How can a Free-Trade Zone benefit your business?
When it comes to moving, processing or assembling imported products, using a Free-Trade Zone has considerable economic benefits – and now importers, manufacturers and distributors can experience these advantages at WW Solutions’ recently opened US Free-Trade Zones in Georgia and Texas.
A Free-Trade Zone (FTZ), also known as a ‘Foreign-Trade Zone’ in the US, is a designated area that is considered outside customs territory. In an FTZ, domestic and foreign goods can be moved, handled and assembled without paying the duties and taxes normally required by customs and border protection.
What are the benefits of using a Free-Trade Zone?
In an FTZ, duties can be deferred, reduced or eliminated.
Customs duties only come into effect when products leave the FTZ and enter the local market. If a product is re-exported, no duties are due.
There are other benefits. Outside the FTZ, an import duty is applied to each unit, as well as the parts associated with it. If the units are fully assembled within an FTZ, there is only one duty charge upon export as opposed to multiple fees.
In addition, if the zone is located in a country where local taxes are imposed on inventory, the FTZ may provide additional savings.
Take advantage of new inland Free-Trade Zones in the US
Typically, an FTZ is found in or near a port; in the US, for instance, we opened our first FTZs at the Baltimore and Galveston ports in 2010. However, at the request of several customers, two inland FTZs have now been established at our equipment processing centres in Pooler, Georgia and League City, Texas.
These new inland FTZs extend across the entirety of both sites – the Pooler site is 55 acres, while the League City site is spread across 30 acres.
“Our new inland FTZs give our customers another storage option, including financial and administrative savings as part of their logistics strategy,” explains Doug Peterson, senior manager, business development, WW Solutions. “They allow flexibility as to when goods are entered into the market, as well as delaying entry. For example, if a machine requires type approval before entry into the US but has that approval delayed, the importer can still ship the unit from overseas and hold it in the FTZ until approvals are granted, avoiding delays.”
Beyond these benefits, customers can take full advantage of additional services being offered at the new inland FTZs, such as inspection, inventory management and technical services. Performing pre-delivery inspections and assembly within an FTZ boosts velocity in the overall supply chain and can result in cost and efficiency savings. The equipment processing facilities in Pooler and League City also provide customers with an even broader range of options for a fully integrated supply chain.
“We see FTZs as a benefit for other customers, who may not even be aware that FTZs could be of value to them,” says Peterson.
Current trade disputes have resulted in a significant increase in FTZ storage enquiries, he adds.