FTZ Evaluation Tips

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.

OHIO LOGISTICS

Your Source for Logistics in Ohio
cbills@ohiologistics.com
419/425-4906
1800 Industrial Drive
P.O. Box 952
Findlay, Ohio 45839-0952