FTZ Benefits
LogistiCenters that are designated a Foreign Trade Zone (FTZ) have distinct advantages over business
parks without the designation. All cargo entering the U.S. from foreign countries is subject to inspection
and clearance by U.S. Customs and payment of duty. One major exception is a FTZ, a specially designated
area within a U.S. Customs Port of Entry jurisdiction, which is considered to be outside the customs
territory of the United States.
A Port of Entry is a place at which a U.S. Customs officer is authorized to accept merchandise, collect
duties and enforce various provisions of customs and navigation laws. Within this designated area, foreign
and domestic merchandise may be stored, repackaged, manipulated, manufactured, relabeled, repaired, exhibited,
cleaned, processed, assembled, destroyed or otherwise altered or changed and re-exported without the
usual formal customs entry procedures and payment of duties and taxes. For merchandise that is sold within
the U.S., no formal customs entry procedures are required and no duties are paid as long as the merchandise
stays within the FTZ.
The FTZ designation saves LogistiCenter tenants money on international cargo shipments and manufacturing
and distribution operations, providing all of the advantages of an international gateway. For example,
if a company at LogistiCenter imports a container of computer chips from Japan, assembles them into
products here – thereby creating local jobs and increasing tax revenues – then re-exports
those products, the company pays no customs duties. If the products are distributed here, thereby entering
the commerce of the U.S., then they are subject to customs duties; however, that duty is significantly
less than were the company to import the chips by conventional means and pay customs upon entry.
Furthermore, if a company imports a raw material like rolled steel from China, uses it to manufacture
a product and, in the process, generates tons of scrap steel shavings, the weight of those shavings
will be deducted from the duty a FTZ company ultimately pays when its products are sold in America.
FTZ designation requires a three-step process for landowners like DP Partners – sponsorship request
to the grantee; application to Foreign Trade Zones Board in Washington, D.C.; and board approval. LogistiCenter
tenants that import high volumes of raw materials, components or merchandise from foreign countries will
benefit the most from our FTZ designation. Once they move into the park, they will contact the grantee
and the U.S. Customs & Border Protection agency and request FTZ activation. It’s a complicated
process, but well worth it.
