Simplify Customs process, reduce transit time
The concept of the Foreign Trade Zone (FTZ) was created to encourage
international trade by American companies and to preserve American jobs. It
provides benefits that can increase a company’s bottom line and enhance its
competitive edge.
An FTZ is an area inside or near a U.S. Customs port of entry where foreign and
domestic merchandise is considered to be “outside” the United States and exempt
from duty, unless the merchandise is transferred for consumption within the
United States.
Port Canaveral is grantee of FTZ 136. The zone encompasses more than 4,000
acres, with hubs located in north, central and south Brevard County including
Melbourne International Airport. That means all parcels within the airport
grounds are eligible for duty-free status under certain conditions.
The zone currently has six operators and one sub-zone operator. FTZ 136 General
Purpose sites include Port Canaveral, Melbourne International Airport, Space
Coast Regional Airport, Spaceport Commerce Park and Tate Industrial Park.
Advantages of operating within an FTZ include deferral, reduction and possible
elimination of duty, tighter inventory control and potential direct-delivery
benefits that reduce long-hold times typical of crowded ports of entry.
Merchandise entering a FTZ may be assembled, manufactured, repackaged, tested,
stored, destroyed, sampled, salvaged, mixed, relabeled, processed and
manipulated.
Cutting Trade Costs
No Duty on Domestic Content or Value Added
Any value added to a product in an FTZ (including the cost of labor, overhead
and profit) is exempt from duty, unlike value added in overseas production
operations. The more activities a company conducts within an FTZ, the more it
can save.
Duty-Free Storage
Duty is deferred on items imported into and stored within an FTZ, until they
leave the zone for domestic sale. That helps companies avoid tying up money in
Customs duties on inventory. Most quota restrictions also do not apply to FTZs.
No Duty on Re-Exports and Sales to the U.S. Military or NASA
Components or raw materials imported for manufacturing within an FTZ can be
exported as finished products without paying duty, and finished products sold to
the U.S. military or NASA are exempt from duty.
Relief from Inverted Tariffs
In some cases, a component or raw material can carry a higher duty rate than the
finished product. To eliminate the penalty on American manufacturers of such
products, FTZ rules allow participants to pay the duty rate applicable to either
the component materials or their finished product, whichever is lower.
Waste and Scrap
No duty is charged on most waste and scrap from production operations within an
FTZ.
Rejected or Defective Parts
If imported merchandise is faulty, it can be destroyed or returned for
replacement without any duty charge. Outside an FTZ, a company might be forced
to pay double duty – first on the defective item, then on the replacement.
Reduced Processing Time and Fees
Under Weekly Entry procedures, zone users have the option of filing one Customs
Entry per week rather than a separate Customs Entry for each entry into the
United States. If a business makes entry on multiple shipments each week, it
will save substantially on processing time and fees.
Reduced Transit Time
Direct Delivery allows receipt of shipments of the same items into an FTZ
without a formal Customs release. This eliminates time-consuming documents and
physical inspections of every delivery, and can shorten transit time.
FTZ 136 is a member of the not-for-profit National Association of Foreign Trade
Zones. For detailed information, visits the association's website at
www.naftz.org.