Foreign-Trade Zone (FTZ) Fact Sheet
Foreign Trade Zones (FTZ) were created, as a way to make American companies more competitive in the global economy. According to the Foreign Trade Zone Board (http://enforcement.trade.gov/ftzpage/index.html), there are approximately 250 “general purpose zones” currently in operation throughout the United States, The Port of Montana, Foreign Trade Zone #274, is one such facility. This designation allows multiple companies to utilize the FTZ simultaneously for storing goods.
A product imported directly into the FTZ is not considered within ‘U.S. Customs Territory’ and therefore cannot have duties assessed. In addition to the Port of Montana being a general purpose warehouse, Butte-Silver Bow can work with individual companies to allow them to import a material into the FTZ, manipulate, process or manufacture the material at their facility (if located within the county) and re-export it to foreign markets without being assessed any duties.
Benefits of FTZ Use:
Foreign goods directly imported into the FTZ are not subject to U.S. duties or generally from state and local taxes;
Allows for exemption of export duties if the original material imported into the FTZ is used in a finished product and then re-exported out of the FTZ, IF the product does not leave the FTZ or one of the FTZ designated facilities;
Products can be warehoused in the Port of Montana’s FTZ for an indefinite amount of time without being subject to any duties. This allows for companies to hold product and wait for the best price within the U.S. market, helping to maximize cash flow;
Because FTZ general purpose warehouses are regulated under U.S. Customs and Border Protection they allow for increased security and inventory controls beyond those of a standard warehouse facility;
Usage of an FTZ enables the user to avoid import quotas on products whose importation may currently be under a quota restrictions. The FTZ allows for a product to be imported even if a specific quota has been reached. By law, the product can be stored indefinitely until the quotas are lifted and the product can once again be brought into U.S. markets;
FTZ’s streamlines bureaucracy – minimizing the amount of paperwork and frequency of submittals of paperwork to U.S. Customs. This increases efficiency and lowers costs; and
Encourages increased foreign direct investment and U.S. manufacturing – if a company can set up a facility for manufacturing in the U.S. and use an FTZ for their import and export activities it will help to maximize their profitability. http://www.areadevelopment.com/LocationUSA/LocationUSA2013/United-States-FTZs-attract-FDI-2833382.shtml
REC Silicon is a manufacturing site within FTZ #274 and takes advantage of the FTZ program by importing goods and then re-exporting a finished product and avoids duties on both the imports and the exports.
The Port of Montana works with a client that purchases a product manufactured in China that is re-sold to both U.S. and foreign markets. This product has a long lead time as well as a high duty associated with it. Our client imports the product into the Port of Montana warehouse where it is stored on-site until its sale. If our client sells his product on the U.S. Market, he will pay the duties owed at that time. If sold to a foreign market, our client avoids the duties altogether. Thus, our client enjoys the benefits of both the cash flow savings and the duty exemption.
Additional FTZ Resources/Information:
For more information contact:
Kristen Rosa TIFID Administrator
155 West Granite Street, Butte, MT 59701
Jeremy Gatz-Miller Business Development Manager
P.O. Box 3641, Butte, MT 59702