Presentation on theme: "Understanding Foreign-Trade Zones"— Presentation transcript:
1 Understanding Foreign-Trade Zones Wayne Coleman FTZ Networks President
2 What is a Foreign Trade Zone? A FTZ is:A designated location in the U.S. that is legally outside of U.S. customs territoryWhere companies can use special procedures that help encourage U.S. manufacturing and other value added activities by allowing delayed or reduced duty payments on foreign merchandise, as well as other savingsThe usual Custom entry process and payments of duties are not required on the foreign merchandise unless and until it enters US Customs territory for domestic consumption
3 Where are the FTZs? All 50 States + Puerto Rico 259 General Purpose Zones471 Subzones2,700 Firms320,000 US Workers
4 Permissible Activities in a FTZ Merchandise admitted to a zone may be:Assembled*TestedSampledRelabeledStoredSalvagedProcessedManufactured*RepackagedDestroyedMixedManipulatedGradedDistributedBroken upExhibitedSorted*The user must receive prior approval from the FTZ Board for “production”
5 FTZ Benefits Duty Elimination Duty Deferral No duty is paid on foreign merchandise destroyed in the zoneNo duty is paid on foreign merchandise that is re-exportedDuty DeferralDuties are not paid on foreign merchandise while in inventory until being withdrawn for U.S. domestic consumption.Duty Inversion/Relief from Inverted TariffThrough manufacture higher duty components can assume the identity of the finished product, for duty calculation purposes, thereby reducing the amount paid upon withdrawal for U.S. domestic consumption.
6 FTZ Benefits Expedited Procedures Weekly Entry No Time Limit Companies using Zone procedures may have access to streamlined customs procedures (e.g. “direct delivery”)Weekly EntryUnique ability to file a single Customs Entry for an entire week’s outbound shipments (MPF savings)Ex: 1,000 customs entries $485 max = $485,00052 customs $485 max = ,220Minimum Annual Savings = $459,780No Time LimitThere is no time limit placed on goods stored in the FTZ (as compared to a Bonded Warehouse) and goods can be released immediately unlike bonded storageOther BenefitsForeign goods and domestic goods held for export are exempt from state/local inventory taxes. FTZ stats may also make a site eligible for state/local benefits which are unrelated to the FTZ Act.
8 FTZ Uses Reverse Logistics / Returns Management Kitting & Assembly of Gift SetsRetail Display Pallet buildsCrude Oil Importing and RefiningLabeling / RelabelingPacking / RepackingFuel Farms for International Flights
9 Role of Consultants and FTZs….. Foreign-Trade Zone (FTZ) Services: Zone Operator Zone Project Applications Minor Boundary Modifications Major Boundary Modification / Zone Expansions Manufacturing Permits Subzones FTZ Management Activation Alterations Feasibility Analysis Procedures Manual Zone Schedules / Tariffs Annual Reports
10 FTZ Site Application Coordination with FTZ Grantee Gathering all information for ApplicationReceive Concurrence Letters from Grantee & CBPDraft FTZ Application
11 FTZ Site ActivationDevelop list of names of Key Individuals for CBP Background InvestigationsPre-activation Meetings with Grantee & CBPConfirm Grantee’s requirements for approval of the facilityReview the facility and determine any suspected Customs security concernsRequest & schedule the “Preliminary Security Survey” visit by CBP
12 FTZ Site ActivationDetermine any/all Security Improvements and/or Signage required by CBP for Activation ApprovalAssist with ensuring all required Security Improvements are CompletedNotify CBP of completed Security ImprovementsHold "follow-up" Security Survey visit by CBP
13 FTZ ICRS Selection and Implementation Inventory Control & Recordkeeping SystemDetermine Short List of Software ProvidersSchedule Demo's with Software Providers on Short ListMeetings with Software Providers & Client Systems StaffSelect Software ProviderExecute license agreement for the FTZ SoftwareComplete Configuration Questionnaire from Software Provider Selected
14 Operational Planning & Execution Tour the facility and understand the flows of the merchandise moving into &out of the facility, including its destination;Identify the roles and responsibilities specific to the FTZ Regulatory OperationsAuditing processes & procedures to identify gaps in SOP's not meeting Customs rules & regulations for FTZ operations;Draft the required FTZ Procedures Manual for CBP;Map out inventory flows (physical product & data flows) for EDI configurations
15 Operational Planning & Execution Develop recordkeeping processes in compliance with CBP’s regulations;Determine process, including timing, of information flow to Customs BrokerHolding FTZ Awareness training for all employees of ClientDraft & Submit the Activation Application to CBPRun 30-Day Mock Operations
16 For Questions or More Information FTZ NetworksWayne Coleman – President, C.O.O