Eliminating delays in customs clearance. This is particularly
important in this time of unprecedented port congestion.
Eliminating duty drawback. Goods that are imported and stored in an
FTZ may be re-exported without ever incurring duties. This eliminates the
need to file for duty drawback refunds, a lengthy procedure that ties up
Avoiding duty on waste or scrap. If for some reason goods in the zone
must be destroyed or returned, no duties will be charges.
Providing relief from inverted tariffs. There are instances where
companies are actually penalized for manufacturing at home. When the duty on
raw materials is higher than that on the finished product, an importer of
finished goods has an advantage over the U.S. producer. If the manufacturing
takes place in an FTZ, however, the owner pays duty on his end products as
they are shipped, thus leveling the playing field. For example, an FTZ-located
company can import parts and components and ship assembled motorcycle and
jet ski engines at a duty rate of 0 to 4 percent, depending on type. If,
however, the same company operated outside the FTZ, the import duty on the
parts and components would range from 0.2 to 11 percent.
Big savings in processing fees. The 2000 Trade and Development Act
contained a provision that provided for "weekly entry" procedures
in all FTZs. This may not seem like a big deal, but companies located
outside the zones pay a 0.21 percent (value of merchandise) fee for every
shipment processed by U.S. Customs. The minimum fee is $25, and maximum
(which applies to any shipment valued at $230,952 or above) is $485,
regardless of the amount of duty paid.
Suppose a company located in an FTZ received 10 shipments, each with a
value of $250,000, every week. At $485 each, the processing fees outside the
zone would be $4,850 weekly, or $252,200 annually. Within the zone, however,
these same 10 receipts would be processed as a single shipment of $2,500,000
for a total fee of $485 per week.