Benefits for Businesses
FTZs provide benefits for U.S. based companies engaged in international trade, such as:
- Deferral of Duties: Customs duties are paid only when and if merchandise is transferred into the U.S. Customs territory.
- Reduction of Duties: If the duty rate on the foreign goods admitted to the zone is higher than the rate applied to the finished product, the FTZ user may elect the finished product duty rate.
- Elimination of Duties: Duty is eliminated on foreign merchandise admitted to the zone that is eventually exported from the FTZ. Duties are also generally eliminated for goods that are scrapped, wasted, destroyed or consumed within the zone.
- Elimination of Drawback: The need for duty drawback may be eliminated, equating to a cash flow savings for companies.
- Labor, Overhead and Profit: Customs duties are not owed on labor, overhead and profit attributed to production in a FTZ.
- Quotas: U.S. quota restrictions do not apply to merchandise admitted to zones, though quotas will apply if and when the merchandise is subsequently entered into the U.S. commerce.
- Zone-to-Zone Transfer: Because merchandise being moved between zones is transported in-bond, Customs duty may be deferred until the product is removed from the final zone for entry into the U.S. Customs territory.