Transcript Foreign Trade Zone No. 41 PowerPoint

Southeastern Wisconsin
Foreign-Trade Zone No. 41
“The history of Milwaukee is closely tied to the development of trade and the development
of the trade gateways in and out of our city. By using the cost advantages of a Foreign
Trade Zone, companies are able to operate on a more level playing field with international
competitors and increase the profitability of local operations.”
-Tom Barrett, Mayor, City of Milwaukee
What is a Foreign Trade Zone?
The U.S. Foreign Trade Zone (FTZ) Program is based on federal legislation
dating back to 1934 intended to foster economic development through
international trade.
An FTZ is an area within the United States, in or near a U.S. Customs port of
entry, where foreign and domestic merchandise is considered to be outside the
country, or at least, outside of U.S. Customs territory.
Certain types of merchandise can be imported into a Zone without going
through formal Customs entry procedures or paying import duties. Customs
duties and excise taxes are due only at the time of transfer from the FTZ for
U.S. consumption. If the merchandise is re-exported and never enters the U.S.
commerce then no duties or taxes are paid on those items.
Establishment of FTZs
 Foreign-trade zones are established:
 To encourage and expedite U.S. participation in international trade
 To encourage capital investment in the U.S. rather than abroad and
secures American jobs.
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The benefit occurs only if the activity takes place in the U.S.
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Through tax savings, allows US companies to remain competitive with
their global counterparts.
Recent Changes in FTZs
Alternative Site Framework (ASF)
 FTZ Board strategy adopted in 2009 to streamline the Grantee’s
ability to bring FTZ benefits and competitiveness to companies.
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Streamlined access to FTZ designation
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Simplified Minor Boundary Modification for new uses (within 60
miles or a 90 minute drive from the Customs Port of Entry)
Where is FTZ No. 41?
12 Included counties:
• Dodge
• Fond du Lac
• Jefferson
• Kenosha
• Milwaukee
• Ozaukee
• Racine
• Rock
• Sheboygan
• Washington
• Walworth
• Waukesha
Who is Involved?
FTZ
Board
 Creates regulations, issues grants of authority
and is responsible for FTZ zone approvals
United States
Customs
 Oversees the zone as FTZ Board’s representative,
approves activation, ensures compliance with
regulations
Grantee
(Port of Milwaukee)
Operator
(Typically a business)
User
(Operator or contracted 3rd party)
 Recipient of grant of authority, public
representative of the zone project, and submits
applications to FTZ Board
 Operates under contractual terms with the
Grantee, and is responsible for zone
operation with concurrence of U.S. Customs
 Entity using zone under agreement
with Grantee or Operator (the User
can be the same as the Operator)
What can you do in a Foreign-Trade Zone?
Merchandise entering a Foreign Trade Zone may be:
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Assembled
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Tested
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Sampled
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Relabeled
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Manufactured*
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Stored
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Salvaged
Processed*
Repackaged
Sorted
Mixed
Manipulated
*The user must receive special approval from the FTZ Board for
manufacturing and certain types of processing.
Potential FTZ Company Benefits
(Tariff and Duty Savings):
 Immediate Inventory Duty Deferral: Cash flow benefit from
“immediately” deferring the payment of duty for one inventory turn
of merchandise in the FTZ.
 Ongoing Duty Deferral: Enhanced cash flow benefit by having
merchandise admitted to the FTZ but having the assessment and
collection of duties/fees when the merchandise is shipped from the
FTZ into domestic commerce.
 Tariff Inversion: Importers have the option to declare to CBP the
duty rate for finished goods shipped from the FTZ or the duty rate
for the imported parts (in their condition as imported) used in the
production of finished goods, whichever is lower.
Potential FTZ Company Benefits
(Duty Exemptions):
 Duty Exemption on FTZ to FTZ Transfers: Dutiable goods
shipped from one FTZ to another FTZ in bonded, foreign
status do not enter commerce, and are not dutiable.
 Duty Exemption on Exported Merchandise: Imported
goods that are re-exported are not subject to duties.
 Duty Exemption on Scrapped Merchandise: Imported
goods that are destroyed in the FTZ are not subject to duties.
Primary Financial Savings
 Inverted Duty –6.8%→0%, 5%→2.5%.
 Cash Flow
 Exports
 Zone-to-Zone Transfers
 Direct Delivery
 U.S. Labor / Overhead / Profit
 Scrap / Waste / Obsolete Material
 Weekly Entry
– Merchandise Processing Fee Savings
– Customs Brokerage Expense Savings
– Paperwork Reduction
 Tax Savings
– “Bona Fide” Customs Reasons
Is an FTZ Right for Your Company?
Operationally, the FTZ must make sense for your unique operating environment.

Indicators of an FTZ opportunity
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High volume of entries into the US
Large customs duty payments
History of shipment delays (supply chain issues, OGA clearance, exams)
Already have Secure Facilities and Compliant Operations
Planned expansion of facility or increase of manufacturing
Feasibility Study
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Calculate the benefits
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Consider the costs
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Duty Deferral, Duty Elimination, Inverted Tariff, Direct Delivery, Merchandise
Processing Fee savings, Customs Broker Fee savings, etc.
FTZ Board Fees, Operator’s Bond Fee, Grantee Fees, Training, Security, Software, etc.
Determine if the cost-benefit analysis predicts enough of a savings to make an FTZ a
worthwhile enhancement to your business
There are FTZ consultants who can provide a more comprehensive analysis
while you are evaluating your potential FTZ participation
Why would a community want an FTZ?
 Foreign-Trade Zone Program benefits only companies
with established presence in US
 Companies invest in facilities adding to property tax rolls
 Companies employ individuals from local communities
surrounding the zone
 Provides financial benefits to existing or new business
without any local funding
 Secures existing jobs
“The Ripple Effect”
 With increased employment, additional support
services are required
 Second tier vendors may locate in the area to
provide direct services to the company or may
increase production
 Retail trade establishments gain from increased
sales leading to increased revenue for the
community from sales tax
Southeastern Wisconsin
Foreign-Trade Zone No. 41
2323 S. Lincoln Memorial Drive
Milwaukee, Wisconsin 53207, USA
Contact Us:
Betty Nowak
Marketing Manager
Email: [email protected]
Phone: 414-286-8131
Nick Grahovac
Phone: 414-286-8133
Trade Development Representative
Email: [email protected]
www.milwaukee.gov/port