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Application and Activation Are Necessary Steps in Obtaining Foreign-Trade Zone Benefits

1/30/2006

Greg Jones, Senior Consultant for the Foreign-Trade Zone Corporation, recently made a presentation on obtaining Foreign-Trade Zone benefits at the American Association of Exporters and Importers’ Western Regional Conference & Expo, which was held in Manhattan Beach, California from January 22-24, 2006.

In his presentation, Jones discussed the steps necessary to begin enjoying Foreign-Trade Zone (FTZ) savings. While the FTZ program provides significant economic opportunities to communities and to companies that use FTZ’s, actual operation under FTZ procedures requires formal government approval. The process differs depending on the kind of Zone environment involved (General-Purpose or Special-Purpose Subzone) and the class of Zone-related activity planned for the operation (Distribution or Manufacturing/Processing).

Manufacturing or processing activity, and/or Subzone status, requires the submission of an application to the U.S. Foreign-Trade Zones Board by the Zone Grantee on behalf of the Zone user. During its review process, the FTZ Board evaluates whether approval would provide “significant public benefit” (Subzones) or have a “net positive economic effect (FTZ manufacturing/processing authority). In addition to its analysis of economic factors, the FTZ Board also considers the degree to which the proposed Zone activity is consistent with U.S. trade law or policy.

Formal activation requires approval by the local Zone grantee and the local office of U.S. Customs and Border Protection, and involves the development of an FTZ Procedures Manual, integration of FTZ procedures with existing procedures, employee training, and inventory control system enhancements. Finally, when Customs and Border Protection approves the request for activation and the FTZ Operator’s bond takes effect, Zone operations may commence.

The Foreign-Trade Zone program, which has been in existence since 1934, is designed to improve the competitiveness of U.S.-based companies engaged in international trade. The FTZ program does this by helping those companies to reduce their tariff-related costs.

Jones began working in the FTZ program in 1986, and has been an active member in the National Association of Foreign Trade Zone (NAFTZ) since 1987. He served as president of the NAFTZ from 1993 to 1995, and was designated as an Honorary Life Member in 2000. The Foreign-Trade Zone Corporation is a service provider offering FTZ cost-benefit analyses, FTZ Board applications, training, assistance in designing, creating and managing Zone projects, and its SmartZoneTM Foreign-Trade Zone management software.

    

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