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Foreign Trade Zones by Liz Whiteman
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Foreign Trade Zones by Liz Whiteman

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  • 1. Foreign-Trade Zones: Supporting U.S. Competitiveness and Jobs
  • 2. The basics• A foreign-trade zone (FTZ) is a location designated by the U.S. FTZ Board where special customs procedures may be used.• The FTZ program was created by Congress in 1934.• FTZs help encourage activity and value-added at U.S. facilities in competition with foreign alternatives by allowing delayed or reduced duty payments on foreign merchandise, as well as other savings. 2
  • 3. The basics (cont.)• FTZ sites/subzones are sponsored by limited number of local “grantee” organizations.• Before a company can conduct FTZ activity at a site authorized by the FTZ Board, the company must get CBP approval for “activation” of the space to be used.• All FTZ activity is under CBP supervision. Companies operating in FTZs must meet CBP requirements for security and inventory control. 3
  • 4. Public benefits of FTZ program• Help facilitate and expedite international trade.• Help firms conduct international trade-related operations in competition with foreign facilities.• Help attract offshore activity and encourage retention of domestic activity.• Assist state/local economic development efforts.• Help create and maintain employment opportunities. 4
  • 5. Potential FTZ benefits for users• Duty Exemption (on re-exports). No duties or quota charges.• Duty Deferral (on imports). Customs duties and federal excise tax deferred.• Inverted Tariff (on imports). In FTZ manufacturing or “kitting” activity, imported inputs can have higher duty rates than the finished product to be entered into U.S. commerce. The FTZ Board may allow applying the lower finished-product duty rate to the foreign inputs. 5
  • 6. Potential FTZ benefits for users (cont.)• Logistical Benefits. Companies using FTZ procedures may have access to streamlined CBP procedures (e.g., "weekly entry" or "direct delivery").• Other Benefits: Poss. benefit on imported production equip. to be used in FTZ. Foreign goods and domestic goods held for export are exempt from state/local inventory taxes. FTZ status may also make a site eligible for state/local benefits unrelated to the FTZ Act. 6
  • 7. Modernizing the FTZ program• FTZ Board’s emphasis has shifted to facilitating designation of sites for companies’ use.• Optional “Alternative Site Framework” (adopted in 2008, incorporated into regulation in 2012) radically simplifies and expedites bringing FTZ to companies.• 2012 regulations (first overhaul in 20 years) streamline and accelerate procedures wherever possible. 7
  • 8. Alternative Site Framework (ASF)• Developed in consultation with FTZ grantees and users through 18-month process.• Shifts focus to bring FTZ to companies as quickly and simply as possible.• Largely eliminates concerns associated with speculative designation of FTZ sites (e.g., fairness of having only a few property owners benefit from advance designation, CBP difficulty in providing input on site designation when future use unknown). 8
  • 9. Alternative Site Framework (cont.)• A grantee that is approved to use the ASF serves a specific “service area” (generally list of counties).• Within service area, simple 30-day process to bring FTZ to companies. In sync with speed of business. 9
  • 10. New regulations (2012)• Complete overhaul of regulations through extensive public comment process (incl. regional forums)• Major changes needed to keep pace with speed of business and ASF improvements.• For ordinary requests for “production” authority, much less paperwork; decision timeframe cut to 120 days.• Faster, simpler processes reduce costs of access to FTZ program, increase companies’ participation. 10
  • 11. Questions?For more information: www.trade.gov/ftz For questions later, contact: Liz Whiteman Elizabeth.Whiteman@trade.gov or (202) 482-0473 11