Where Are We?
Where Are We?

 



 

FOREIGN-TRADE ZONE DEFINED

In 1934 the U.S. Congress passed the Foreign-Trade Zones Act to expedite and encourage foreign commerce. The Act, as amended in 1950 to include manufacturing in zones, was designed to stimulate international trade and create jobs and investment in the United States.

A Foreign-Trade Zone is defined in the regulations of the FTZ Board (19 CFR Part 400) as follows:

A Foreign-Trade Zone is a restricted-access site, in or adjacent to a Customs port of entry, operated pursuant of public utility principles under the sponsorship of a corporation granted authority by the Board and under supervision of the US Customs Service.

FTZ's are treated, for the purposes of the tariff laws and Customs entry procedures, as being outside the Customs territory of the United States and thereby not subject to Customs duties or certain excise taxes.

EXPLANATION OF ZONES

There are two types of zones: general-purpose zones and subzones.

A general-purpose zone is usually located in an industrial park or in port complexes whose facilities are available for use by the public.

A subzone is a site sponsored by a grantee on behalf of an individual firm. A subzone is a single purpose site that cannot be operated in a general-purpose zone; e.g., oil refineries, pigment manufacturers.


VERSATILITY OF OPERATIONS

  • No time restrictions for goods stored in the zone
  • Ability to inspect, upgrade, re-label goods before bringing into US Customs Territory
  • Uncongested transportation connections
  • Intensely competitive rates and modern facilities at the Port of Corpus Christi
  • Reasonably priced resources available, including water, utilities and land
  • Expeditious connections to Mexico

BUSINESS BENEFITS AND SAVINGS

  • Cash Flow - Customs duties are paid only when imported merchandise is shipped into the US Customs territory.
  • Exports - No Customs duties are paid on merchandise exported from a zone.
  • Defect/Damage/Waste/Scrap/Obsolescence - Customs duties are significantly reduced or eliminated on merchandise subject to these losses while in the zone.
  • Inverted Duty Savings - In an FTZ, the FTZ user may elect to pay the duty rate applicable to either raw materials or the finished product manufactured from the raw materials, depending upon which is lower.
  • Nondutiability of labor, overhead and profit - Customs duties are not owed on labor, overhead and profit attributed to production operations in an FTZ.
  • Staged Duty Reductions - Under the Uruguay Round of GATT, many articles have US Customs duties reduced annually
  • Reduced Cycle Time - Delays relating to US Customs clearances are eliminated
  • Weekly Entries - Weekly entry procedures significantly reduce paperwork and expense.
  • Harbor Maintenance Fee - Fees are paid quarterly on merchandise admitted in the FTZ, not on US Customs entry.
  • Ad Valorem Tax - Possible exemption if requested in the application. By federal statute, tangible personal property imported from outside the US and held in a zone and tangible personal property produced in the US and held in a zone for exportation can be exempt from state and local ad valorem tax.
  • International Returns - By having exports returned and admitted to an FTZ, no US Customs duties are paid upon return.
  • Absolute Quota - Most merchandise may be held in an FTZ, even if it is subject to absolute quota restrictions. When the quota opens, the merchandise may be immediately shipped into US territory.
  • Zone-to-Zone Transfers - In-bond transfer of merchandise from one zone to another without US Customs duty payments.

 

  
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