trade Zone without having to pay business inventory taxes. Customs assesses a "Merchandise Processing Fee" (MPF) per entry which is calculated as 0.21% (.0021) of the full declared value of the merchandise, up to a maximum of $485. Foreign-Trade Zones are only required to submit one entry per week for all shipments from the Zone, thus ensuring a maximum MPF of only $485 per week, reducing MPF costs to importers who currently file several entries per week, and pay more than $485 total per week for all entries.
 
These are just some of the benefits of U.S. Foreign-Trade Zones. Please contact us, to discuss how your operation could benefit from the U.S. Foreign-Trade Zones program.