An Overview of theAn Overview of theForeign-Trade Zone 202Foreign-Trade Zone 202May 28, 2013Port of Los Angeles
What is an FTZ?What is an FTZ?• An area inside the United States that isAn area inside the United States that isdesignated as being outside U.S.designated as being outside U.S.Customs and Border ProtectionCustoms and Border Protection(Customs) territory.(Customs) territory.
What is Foreign Trade ZoneWhat is Foreign Trade Zone• Federally approved legislation (1934)Federally approved legislation (1934)• Promote U.S. CommercePromote U.S. Commerce• Duty savingsDuty savings (defer, reduce or eliminate)(defer, reduce or eliminate)• Weekly Merchandise Processing feeWeekly Merchandise Processing fee
Foreign-Trade Zones BoardForeign-Trade Zones Board• FTZ Board is comprised of theFTZ Board is comprised of the– Secretary of Commerce :Secretary of Commerce : Chaired for FTZ BoardChaired for FTZ Board– Secretary of the Treasury.Secretary of the Treasury.• The Commissioner of U.S. Customs and BorderThe Commissioner of U.S. Customs and BorderProtection, providing a position during the FTZProtection, providing a position during the FTZBoard voting process with respect to customsBoard voting process with respect to customssecurity, control, and resource matters.security, control, and resource matters.
FTZ GranteeFTZ Grantee• Zone Grantee - The corporate recipient ofZone Grantee - The corporate recipient ofa grant of authority for a zone project.a grant of authority for a zone project.• More than 286 FTZ Grantees in all 50 states andMore than 286 FTZ Grantees in all 50 states andPuerto RicoPuerto Rico
Activation by the U.S. CBPActivation by the U.S. CBP• A FTZ site need to be approved for FTZA FTZ site need to be approved for FTZactivation by U.S. Customs and Borderactivation by U.S. Customs and BorderProtection officials, and the zone activityProtection officials, and the zone activityremains under the supervision of CBP.remains under the supervision of CBP.
What are the public benefits?What are the public benefits?• Facilitate international tradeFacilitate international trade• Help firms conduct international trade relatedHelp firms conduct international trade relatedoperations in competition with foreign plants.operations in competition with foreign plants.• Attract offshore activity and encourage retentionAttract offshore activity and encourage retentionof domestic activity.of domestic activity.• Assist state/local economic development efforts.Assist state/local economic development efforts.• Help create employment opportunities.Help create employment opportunities.
Foreign-Trade Zone No. 202Foreign-Trade Zone No. 202• 33 Sites throughout the Los Angeles Area33 Sites throughout the Los Angeles Area– 20 Activated General-Purpose Operators20 Activated General-Purpose Operators• 3 Subzones are operating.3 Subzones are operating.– Conoco PhillipsConoco Phillips– ChevronChevron– SonySony
What are the types of zones?What are the types of zones?• General-purpose zonesGeneral-purpose zones• They must be opened to multiple zone users.They must be opened to multiple zone users.• SubzonesSubzones• Special-purpose zones, approved for aSpecial-purpose zones, approved for aspecific company.specific company.
What Is a Zone Site?What Is a Zone Site?• An Industrial Park.An Industrial Park.• An industrial development inside a port orAn industrial development inside a port oran airport.an airport.• A company’s facility.A company’s facility.
What Can I Do in an FTZ?What Can I Do in an FTZ?• DistributeDistribute• StoreStore• Test and InspectTest and Inspect• RepackRepack• AssembleAssemble• RepairRepair• ManufactureManufacture
FTZ BenefitsFTZ Benefits• Duty Deferral:Duty Deferral: Deferred duty paymentDeferred duty payment• Duty Elimination:Duty Elimination: Scrap, Re-ExportScrap, Re-Export• Duty Reduction (Duty Reduction (Inverted Tariff):Inverted Tariff):If finished product has a lower duty rate thanIf finished product has a lower duty rate thanparts import, the finished products may beparts import, the finished products may beentered at lower duty rate.entered at lower duty rate.• Merchandise Processing Fees (MPF):Merchandise Processing Fees (MPF): 0.3463% $25 2900.3463% $25 290SSavings by using Weekly Entryavings by using Weekly Entry
MPFMPF• 0.3463 % of invoice value0.3463 % of invoice value– Maximum is $485 per entryMaximum is $485 per entry• $100,000,000 importer:$100,000,000 importer:– Potentially pay $346,300 annuallyPotentially pay $346,300 annually• FTZ Weekly entryFTZ Weekly entry– 52.14 week/a year x $485 = $25,29052.14 week/a year x $485 = $25,290