FTZ Evaluation Tips

Items to Consider When Investigating FTZs

Consider All Options

• FTZs are not meant for every U.S. importer and exporter.
• FTZs may offer substantial financial savings and operational flexibility.
• FTZs do create additional costs and obligations..

Cost/Benefit Studies Are Important

• Doing a FTZ cost/benefit analysis must be thorough. Your study is only valuable when every piece of the import/export puzzle is considered.
• Consider results over an extended period of time, particularly if facts and laws are expected to change.

Carefully Gather Information

• Go to the source for information.
• Specific company data is vital.
• Know exactly what information you need and how you will use it.
• Identify a person to coordinate information from different departments.

Special Commodity Issues

• Always check for product-specific limitations in an FTZ or customs laws.
  • Example: Steel Safeguards Case (Proclamation 7529, March 2, 2002)
• See published FTZ Board Orders for similar products and processes.
• Are there grant limitations from FTZ Board?
  • Example: Textile Product Restrictions (Order No. 1110, July 20, 2000), Standard Shipyard Restriction (Order No. 1210, February 25, 2002)

Consider Other Trade Agreements

• FTZ studies must consider the interplay between FTZ benefits and trade agreements relevant to your importing/exporting activity.
• Trade agreements can create limitations or may produce better results without U.S. FTZ operations.

Specific Benefits to Evaluate

• MPF savings
  • Reduced through weekly entry, if U.S. consumption.
  • Eliminated if products exported from zone out of U.S.
• Broker fee savings
  • Same as MPF savings.
• Flexibility through direct delivery and weekly entry processes.
• Ability to cure problems with merchandise.
• Quotas generally inapplicable in FTZs, although benefits restricted.

Review Start-Up And Annual Costs

• FTZ fees and anticipated third-party payments
  • FTZ Board, Department of Commerce fees
  • Additional general purpose zones..... $3,200
  • Non-manufacturing special purpose subzone..... $4,000
  • Manufacturing special purpose subzone..... $6,500
  • Expansions..... $1,600
• Grantee fees
  • Application fee
  • Annual user fee
• Consultant fees
• Local government agreements
• Employee requirements both for implementation and ongoing needs.
• Inventory control and record keeping needs.
• Physical security requirements
• Bond cost

Summary

• FTZ is one factor among many that importers/exporters should consider.
• Cost/benefit studies are essential.
• Accurate company-specific information is important to good decision-making.
• FTZ cannot be viewed in isolation.
• With careful planning, a FTZ can provide substantial benefits well worth the costs.
• FTZ is not for every company.