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Foreign Trade
Zones |
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Foreign
Trade Zones (FTZ), also referred to as Free Trade Zones or Free Zones, are
areas where foreign and domestic merchandise located in the zone are
generally considered to be in "international commerce." A Foreign Trade Zone allows the user
greater flexibility than a bonded warehouse.
Port Manatee is Foreign Trade Zone (FTZ) #169. Unlike most other ports, the entire port is
considered a Foreign Trade Zone. Firms
use Foreign Trade Zones because the zone status provides an opportunity to
reduce certain operating costs associated with a U.S. location that are
avoided when operating from a foreign site.
FTZ's can be used to defer, reduce or even eliminate customs duties
altogether. This equates to more
working capital for your business.
Foreign products, materials and merchandise may enter this enclave
without formal customs entry or the pay of customs duties, or government
excise tax. Merchandise entering the
zone may be assembled, stored, tested, sampled, re-labeled, re-packaged,
displayed, repaired, manipulated, mixed, cleaned, manufactured, salvaged,
destroyed or processed. If the final
product is exported from the United States, no U.S. customs duty or excise
tax is levied. It is as if the
products never entered the United States.
However, if the final product is ultimately imported to the United
States, customs duty and excise taxes are due only at the time of transfer
from the Foreign Trade Zone. The duty
you pay is based either on the foreign components or end product produced,
whichever is lower. An example is
steel gears, shafts and casings, which might pay a combined duty of $100,
where the parts can be combined in an FTZ and can be classified as a gearbox
and assessed only $80. A business not
operating in an FTZ that pays duties on imported parts, assembles them and
then re-exports them, can apply to U.S. Customs for a duty drawback. Duty drawbacks require a significant amount
of paper work and outlay of working capital over some period of time. This can be completely avoided by operating
in an FTZ. Other advantages of operating
in an FTZ include no duty payments on damaged goods, lower insurance rates,
and no quotas.
Among the greatest uses of Foreign Trade Zones is the trans-shipment of
merchandise. For example, cargo from
country "A" is destined for country "B," but no shipping
service exists directly connecting the two countries. Therefore, shippers would ship cargo to a
port where it is off-loaded from one vessel in order to be reloaded aboard a
different vessel, offering service from the port to country
"B." Port Manatee can easily
serve as a trans-shipment port as shown in the example above. If your corporation is importing materials
or products, then you should consider utilizing the port's FTZ, since it can
save you money. The savings are
realized by allowing your corporation to keep its funds in the bank rather
than paying duty on the merchandise immediately upon its arrival in the
United States. Your merchandise can
remain in the port's FTZ without incurring duty until it actually leaves the
premises, which can be months later.
For further information on how an FTZ may be of benefit to your company,
contact the port's marketing department.
Source: Port Manatee
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