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FTZ #176

FTZ #176 . FTZ BOOT CAMP April 22, 2010 – Go Global III. What is a Foreign-Trade Zone?. Authorized by Congress: FTZ Act of 1934 Oversight by FTZ Board (US Dept. of Commerce) Local FTZ Board rep: Customs & Border Protection Zones -inside jurisdiction of CBP Port of Entry

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FTZ #176

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  1. FTZ #176 FTZ BOOT CAMP April 22, 2010 – Go Global III

  2. What is a Foreign-Trade Zone? • Authorized by Congress: FTZ Act of 1934 • Oversight by FTZ Board (US Dept. of Commerce) • Local FTZ Board rep: Customs & Border Protection • Zones -inside jurisdiction of CBP Port of Entry • Secure, defined site inside U.S. but outside customs territory • Goods admitted to FTZ remain duty free until formal customs entry when shipped off site • Domestic activity with foreign items occurs before customs entry, offering preferential duty treatment.

  3. How to Tell the Players… • FTZ BOARD • LOCAL US CUSTOMS & BORDER PROTECTIONS (CBP) • GRANTEE • SITE/SUBZONE OPERATOR • END USERS

  4. FTZ #176 History • Grant of Authority: 1 May 1991 • Major expansion: 2005(Rochelle, Woodstock) • POE Expansion: 2006 (to include I-88 in DeKalb) • Activityin FY 2005: $45 million FY 2009: $192 million • Expansion/Reorganization: 1/31/09 • 22 partners (3 subzones/19 sites) • 3,618 acres • ASF Reorganization: summer 2010?

  5. FTZ #176 Benefits • Experienced staff & consultant • Passenger service: 9 destinations • International flights • TIF District + RERZ • Global III Intermodal Hub/30+ miles • Centralized examination station (CES) • 5 highways: I-90, I-39, US 20, US 51& 251 • Trucking depots • Cargo carriers & new cargo facility • Expanded POE

  6. Zone Operators Structure (1934 – 2009) Subzone • Special-purpose zones used by one firm (often manufacturer) for specific activity General Purpose Zone (GPZ) Site • Usually at ports or industrial parks • Serves multiple FTZ end users • Operators of GPZ sites/warehouses may benefit directly or provide third party services to an end user.

  7. Assembled Displayed Stored Tested Repaired Manufactured Sampled Exhibited Manipulated Salvaged Relabeled Mixed Destroyed Repackaged Cleaned Processed FTZ Approved ActivityMerchandise within a zone may be…

  8. Benefits to End Users • Duty Deferral: Windfall savings (inventory x average duty = big savings Year #1; zone-to-zone transfer • Duty Reduction:Inverted tariff (mfg); no duty drawback • Duty Elimination: Re-export; scrap/waste; value added in zone not dutiable. Finish good duty rate zero (manufacturing) • Inventory: Improved inventory control; fungible methods (FIFO and Foreign First) • Weekly Entry: Reduces Customs Brokers & MPF fees • Reporting: Paperless, electronic reporting • Direct Delivery: Reduces CBP inspections/delays with 24/7 cross-dock operations. Also applies to Wkly Export to foreign markets

  9. Rockford Port of Entry • Sites & subzones are sponsored by a Grantee • All firms inside POE will apply under that Grantee • Grantee’s territory includes POE & adjacent area 60 miles/90 min. from POE boundaries • In case of overlapping territories, closest FTZ Grantee serves as sponsor

  10. FTZ #271 – Jo-Daviess & Carroll Counties FTZ #176 Rockford FTZ #22 - Chicago FTZ #133 – Quad-Cities, IA/IL FTZ #114 - Peoria FTZ #245 - Decatur FTZ #146 – Lawrence County FTZ #31 – Granite City 8 Illinois Foreign-Trade Zones ©2007 PointTrade Services

  11. New Zone Structure – ASFAlternative Site Framework (2009) • FTZ #176 application • Application filed: Nov 2009 • FTZ Board decision: summer 2010 • Structure – All “Sites” • Current subzones remain • Company may still apply for subzone status OR • Apply for site status: • Company may also seek TIM (temporary interim mfg.) & • Permanent Grant of Authority to mfg • Benefits to applicants • Faster (2-3 months to activate vs. 6-18 months) • Cheaper application ($2,500-3,500 vs. $15,000-50,000) Applicants already eligible to apply under new ASF structure!

  12. FTZ #176 Fees • Annual Service Fee • Approved but not activated: $2,500 • Activated (based # of employees): Current • 1to 50: $5,000 • 51-150: $7,500 • 151-300: $7,500 • 301+: $15,000 • Audit(activated sites/subzones only) • Service Fees

  13. Step 1: Evaluation • Feasibility Study:cost benefit analysis • FTZ Program Costs • Feasibility: some consultants offer free • FTZ application fee – none for MBM • Grantee annual fee • Consultant’s fee for Approval and/or Activation • Customs bond • IT requirements & software • Employee, security, inventory requirements • Contract consultant

  14. Step 2 – Application for Approval • ASF APPLICATION: Minor Boundary Modification (MBM) • Prior approval by governmental/political entities • May include TIM authority to manufacture (45-90 days) • Timeline: 3-4 months to activation • SUBZONE APPLICATION(full FTZ Board OK) • Federal Register Notice of application • Public Hearing & Comment Period • Examiner’s Investigation • Preliminary Examiner’s Report • Final Examiner’s Report (if favorable) • Interagency report • Final Commerce Review & Action • Approval published in Federal Register  Timeline: 6-9 months for approval – may double if disputed

  15. Step 3 – Activation Process • Activation Application letter from Operator • Submit background investigation info to Customs • Prepare FTZ Procedure Manual • Customs site tour to review security • Customs FTZ Operators bond • Agreed space for activation • Operators Agreement with Grantee • Customs approval & Grantee concurrence • Prepares site rules & fees to Grantee

  16. Win – Win - Win End Users/Operator • Retains or creates jobs • Save money • Speed delivery • Compete more effectively in world market Community & Grantee • Retain/create jobs • International Trade • Business & infrastructure investment • Expand tax base • Reap indirect employment

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