Foreign-Trade Zone (FTZ)
Welcome to Foreign Trade # 8 Toledo, Ohio
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Administrator: |
Randy P. Campbell |
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Phone: |
717-873-0569 |
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eMail: |
General Information
- What is a foreign-trade zone?
- Why do companies use foreign-trade zones?
- What are the benefits of using the program?
- 10 reasons for distribution centers to use foreign trade zones?
FTZ 8 - Toledo, Ohio
What is a foreign-trade zone?
The Foreign-Trade Zone (FTZ) Program is a trade program designed to offer certain specific benefits to the users. Each potential user must analyze the relevant facts and circumstances to determine and to quantify the potential benefits of operating or using an FTZ.
Foreign Trade Zones are organized as general-purpose zones or as subzones. General-purpose zones are organized using public utility principles and serve multiple users. Subzones are adjuncts to general-purpose zones organized to serve only one user.
Foreign-trade zones are secured areas located in or near U.S. Customs ports of entry, but legally considered to be outside the Customs territory.
In a zone merchandise may be assembled, exhibited, manufactured, mixed, processed, relabeled, repackaged, repaired, salvaged, sampled, stored, tested, displayed, and destroyed.
Why do companies use foreign-trade zones?
Companies use zones to maintain the cost competitiveness of their U.S.-based operations. For a company, 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.
What are the benefits of using the program?
The FTZ program provides a means of improving their competitive position vis-à-vis their counterparts abroad. The fundamental benefits offered by the FTZ program are the ability to defer, reduce or even eliminate U.S. Customs duties on products admitted to the zone.
Deferral of Duties: Customs duties are paid only when and if merchandise is transferred into U.S. Customs territory. This benefit equates to a cash flow savings that allows companies to keep critical funds accessible for their operating needs while the merchandise remains in the zone.
Funds are not tied up paying U.S. Customs duties or posting bond while goods are held within the zone. Duties on foreign goods intended for U.S. consumption are levied only at the time goods are removed from the zone and only on quantities actually removed. As a result, sale proceeds are available at the same time duties are due.
There is no time limit on the length of time that merchandise can remain in a zone.
Reduction of Duties: In a foreign-trade zone and with the permission of the Foreign-Trade Zones Board, users may elect a zone status on merchandise admitted to the zone. This zone status determines the duty rate that will be applied to foreign merchandise if it is eventually entered into U.S. commerce from the FTZ. The process allows users to elect the lower duty rate applicable to either the foreign inputs or the finished product manufactured in the zone. If the rate on the foreign inputs admitted to the zone is higher that the rate applied to the finished product, the FTZ user may choose the finished product rate, and pay the duty rate of the finished product on the value of the foreign components. There is no duty payable on domestic product used in the manufacturing or on the value added in the zone.
Elimination of Duties: No Customs duties are paid on merchandise exported from a FTZ. Therefore, duty is eliminated on foreign merchandise admitted to the zone but eventually exported from the FTZ. Generally, Customs duties are also eliminated for merchandise that is scrapped, wasted, destroyed or consumed in a zone. Therefore companies avoid customs duties on moisture, dirt, culls, defective merchandise, scrap, other waste and shrinkage.
Increased Convenience and Flexibility
- The Foreign-Trade Zone can be used as a staging area for inventory and spare parts, considerably reducing lag time inherent to delivery from abroad.
- Prospective buyers may be given the opportunity to see samples of goods stored in a Foreign-Trade Zone.
- If the goods being imported are subject to a quota, the goods may be stored in a Foreign-Trade Zone pending the issuance of additional quota allocations.
- A Foreign-Trade Zone provides an expedited method of moving goods from the port of arrival to the FTZ.
Foreign-Trade Zone users are entitled to special aggregated entry procedures called “weekly entry.”
10 Reasons for Distribution Centers to Use Foreign-Trade Zones
1. Imports may be admitted and held in a foreign-trade zone without paying U.S. Customs duties.
2. Distribution FTZs can file a “weekly entry” instead of an entry for each Bill of Lading. Because a week’s worth of transactions can become one entry, supply chain velocity is increase and Customs and brokerage fees are reduced.
3. Duties are never paid on merchandise exported from a zone.
4. Duties are reduced or eliminated on materials that are defective, damaged, or obsolete.
5. Spare parts may be stored, returned, or destroyed without duty payment.
6. Delays in Customs clearances and duty drawback are eliminated.
7. Quality control inspections can identify sub-standard goods to be destroyed or returned without duty payment.
8. U.S. Quota restrictions are different for merchandise admitted to FTZs. Although quotas will apply when the merchandise is entered into U.S. commerce, quota merchandise may be stored in a FTZ so that when the quota opens, the merchandise may be immediately shipped to the U.S. customers.
9. No duty is owed on in-bond, zone-to-zone transfer of merchandise. An increasing number of firms are making use of the ability to transfer merchandise from one zone to another. Because the goods are transported in-bond, duty is deferred until the goods are removed from the final zone for entry into the U.S.
10. Merchandise may be stored in a FTZ for an indefinite period of time. The storage time limits imposed on bonded warehouses are not applicable to FTZs.
FTZ No. 8 General-Purpose Zone operators
Site 1 Port of Toledo - Midwest Terminals of Toledo International (MTTI) & Arbor Foods, Inc.
Site 2 Toledo Express Airport - BAX Global (Burlington Air Express) Site 3 Fremont, Ohio - First Choice Packaging -- warehousing
Site 4 Oregon, Ohio - Oregon Economic Development Foundation Site 5 Wood County - Ohio Northern Global Distribution & Business Center
Site 6 - Toledo, Ohio - Greenbelt Development Park
FTZ No. 8 Subzones:
8A DaimlerChrysler Jeep Wrangler, Jeep Liberty and North Cove Plants - deactivated
8B DaimlerChrysler Toledo Machining Plant - deactivated
8C Sandusky Athol (SanduskyLimited) - deactivated
8D DaimlerChrysler Amplex Plant-closed in early 90's
8E Giant Industries, Inc.
8F BP Products North America, Inc.
8G Valero Energy Corporation (Husky Refining, Inc.)
8H Sunoco, Inc.