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Global Logistics and the Foreign-Trade Zone Program

Global Logistics and the Foreign-Trade Zone Program. Steve Schellenberg IMS Worldwide 281 554 9099 s.schellenberg@imsw.com. Prince Rupert, Canada. New York. Norfolk. Los Angeles. Charleston. Hong Kong, China. Ensenada, Mexico. Colima, Mexico. Singapore. Global Trade Routes.

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Global Logistics and the Foreign-Trade Zone Program

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  1. Global Logistics and the Foreign-Trade Zone Program Steve Schellenberg IMS Worldwide 281 554 9099 s.schellenberg@imsw.com

  2. Prince Rupert, Canada New York Norfolk Los Angeles Charleston Hong Kong, China Ensenada, Mexico Colima, Mexico Singapore Global Trade Routes

  3. Port TEU Volumes Source: Individual Port Websites

  4. Intermodal Routes to Major Inland Ports Prince Rupert Vancouver Seattle/ Tacoma Chicago Cent. PA NY/NJ Kansas City Columbus Norfolk Oakland Memphis Dallas/ FW Los Angeles / Long Beach Savannah / Charleston Atlanta Jacksonville Houston Mexico City Lazaro Cardenas

  5. What Is an FTZ? • An area inside the United States that is designated as being outside Customs Territory. • Where items are brought into the Zone duty free. • Where Customs duty is determined when the merchandise leaves the Zone.

  6. What is a Zone Site? • An Industrial Park • An Industrial Development Inside a Port or Airport • A Company’s Facility

  7. What Can I Do in an FTZ? • Distribute • Store • Test and Inspect • Repack • Assemble • Repair • Manufacture

  8. Duty Deferral • Duty is not paid when an item enters the Zone • An item enters the Zone in January • Duty is paid when the item leaves the Zone • The item leaves the Zone in April • Four months of duty deferral

  9. Duty Elimination • Testing and inspection is conducted in the Zone duty free • All rejected and destroyed items are duty free • Exports are duty free • All items exported from the Zone are duty free

  10. Duty Reduction • For manufacturing Zones • The Zone allows a company to choose the lowest duty rate associated with its components and finished product(s) • A company imports 3 components • A has a duty rate of 10% • B has a duty rate of 9% • C has a duty rate of 8%

  11. Duty Reduction • The company’s finished product has a 5% duty rate • The company will pay for the value of the components at the finished product rate • A from 10% to 5% • B from 9% to 5% • C from 8% to 5% • This reduction means a savings of 5% to 3%

  12. Merchandise ProcessingFee Savings • Each entry into the United States is assessed a Merchandise Processing Fee (MPF)(valorem fee of 0.3464 percent) • Foreign-Trade Zones are allowed one entry per week • The MPF is collected on that one entry

  13. How to Become an FTZ? • Application • For manufacturing • For land associated with the site • Activation • Approval by Customs

  14. FTZ Activation Package • Background Investigation • Concurrence Letter from Grantee • Procedures Manual • Security Survey • Blue Print Drawing of Activated Area • Operator’s Bond

  15. FTZ Operations • SOP Development • Operational Training • Audit Program • Zone Administrative Training • Inventory Control and Record Keeping System

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