Foreign Trade Zones & the Managing Partner of Luxury Law Group MIASF Subzone By Danielle J. Butler Managing Partner of Luxury Law Group

WHAT IS A FOREIGN-TRADE ZONE? Sites within the US that are considered to be outside the U.S. Customs territory where foreign and domestic merchandise is considered to be in international commerce Companies that operate in foreign trade zones can defer, reduce, or eliminate Customs Duties on foreign products Merchandise can enter A FTZ duty free and w/o a formal Customs entry WHO BENEFITS? Companies that import foreign merchandise Companies that export imported merchandise Marinas and shipyards Manufacturers Third party logistics providers Large distribution and retail companies

What Activity is Permited in FTZ? Merchandise in a FTZ may be assembled, exhibited, cleaned, manipulated, mixed, processed, relabeled, repackaged, repaired, salvaged, sampled, stored, tested, displayed and destroyed Manufacturing and processing activity must be specifically approved by the FTZ Board Retail trade is prohibited in activated zone space

BENEFITS OF THE FOREIGN TRADE ZONE 1. DUTY ELIMINATION: All items for re-exports (never enter US Commerce) Components are brought into the FTZ under a bond Duty rates on components may vary according to the commodity Assembly of component onto a Vessel which changes the Harmonized Code of the component and the component now becomes part of the Vessel Upon departure from FTZ, the Vessel is exported from the US and so no duty is levied on the component

BENEFITS OF THE FOREIGN TRADE ZONE 2. DUTY DEFERRAL Component enters the FTZ Duty free Duty is paid when the component leave the FTZ and enters US commerce Leads to significantly enhanced cash flow 3. DUTY REDUCTION / INVERTED TARIFF Components are brought into the FTZ under bond Duty rates on components may vary according to the commodity Assembly combines the component into the product which changes the Harmonized Code of the component The new Duty Rate is the one for the product (Vessels pay 1.5% duty)

What is New with FTZs In 2017 MIASF created an FTZ Subzone In March 2013, Broward inaugurated FTZ #241 organized under a new process called ASF (Alternate Site Framework) allowing the FTZ status to be brought to any company in the permitted area that can comply with the regulations…so now the FTZ comes to you! CBP will only approve a FTZ Site when the site has the ability to communicate electronically with Customs 24/7 and issue paperless documentation Most sites can be up and operating in 90-120 days from the time they start the process In 2017 MIASF created an FTZ Subzone To date, 19 FTZ have been approved in the MIASF Subzone within Broward County with a total of over 8 million square feet of warehousing space.  

How do Foreign Trade Zones Benefit The Marine Industry Reduce/eliminate importation costs You can move a Vessel for up to 4 months without paying import duties Show a foreign flagged Vessel to US Citizens Allows you to perform repairs and add value to merchandise while under bond in a FTZ without paying Sales and Excise Taxes. Allow you to handle products not permitted to import in the United States due to EPA and/or other agency restrictions Save all duties payable at importation if the Vessel is registered foreign Job creation/retention Capital investment opportunities To defer payment of duties until goods enter into the commerce of the U.S.

Current MIASF Subzones 3 FTZ Sites approved and activated by Customs: 1. LMC LMC recently obtained Production Authority which means LMC can repair or refit Vessels with bonded parts and components without payment of duties.  If the Vessel then is exported from the US, then no duty is due nor is FL sales tax due. 2. Bahia Mar During FLIBS, Bahia Mar will be allowed to receive Vessels for exhibition under FTZ and to move them from Exhibition to Exhibition without having to stop showing it.  3. Pier 66 Pier 66 has one Vessel in its FTZ right now.

Current MIASF Subzones 2 FTZ Sites approved and 2-3 weeks away from activation by Customs: 1. Taylor Lane Yacht and Ship Taylor Lane Yacht & Ship LLC has applied for activation, has been approved pending filing of their bond.  They will act more like LMC. 2. The Quay The Quay has applied for activation, it will be able to hold 4 yachts.  SanLorenzo has the space totally booked for long term occupancy. 14 FTZ Sites approved, but not yet activated by Customs: Bradford Marine Rosciolli Lauderdale Marina Frank & Jimmies Wards Electronics Yacht Management Derektors Dania Marine Fassmer Marina Mile Marina Hilton Fort Lauderdale D.S. Hull # 1 D.S. Hull #2 National Marine *Not part of the MIASF Subzone, in Palm Beach County, Rybovich is now approved and activated as a FTZ.