CHAPTER XXIII FOREIGN TRADE ZONES Purposes of A Foreign Trade Zone Treatment of Goods Benefits of Foreign Trade Zone (FTZ) Foreign Trade Zones (FTZs) in California & New York Copyright(c) 2012 Dr. Chase C. Rhee

Copyright(c) 2012 Dr. Chase C. Rhee Foreign Trade Zones Foreign Trade Zones Board under Foreign Trade Zones Act of 1934. Free trade areas outside a nation's customs territory even though located in or near ports of entry. Must be within 60 miles or 90 minutes' driving time from Customs supervising office Copyright(c) 2012 Dr. Chase C. Rhee

Copyright(c) 2012 Dr. Chase C. Rhee Foreign Trade Zones Operated by States, political subdivisions or corporations under the supervision of the U.S. Customs & Border Protection Licensed and regulated by the Foreign Trade Zones Board under public utility principle "Public interest" Subzones: User's manufacturing plants or distribution centers located in his private facilities or distribution centers. No limit on distance from the Customs GM, Ford, Chrysler, HP, IBM, Maytag, 3M, Merck, Polaroid, Xerox, Pier One, W-M Copyright(c) 2012 Dr. Chase C. Rhee

Purposes of Foreign Trade Zone (1) Create and maintain employment in the United States which might otherwise have moved abroad (2) Attract & promote international trade and commerce (3) Bring in foreign raw materials & components and manufacture products there, and reexport them. Copyright(c) 2012 Dr. Chase C. Rhee

Copyright(c) 2012 Dr. Chase C. Rhee Treatment of Goods Goods may be stored, sold, exhibited, broken up, repacked, assembled, distributed, sorted, graded, cleaned, mixed with foreign or domestic materials, manipulated or manufactured. But no retail trade. Usual formal Customs entry procedures and payment of duties are not required when goods enter the FTZ or while remain there. Goods can be held for unlimited time while waiting for favorable market Copyright(c) 2012 Dr. Chase C. Rhee

Copyright(c) 2012 Dr. Chase C. Rhee Treatment of Goods Privileged Foreign Status Duties and taxes are assessed on entered goods according to condition of foreign goods at time of entry into FTZ Duties on components are lower than finished goods: Battery 3.5% (8507) & Truck 25% (8704) Nonprivileged Foreign Status Duties and taxes are assessed on entered goods according to character, condition, and quantity at the time of entry or entry summary is filed with U.S. CBP. Duties on components are higher than finished goods: Battery 3.5% (8507) & Passenger car 2.5% (8703) Copyright(c) 2012 Dr. Chase C. Rhee

Benefits of Foreign Trade Zone Goods can be stored in the FTZ without paying duties and customs bond until taken into the Customs territory. Clear goods as necessary. Goods can be stored in the FTZ and reexport without paying duties. Savings of duty and tax on moisture taken from content or dirt removed or culls thrown out. Savings in shipping costs, duties and taxes from shipping unassembled or disassembled furniture or machinery, and assembling or reassembling it there. Copyright(c) 2012 Dr. Chase C. Rhee

Benefits of Foreign Trade Zone Duties are not paid on labor, overhead, and profit resulted from production in the FTZ Importers can elect the Privileged Foreign Status, if component’s duty is lower than finished product or Non-privileged Foreign Status, if it is higher than finished product’s duty. Foreign goods may be remarked or relabeled in the zone to conform to requirement of the United States. But misleading is not permitted. No time limit on how long foreign merchandise may be stored in an FTZ,compared to 5-year limit for storage at a Customs bonded warehouse Copyright(c) 2012 Dr. Chase C. Rhee

Benefits of Foreign Trade Zone (9) Domestic merchandise taken into a zone & combined with foreign goods may be returned to customs territory free of quotas, duty or tax providing its identity is maintained. (10) Foreign merchandise can also be exhibited within a zone without bond and duty payment for an unlimited length of time. (11) When duty-paid imported merchandise entered an FTZ, it can obtain drawback of duties When foreign goods are transferred from bonded warehouses to the foreign trade zones, the bond is canceled and all obligations are terminated. Copyright(c) 2012 Dr. Chase C. Rhee

Foreign Trade Zones in California FTZ No. 3: San Francisco FTZ No. 18: San Jose FTZ No. 50: Long Beach FTZ No. 56: Oakland FTZ No. 143: West Sacramento FTZ No. 153: San Diego FTZ No. 191: Palmdale FTZ No. 202: Los Angeles FTZ No. 205: Port Hueneme FTZ No. 225: Merced/Madera/Fresno Counties Copyright(c) 2012 Dr. Chase C. Rhee

Foreign Trade Zones in California FTZ No. 231: Stockton FTZ No. 236: Palm Springs FTZ No. 237: Santa Maria FTZ No. 243: Victorville FTZ No. 244: Riverside County FTZ No. 248: Eureka FTZ No. 257: Imperial County FTZ No. 276: Kern County Copyright(c) 2012 Dr. Chase C. Rhee

Foreign Trade Zones in New York FTZ No. 1: New York City FTZ No. 23: Buffalo FTZ No. 34: Niagara County FTZ No. 37: Orange County FTZ No. 52: Suffolk County FTZ No. 54: Clinton County FTZ No. 90: County of Onondaga FTZ No. 109: Watertown FTZ No. 111: JFK International Airport Copyright(c) 2012 Dr. Chase C. Rhee

Foreign Trade Zones in New York FTZ No. 118: Ogdensburg FTZ No. 121: Albany FTZ No. 141: Monroe County FTZ No. 172: Oneida County FTZ No. 2: New Orleans, Louisiana FTZ No. 22: Chicago, Illinois Copyright(c) 2012 Dr. Chase C. Rhee