1. Foreign-Trade Zones Overview
Presented by:
Greg Jones
FTZ Corporation

2. Purpose of Foreign-Trade Zones
Foreign-Trade Zones are established:
To encourage and expedite U.S. participation in international trade
To foster trade in foreign goods imported not only for export, but also for domestic consumption after combining with domestic goods
To capture domestic economic activity which might otherwise be more cost-effectively conducted outside the United States

3. What is a Foreign-Trade Zone?
Secure area located in or near a Port of Entry
For tariff and tax purposes, goods treated as legally outside U.S. Customs territory
In a zone, merchandise may be:
Stored
Manipulated
Used in Production (typically manufacturing)*
Repackaged
Destroyed
* With Foreign-Trade Zones Board Approval

4. Types of Foreign-Trade Zone Sites
General-Purpose Zone
Often an industrial park or port complex whose facilities are available for use by the general public
Subzone
Normally special-purpose sites when the operations cannot feasibly be moved to, or accommodated in a general-purpose zone

5. Zone Program Key Organizations
Foreign-Trade Zones Board (FTZB)
Grantee
Operator/user
Administrator
Bureau of Customs and Border Protection

6. Why do U.S.-based Businesses Use Foreign-Trade Zones?
Answer: To lower Customs-related costs within their supply chains

7. Zone Benefits to Users Duty Deferral
Duty is not paid unless or until goods enter the commerce of the U.S.
Duty Avoidance on “Re-exports”
Duty is not paid on goods that do not enter U.S. commerce
Relief from “Inverted” duty rate relationships
With FTZ manufacturing authority, imported materials included in items manufactured for domestic consumption may be entered into U.S. commerce at the lower finished product duty rate
Streamlined Logistics (e.g. Weekly Entry, Direct Delivery)

8. Zone Benefits to Users
Relief from State aviation fuel taxes on qualifying international flights
2013 Mississippi Code, Title 27 - TAXATION AND FINANCE Chapter 55 - GASOLINE AND MOTOR FUEL TAXES Article 7 - SPECIAL FUEL TAX § Special fuel taxes; exemptions and allowances
State fuel tax is not paid on fuel “Sold or delivered in bond, or sold or delivered, to any person within a foreign-trade zone within this state and sold, used, consumed, distributed, stored or withdrawn from storage and used to propel aircraft on an international flight including any interim stops within the United States so long as the origin or ultimate destination of the aircraft is outside the United States and District of Columbia. As used in this paragraph, "foreign-trade zone" means a foreign-trade zone operated and maintained by a public or private corporation under the provisions of Sections through ”

9. Steps Required for Practical Implementation
Feasibility Analysis
Application
Activation 9

10. Application Application is required for:
Manufacturing within the general-purpose zone or a subzone
Manufacturer may submit Production Notification directly to the FTZ Board
or, alternatively, Production Notification may be submitted by the Grantee 10

11. Application Application is required for: Establishment of a subzone
Subzone application may only be formally submitted by the Grantee
Operator Agreement between the Grantee and FTZ user is generally required prior to submission
Grant of authority is issued to the Grantee on behalf of FTZ user 11

12. Activation
Activation is required for conducting operations under zone procedures, AND for receiving zone benefits.
Activation requires the approval of:
Zone Grantee
Local office of Customs and Border Protection 12

13. A Snapshot of Zone Activity in Mississippi for 2016
4 Zone projects with 7 active subzones
Total value of FTZ production activity: $18 Billion
Value of exports from FTZ users: $900 Million
12,000 people employed by FTZ users
Major uses include:
Oil refining
Automotive production
Shipbuilding
Furniture manufacturing
Apparel distribution 13

14. Questions and Answers
Questions?