Frequently Asked Questions
What is a foreign trade zone?
A federally approved site treated as being outside the territory of U.S. Customs and Border Protection (CBP) for the purposes of the tariff laws and CBP entry procedures. Therefore, foreign and domestic merchandise may be admitted to a FTZ for operations such as storage, exhibition, assembly, manufacture and processing, without being subject to formal U.S. CBP entry procedures, the payment of duties or the payment of federal excise taxes. When merchandise is removed from a FTZ, duties may be eliminated if the goods are then exported from the United States. If the merchandise is formally entered into U.S. commerce, duties and excise taxes are due at the time of removal from the FTZ, often at a lower rate.
What are free zones, export processing zones & enterprise zones?
Free zones — Allow merchandise to enter an area for storage and be exported or entered into the host country.
Export processing zone (EPZ) — EPZs are duty-free zones dedicated to manufacturing for export. No duties are charged for entry of raw materials, components, machinery, equipment, and supplies used to produce manufactured goods provided these are then exported.
Enterprise zones — Encourage new industrial and commercial activity in economically depressed areas by removing most zoning, taxation, and federal and local business regulations from carefully defined districts.
What savings/benefits does a foreign trade zone offer?
Improved Cash Flow: Payment of U.S. Customs duties is deferred until the goods are removed from the zone for entry into the commerce of the U.S..
Reduction in Duties: If the duty rate on imported goods used in the production of a finished product is higher than the duty rate of the finished product, then the lower rate is applied to the imported merchandise. The “inverted tariff” benefit results in lower duty payments to U.S. Customs. For example, if an imported part used in the production of a finished product has a duty rate of 6%, but the duty rate on the same finished product is only 3%, then FTZ procedures allow the imported part to be classified at 3%. The U.S. government allows the reduction in duty because it levels the playing field for U.S. manufacturers competing internationally.
Elimination of Duties: No duties are paid on merchandise exported from a FTZ. This includes the elimination of duty on imported finished products or imported materials used in the production of a finished product that is exported from the FTZ.
Faster, Streamlined Movement of Goods & Lower Processing Fess: Many FTZ users are eligible to take advantage of special Customs procedures such as direct delivery and weekly entry. These procedures expedite the movement of cargo, thereby supporting just-in-time inventory methodologies. The weekly entry benefit might also result in reduced Merchandise Processing Fees (MPF) and brokerage fees.
How many foreign trade zones are in Georgia?
The 3 international ports of entry in Georgia each have FTZ projects associated with them: (Atlanta, Savannah, Brunswick) Within these zone projects, there are multiple zone sites including industrial parks and individual companies with FTZ status.
How does a company obtain foreign trade zone status?
Applications for FTZ designation are submitted to the Foreign-Trade Zones Board, U.S. Department of Commerce. Depending on the type of application, processing and approval time is from 1 to 6 months on average.
Are any items restricted from entering an FTZ?
Any item that can be legally imported into the United States is eligible for FTZ status. Goods cannot be admitted into an FTZ as a way to circumvent trade laws. Products related to sensitive US industries such as textiles and agriculture have some restrictions.
Where can I find duty rates for specific products?
Duty rates are listed by product and country of origin in the U.S. Customs Tariff Schedule available online at http://www.usitc.gov/tata/hts/bychapter/index.htm. Because product categories are very specific, a licensed customs broker should be contacted for assistance.