Benefits of Using a Foreign-Trade Zone

The FTZ program provides unique customs relief and support for U.S. businesses whose operations include import and export activities. Georgia Foreign-Trade Zone can help you take advantage of this unique program, improving your ability to do business in Georgia while participating in the global economy. Whether you are importing finished goods for sale in the U.S. or international markets, or importing components for use in the production of a finished product, the following FTZ benefits might be just what you need to improve your competitive position and grow your Georgia operations.

Duty Reduction

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. There are also certain duty reduction benefits to production equipment admitted to the FTZ for assembly and testing prior to use in production.

Duty Deferral

Duty is not owed on imported products admitted to an FTZ facility until they actually “enter” into the commerce of the U.S. In other words, when they are withdrawn from the FTZ facility. Importers can therefore delay payment of duties until the merchandise leaves the FTZ for consumption in the U.S. Duty payment is delayed even further if the merchandise moves in a ZONE-TO-ZONE TRANSFER – from one FTZ facility directly to another in Georgia or anywhere in the U.S. This benefit can be implemented up and down the supply chain by incorporating the activities of both suppliers and customers.

Duty Elimination

No duties are paid on merchandise exported from a FTZ. This includes the elimination of duty on imported materials used in the production of a finished product that is exported from the FTZ. This benefit alone can create new export market opportunities and increase production because the duty that was being paid on inputs is eliminated entirely on those products destined for international markets. Therefore, the production cost of goods being made for export is lower. Generally, duties are also eliminated for merchandise that is scrapped, wasted, destroyed or consumed in a zone.

Labor, Overhead & Profit

In calculating the dutiable value on foreign merchandise removed from a zone, zone users are authorized to exclude zone costs of processing or fabrication, general expenses and profit. Therefore, duties are not owed on labor, overhead and profit attributed to production in a FTZ.

Faster, Streamlined Movement Of Goods & Lower Processing Fees

Additional benefits, sometimes referred to as intangible benefits, have begun to play a greater role in a company’s evaluation of the FTZ program. 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.

Public Benefits

  • Help facilitate and expedite international trade.
  • Provide special customs procedures as a public service to help firms conduct international trade related operations in competition with foreign plants.
  • Encourage and facilitate exports.
  • Help attract offshore activity and encourage retention of domestic activity.
  • Assist state/local economic development efforts.
  • Help create employment opportunities.