Of all the benefits the Foreign-Trade Zones program can offer manufacturers and processors located in the United States there are a few main benefits that account for most of the companies that use the Zones program. Those benefits are listed below:

 

  • Relief from inverted tariffs—In certain instances, there are tariff (import duty) relationships that actually penalize companies for making their product in the United States. When a component item or raw material carries a higher duty rate than a finished product. The finished product pays a lower duty rate than a manufacturer of the same product in the United States. Giving the importer an unfair and unintended advantage over the domestic manufacturer. The Foreign-Trade Zones program addresses this issue.


FOR EXAMPLE: A Foreign-Trade Zone user imports a motor (which carries a 4% duty rate) and uses it in the manufacture of a vacuum cleaner (which is free of duty). When the vacuum cleaner leaves the FTZ and enters the commerce of the U.S., the duty rate on the motor drops from the 4% motor rate to the free vacuum cleaner rate. By participating in the Zones program, the vacuum cleaner manufacturer has virtually eliminated duty on this component, and therefore reduced the component cost by 4%. (Provided by foreign-trade-zone.com)

  • Duty exemption on re-exports—When foreign merchandise is brought into a Foreign-Trade Zone, no Customs duty is owed until the merchandise leaves the zone and enters the commerce of the United States. Only then is the duty paid. If the imported merchandise is exported back out of the country, no Customs duty is ever due.
  • Duty elimination on waste, scrap, and yield loss—When a processor or manufacturer is conducting its operations within a zone, the merchandise is not considered imported, and therefore no duty is owed until it leaves the zone for shipment into the United States.
  • Weekly Entry Savings— Under Weekly Entry procedures, the zone user files only one Customs Entry per week, rather than filing one Customs Entry per shipment.