Transcript Foreign-Trade Zone Basics

FTZ #176
FTZ BOOT CAMP
April 22, 2010 – Go Global III
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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.
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How to Tell the Players…
• FTZ BOARD
• LOCAL US CUSTOMS & BORDER
PROTECTIONS (CBP)
• GRANTEE
• SITE/SUBZONE OPERATOR
• END USERS
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FTZ #176 History
• Grant of Authority: 1 May 1991
• Major expansion: 2005
(Rochelle, Woodstock)
• POE Expansion: 2006 (to include I-88 in DeKalb)
• Activity
in 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?
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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
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Zone Operators Structure
(1934 – 2009)
Subzone
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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.
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FTZ Approved Activity
Merchandise within a zone may be…
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Assembled
Displayed
Stored
Tested
Repaired
Manufactured
Sampled
Exhibited
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Manipulated
Salvaged
Relabeled
Mixed
Destroyed
Repackaged
Cleaned
Processed
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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
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Rockford Port of Entry
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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
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FTZ #271 – Jo-Daviess & Carroll Counties
FTZ #176
Rockford
FTZ #133 – Quad-Cities, IA/IL
FTZ #22 - Chicago
FTZ #114 - Peoria
FTZ #245 - Decatur
FTZ #146 – Lawrence
County
FTZ #31 – Granite City
8 Illinois
Foreign-Trade
Zones
©2007 PointTrade Services
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New Zone Structure – ASF
Alternative 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
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● 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!
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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
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Step 1: Evaluation
• Feasibility Study:
cost benefit analysis
• FTZ Program Costs
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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
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Step 2 – Application for Approval
• ASF APPLICATION:
Minor Boundary Modification (MBM)
• Prior approval by governmental/political entities
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May include TIM authority to manufacture (45-90 days)
 Timeline: 3-4 months to activation
• SUBZONE APPLICATION (full FTZ Board OK)
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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
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Step 3 – Activation Process
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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
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Win – Win - Win
End Users/Operator
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Retains or creates jobs
Save money
Speed delivery
Compete more effectively in world market
Community & Grantee
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Retain/create jobs
International Trade
Business & infrastructure investment
Expand tax base
Reap indirect employment
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