San Juan’s Foreign-Trade Zone No. 61 Submits Application to Expand Boundaries

November 1, 2006 – The Puerto Rico Trade & Export Company, with the assistance of the Foreign-Trade Zone Corporation, has submitted an application to the Foreign-Trade Zones Board to expand the General-Purpose Zone of FTZ No. 61 in San Juan. The application requests authority to extend FTZ No. 61’s present boundaries within the International Trade Center Grounds (60 acres) to a total of 650 acres at twelve non-contiguous sites throughout the extended San Juan Metropolitan area, as well as several port communities throughout the island.

This move, which is a critical component in the island’s economic development efforts, will allow FTZ No. 61 to build on its success in making the Zones Program available to a wide variety of import/export firms. The planned expansion will provide the flexibility necessary for FTZ No. 61 to meet the needs of businesses in Puerto Rico as they compete in the international market.

The Foreign-Trade Zones Program was established in 1934 as a means to counteract the destructive effects of the Smoot-Hawley Tariffs. These zones are considered, for Customs purposes, to be outside the Customs Territory of the United States, and they provide a number of benefits key to the competitiveness of companies that engage in international trade. Because duty is not paid until merchandise admitted into a Zone is shipped into U.S. Customs Territory, firms can avoid duty payments on merchandise that is shipped to a foreign country and defer the payment of duty for shipments into the U.S until the time of shipment.

Manufacturers, with FTZ Board approval for manufacturing authority under Zone procedures, can obtain relief from “inverted tariffs” by admitting raw materials and components into a Zone and manufacturing those materials into finished products. They obtain this relief by electing to pay, at the component value, the duty on the finished item or the duty rate on the components, whichever is lower. They may also avoid duty payment on that merchandise which is shipped to foreign countries.

Other benefits include weekly entry, direct delivery, duty reduction on waste, scrap, and yield loss, and duty exemption on qualified sales to the U.S. Government and the U.S. military.

The Foreign-Trade Zone Corporation is a service provider offering FTZ cost-benefit analyses, FTZ Board applications, activation with Customs and Border Protection (CBP), training, assistance in designing, creating and managing Zone projects, and its SmartZone^® Foreign-Trade Zone management software.