town of islip foreign trade zone authority administrators of foreign trade zone no.52

TOWN OF ISLIP FOREIGN TRADE ZONE AUTHORITY

Administrators of Foreign Trade Zone No.52

WHAT IS A FTZ

• The US Foreign Trade Zone Program was introduced by President Roosevelt in 1934 as

part of the “New Deal” to promote and encourage international trade

• It is intended to give United States-based companies increased global competitiveness by eliminating some of the disincentives associated with manufacturing in the U.S

• A Foreign Trade Zone is a site within the United States or near a U.S. Customs port of entry, where foreign and domestic merchandise is generally considered to be in international commerce

• Foreign or domestic merchandise may enter this enclave without a formal Customs entry or payment of Customs duties or government excise tax

2 Types of FTZ’s

• 1st Type – GENERAL PURPOSE ZONE A variety of activities for multiple users

• 2nd Type – SUBZONE A Manufacturing Operations User who can not be accommodated in a general purpose zone

WHY CHOOSE A FTZ

• The Town of Islip Foreign Trade Zone is one of the Island's most valuable resources for companies engaged in international trade

• Legally, a foreign trade zone is an area within the

United States that is considered outside of U.S. Customs territory

WHY CHOOSE A FTZ

• Consequently, you can import certain types of merchandise into an FTZ without going through formal customs entry procedures or paying import duties

• There are many benefits to being located in a FTZ which make a FTZ a more profitable way for local businesses to reduce costs and compete in the international marketplace

Merchandise entering a zone may be:

DUTY DEFERRAL

• One major benefit is increased cash flow from keeping the goods out of US Customs territory

• Duties are paid on merchandise when it is entered into US Customs Territory

• By deferring this payment, the business has

the use of its money for the interim period thereby keeping these funds available for its operations

Increased Cash Flow Example

• A company imports 1000 pieces into the FTZ• 300 pieces are transferred into the US market• The duty is paid on 300 pieces not 1000 pieces• 3 months later 700 pieces goes out• Duty was deferred for 3 months on 700 pieces• Your company had an increased cash flow

DUTY FREE

• Duties are paid only on the goods entering the domestic marketplace

• You may avoid paying duties altogether if your products are re-exported

• Additionally, merchandise can be held indefinitely within the FTZ without any payment of customs duties

Duty Elimination Example

• 1000 pieces was imported• 200 pieces was transferred into the US market• Duty was paid on 200 pieces• 700 pieces didn’t sell and was re-exported• Duty on 700 pieces was eliminated• You avoided a drawback on 700 pieces

DUTY REDUCTION

• Inverted tariff relief is yet another benefit available in a Zone; finished products manufactured in a FTZ from components purchased abroad may be subject to an even lower rate of duty

• With inverted tariff relief, a manufacturer may elect to pay duty on the component parts or the finished product, whichever rate is lower

WEEKLY ENTRIES

• The FTZ permits zone users to file one entry as opposed to multiple entries throughout the week, significantly reducing paperwork and expense

QUOTAS

• Quotas do apply to goods entered into US Customs territory

• The goods which can be stored in the FTZ can be among the first to enter the US market when the quota is eased

ADDITIONAL BENEFITS

• Direct deliveries ease the movement restrictions of merchandise in and out of the country

• Quota restrictions do not apply to goods admitted to zone

Participants

• Foreign Trade Zones Board in Washington D.C

• Bureau of Customs & Border Protection• Grantee-Suffolk County

• Operators• Users• Brokers• NAFTZ

Bureau of Customs & Border Protection

• Oversees zone operations• Agent of the FTZ Board

Operator

• Provide day-to-day oversight of zone activities, including

–Recordkeeping–Marketing– Technical expertise

User

• Entity using zone for storage, handling, or manufacturing

• Operator in some instances• Varied industries– Manufacturers– Petroleum refining– Computer and electronic production– Shipbuilding– Warehousing/distribution

Brokers• Holder of license from Customs• Customs “expert”• Transacts Customs business on behalf of operator or user

– Importer may transact business on its own behalf – Importer is always responsible party

Additional Information

• Contact us by:

Phone: 631-588-5757Visiting: 1 Trade Zone Drive

Ronkonkoma NY 11779 www.ftz52.com

Email: foreigntradezone@townofislip-ny.gov