Business Facilities - October 2008 - (Page 24)

merce, applicants may seek permission to classify their goods for duty purposes in their condition after manufacturing and processing in the U.S. FTZ. Many finished goods have a lower duty rate than components and only the foreign value of the inputs is taxable so U.S. value added in the zone is exempt from duty. Here’s an example: Part A is imported into a U.S. FTZ at a duty rate of 5% and valued at $100; Finished Good 1 is made in the FTZ and is dutiable at 2.5% with a total value of $1,000. The FTZ program provides importers the ability to apply for permission to withdraw Finished Good 1 from the U.S. FTZ for sale in the U.S. at a duty cost of 2.5% times $100 or $2.50. Compare this outcome to the $5.00 in duty due if Part A was customs cleared upon arrival into the U.S. This represents a 50% reduction in the amount of duty owed in this example and encourages U.S. based production and value added activities. Over time and volume, the savings can be significant. In this manner, value added activity is encouraged in the U.S. while equalizing the duty treatment with products finished abroad and imported into the U.S. without the addition of U.S. labor or inputs. If Finished Good 1 is exported from the FTZ, no U.S. duty is owed except for exports to Canada and Mexico based on an exception provision under the North American Free Trade Agreement that applies to manufactured goods in U.S. FTZs. In addition to duty savings, FTZ usage as part of an integrated supply chain strategy can result in lower inventory levels and expedited movement of goods to and from the zone. Direct delivery provides for imported shipments to move directly from the port of unloading to a U.S. manufacturing or distribution facility in-bond, eliminating certain types of delays that can be associated with Customs entry at the port. Full security reviews are still in place at the port and are supplemented by additional security at the FTZ to complement government efforts to secure international cargo. Outbound from the FTZ, users may qualify for weekly entry procedures allowing for one weekly entry summary for all goods shipped from the FTZ over a seven-day period. For high volume, 24/7 operations, weekly entry equates to flexible and just in time delivery schedules to customers as well as fewer Customs entries driving associated administrative savings in the form of customs broker filing fees and merchandise processing fees. From an import compliance perspective, by filing Customs entries after goods have been physically received, verified and shipped, high volume importers find that FTZs support their Customs compliance efforts by allowing for more accurate Customs reporting and reduced post entry adjustments and amendments. Companies can also position themselves to realize FTZ benefits throughout the supply chain for inventory moves between facilities using zone-to-zone transfers. Transfer of title can be performed in an FTZ, providing flexibility in support of vendor-managed inventory strategies. For new or expanded capital investments in the U.S., certain FTZ benefits also apply to imported production equipment for use in the zone. Given the high value and extended timeframe for shipping, assembly and testing of production equipment, associated duty benefits can be significant. While FTZs are flexible in terms of operational setup, for example, allowing commingling of foreign Cleveland Port 24 OCTOBER 2008 A S P E C I A L A D V E RT I S I N G S E C T I O N O F B U S I N E S S FA C I L I T I E S PHOTO CREDIT: DON IANNONE, FLICKR.COM http://www.FLICKR.COM

Table of Contents Feed for the Digital Edition of Business Facilities - October 2008

Business Facilities - October 2008 Contents First Word Snapshots Metro Spotlight: Phoenix, AZ Essential Relocation Tips Metro Spotlight: Fayette County, GA Corporate Moves: Kentucky Austria: Hungry for International Trade Foreign Trade Zones: Global Expansion at Reduced Cost New York is Banking on High-Tech Growth Metro Spotlight: Cuba, MO The Garden State is Growing it's City Centers Information Technology: No Signs of a Slowdown Advertiser Index Inside LiveExchange

Business Facilities - October 2008

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