1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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