Foreign-Trade Zone Corporation
You are here: Article Details
Foreign-Trade Zone Search  
Article Description

Access to Foreign-Trade Zones: Faster and Easier, Thanks to Recent Federal Regulations

9/17/2013

By Greg Jones (©Trade & Industry Development, September 2013)


As a result of a rewrite of federal regulForeign Trade Zoneations in 2012, many U.S.-based businesses will now find access to the U.S. Foreign-Trade Zones (FTZs) program faster and easier. U.S. Foreign-Trade Zones are used by hundreds of companies to enhance the competitiveness of their U.S.-based manufacturing and distribution operations through the reductions in Customs duty costs that the Zones program offers. Zone projects are established in more than 200 American communities to support economic activity in their locales that, if not for the FTZ program, might otherwise be conducted more cost-effectively overseas. Since the FTZ program was instituted in 1934, the federal government’s mandate has been to see that it is used to help U.S.-based businesses engaged in international trade activities level the playing field versus their overseas competitors.

For more than 75 years, local Zone project grantees have been responsible for delivering the FTZ program to members of their respective business communities. The Foreign-Trade Zones Board, which oversees the program on a national basis, is responsible for issuing grants of authority that enable individual companies to use FTZ procedures under the auspices of their local grantee organizations.

Since its inception, the Foreign-Trade Zones program has seen a number of crucial developments. In 1950, the Foreign-Trade Zones Act was amended to allow manufacturing activity within Zones. In 1973, the U.S. Court of International Trade issued a ruling that upheld the Foreign-Trade Zones Board’s legal authority to establish so-called “subzones” to provide access to the FTZ program for companies not located within the boundaries of existing Zones. In 1980, a U.S. Treasury Decision determined that the “value added” in FTZ production activities (i.e., domestic labor, materials, overhead or profit) is not included in the dutiable value of manufactured goods when they enter U.S. commerce. These three developments prompted tremendous growth in the use of the program during the 1980s, notably in the automotive manufacturing sector.

However, growth in the use of manufacturing subzones in the 1980s raised questions in the minds of some, particularly those who were concerned that one particular benefit – that of relief from so-called “inverted tariffs” – might result in less, rather than more, U.S.-based economic activity. An “inverted tariff,” also known as an “irrational duty rate relationship,” exists when the duty rate applied to an import of a particular manufactured product is lower than that applied to one or more of its imported components. This kind of duty rate relationship suppresses the operating margins of U.S.-based manufacturers.

Relatively fast access to Zone status clears the way for significant capital investment decisions to be realized.When a U.S-based manufacturer finds itself the victim of an inverted tariff, it has only two ways to rectify this problem: 1) move offshore or 2) be granted relief from inverted tariffs by the U.S. Foreign-Trade Zones Board. There were some people in the 1980s who failed to realize just how willing U.S.-based companies might be to outsource their manufacturing operations to foreign locales and the extent to which companies regularly evaluate the various international options for manufacturing platforms. One need only read the record of the October 24, 1986 Hearing before the U.S. House Ways and Means Subcommittee on Trade to see just how contentious an issue this was.

« Start ‹ Prev | 1 2 3 | Next › End »
    

FTZ Articles
9/26/2016

Looking for a tool that serves U.S.-based manufacturers to boost operating margins? Learn about the U.S. Foreign-Trade Zones (FTZs) program. 

7/20/2016

The FTZC was awarded 'Best Local Company To Work For' by Lagniappe Magazine. Learn more about why people want to work for and with the FTZC.  

6/22/2016

Learn more about the Foreign Trade Zone Corporation (FTZC) and its SmartZone Software Suite in an article from Supply Chain World Magazine.  

9/3/2015

Still think FTZs are just about large water ports? Think again and learn here how FTZs can be instrumental in helping your globalization efforts. 

9/22/2014

Import values into Zones has tripled in the last decade and businesses continue to save money using the FTZ program. 

5/27/2014

Industrial and development parks through out the United States are discovering that Foreign-Trade Zone status (FTZ) can be a beneficial tool for bringing new economic development to their area.  Read why Neosho, MO is seeking a Foreign-Trade Zone.

9/17/2013

Foreign-Trade Zones Board adopted a comprehensive rewrite of its regulations in 2012. Greg Jones explains how this decision, along with past decisions, have affected the success of FTZs and how FTZs are used by businesses to help compete globally.

5/10/2013

Scott Sheldon and FTZC Announce Partnership to Place Deeper Value on Supply Chain Solutions.

9/22/2010

Foreign Trade Zones: Relief from inverted tariffs enables U.S.-based manufacturers to produce their goods and sell them in the American marketplace, and maintain the operating margins that are essential to their survival. 

5/12/2010

This strategic alliance between FTZC and Management Dynamics will integrate and expand the use of Foreign-Trade Zones in global trade management.

Page 1 of 4First   Previous   [1]  2  3  4  Next   Last   
    

 Copyright 2017 Foreign-Trade Zone Corporation SiteMap   Contact