TOWN OF ISLIP FOREIGN TRADE ZONE AUTHORITY Administrators of Foreign Trade Zone No.52

WHAT IS A FTZ The US Foreign Trade Zone Program was introduced by President Roosevelt in 1934 as part of the “New Deal” to promote and encourage international trade It is intended to give United States-based companies increased global competitiveness by eliminating some of the disincentives associated with manufacturing in the U.S

A Foreign Trade Zone is a site within the United States or near a U.S. Customs port of entry, where foreign and domestic merchandise is generally considered to be in international commerce Foreign or domestic merchandise may enter this enclave without a formal Customs entry or payment of Customs duties or government excise tax

2 Types of FTZ’s 1 st Type – GENERAL PURPOSE ZONE A variety of activities for multiple users 2 nd Type – SUBZONE A Manufacturing Operations User who can not be accommodated in a general purpose zone

WHY CHOOSE A FTZ The Town of Islip Foreign Trade Zone is one of the Island's most valuable resources for companies engaged in international trade Legally, a foreign trade zone is an area within the United States that is considered outside of U.S. Customs territory

WHY CHOOSE A FTZ Consequently, you can import certain types of merchandise into an FTZ without going through formal customs entry procedures or paying import duties There are many benefits to being located in a FTZ which make a FTZ a more profitable way for local businesses to reduce costs and compete in the international marketplace

Merchandise entering a zone may be: Stored Repackaged Processed Manipulated Manufactured Assembled Repaired Displayed Tested Mixed Relabeled Sampled Salvaged Destroyed Cleaned

DUTY DEFERRAL One major benefit is increased cash flow from keeping the goods out of US Customs territory Duties are paid on merchandise when it is entered into US Customs Territory By deferring this payment, the business has the use of its money for the interim period thereby keeping these funds available for its operations

Increased Cash Flow Example A company imports 1000 pieces into the FTZ 300 pieces are transferred into the US market The duty is paid on 300 pieces not 1000 pieces 3 months later 700 pieces goes out Duty was deferred for 3 months on 700 pieces Your company had an increased cash flow

DUTY FREE Duties are paid only on the goods entering the domestic marketplace You may avoid paying duties altogether if your products are re-exported Additionally, merchandise can be held indefinitely within the FTZ without any payment of customs duties

Duty Elimination Example 1000 pieces was imported 200 pieces was transferred into the US market Duty was paid on 200 pieces 700 pieces didn’t sell and was re-exported Duty on 700 pieces was eliminated You avoided a drawback on 700 pieces

DUTY REDUCTION Inverted tariff relief is yet another benefit available in a Zone; finished products manufactured in a FTZ from components purchased abroad may be subject to an even lower rate of duty With inverted tariff relief, a manufacturer may elect to pay duty on the component parts or the finished product, whichever rate is lower

WEEKLY ENTRIES The FTZ permits zone users to file one entry as opposed to multiple entries throughout the week, significantly reducing paperwork and expense

QUOTAS Quotas do apply to goods entered into US Customs territory The goods which can be stored in the FTZ can be among the first to enter the US market when the quota is eased

ADDITIONAL BENEFITS Direct deliveries ease the movement restrictions of merchandise in and out of the country Quota restrictions do not apply to goods admitted to zone

Participants Foreign Trade Zones Board in Washington D.C Bureau of Customs & Border Protection Grantee-Suffolk County Operators Users Brokers NAFTZ

Bureau of Customs & Border Protection Oversees zone operations Agent of the FTZ Board

Operator Provide day-to-day oversight of zone activities, including – Recordkeeping – Marketing – Technical expertise

User Entity using zone for storage, handling, or manufacturing Operator in some instances Varied industries – Manufacturers – Petroleum refining – Computer and electronic production – Shipbuilding – Warehousing/distribution

Brokers Holder of license from Customs Customs “expert” Transacts Customs business on behalf of operator or user – Importer may transact business on its own behalf – Importer is always responsible party

Additional Information Contact us by: Phone: Visiting: 1 Trade Zone Drive Ronkonkoma NY