As printed in the Atlanta Business Chronicle
In today’s economy, Georgia businesses are looking for methods to improve their bottom line. Some options are not ideal: layoffs, cutting services, even closing shop. For certain employers—those that import products or raw materials from overseas—the federal government has a proven program that can help companies reduce costs without having any impact on customers or employees. What’s more: participating in the Georgia program has just become far easier.
The Foreign Trade-Zone (FTZ) program allows qualified businesses to defer, decrease, or eliminate duties on materials imported from overseas that are used in products assembled in Georgia. Participation in the program also allows employers to file weekly customs entries rather than one entry for every shipment – decreasing administrative costs, and in many cases speeding up the delivery of goods.
For decades, many large companies have participated in this program. Smaller employers, though, either have not known about the program or have been daunted by its lengthy application process. To counter this underutilization, the federal government recently streamlined the program’s application process for companies in certain industries. Approval of an FTZ application that might have taken 12 months now can be approved in thirty days.
There is one important caveat: Applicants need to demonstrate that participation in the program will create or protect jobs here in Georgia. The program was established with the sole purpose of keeping jobs here or creating new opportunities for employment in the sectors that long have served as the foundation of our economy.
Here’s how it works. Let’s take a Georgia-based distributor looking to tighten its belt without cutting jobs. Without the benefits associated with FTZ status, the distributor would be compelled to file a customs entry for every imported shipment, and would pay duty on all shipments soon after they arrived in port. These import obligations come with their own administrative costs and processing times. And, the “pay up front” conditions have a direct and negative impact on cash flow.
With help from the Georgia Foreign Trade Zone (GFTZ), the federal grantee for FTZ applications in much of central and northern Georgia, companies have a cost effective method for solving each of these issues. Inclusion in the GFTZ would enable the distributor to file only one customs entry per week when the inventory exists in an FTZ, decreasing administrative overhead and speeding up the distribution process. Further, the distributor could defer duty payments on all imported products, until the product leaves the FTZ, freeing up cash flow. Finally, a distributor located in an FTZ will not have to pay any tariffs on those products that are re-exported outside the U.S. (to Canada for example). The combined savings can be substantial.
Ultimately, the FTZ program is founded upon the intuitive but often overlooked truth that only successful, profitable companies create jobs. GFTZ’s goal is to bring jobs to Georgia, and we do that by using the tools associated with the FTZ program to help Georgia’s companies succeed.
Julie Brown is the President and CEO of the Georgia Foreign Trade Zone.
