The Foreign-Trade Zones (FTZ) Program is now more accessible to small and midsize manufacturers, due to streamlined application procedures recently implemented by the Foreign-Trade Zones Board. One of the changes includes a widened scope of products that qualify for Foreign-Trade Zone Temporary/Interim Manufacturing Authority.
In the current environment of global trade and dynamic raw material and component sourcing, U.S.-based small and midsize manufacturers face the dilemma of maintaining the flexibility necessary to meet their customers’ needs while keeping costs down. Obtaining permanent FTZ Manufacturing Authority is an option that would save many companies money, but the 8-10 month application time frame often exceeds the production outlook of midstream suppliers that have to alter their production within a period of weeks or months to meet their customers’ needs.
Who benefits from this streamlined FTZ Temporary Interim Manufacturing application process?:
Companies located within existing General-Purpose Foreign-Trade Zones and with a temporary or permanent need to manufacture under Zone procedures. Through this process, companies can begin saving more quickly by obtaining relief from inverted tariffs, and have more flexibility as the need to manufacture new products under Zone procedures arises.
Companies have requested Foreign-Trade Zone Temporary Interim Manufacturing Authority for activities such as: kitting of home theater systems, manufacturing of petrochemical products and crop protection products, shipbuilding, cosmetic kitting, manufacturing and refurbishing of toner cartridges, and the manufacture of diesel engines. As is evident from this list, manufacturers in a wide variety of industries have applied for Foreign-Trade Zone Temporary Interim Manufacturing Authority.
If a company needs FTZ manufacturing authority for a limited time, then it files only a temporary/interim application. If a company needs permanent authority, then a permanent application is filed in conjunction with the temporary application, either making permanent - or expanding the scope of - the authority requested in the Temporary Interim application.
A look at the manufacturing activities that have already been approved in Foreign-Trade Zones indicates that there is tremendous opportunity for companies with an immediate need to manufacture their products under FTZ manufacturing procedures. Products manufactured in FTZ's include petroleum products, automobiles, pharmaceuticals, electronics, computers, ship parts, chemicals, audio video equipment, machinery, forklifts, apparel, textiles, leather goods, home applicances and furnishings, electrical equipment, toiletries, cosmetics, watches, jewelry, photo optical equipment, metal and mineral products, juice concentrates, plastics, gaming and recreation equipment, and steel.
Finally, it is important to note that "manufacturing" in a Foreign-Trade Zone involves a change in HTS (duty or tariff) classification. This distinction from non-FTZ manufacturing necessitates a close analysis of all FTZ activities to maximize savings and maintain fully compliant operations.
The Foreign-Trade Zone Corporation (www.ftzcorp.com) provides turnkey Foreign-Trade Zone consulting services including applications to the Foreign-Trade Zones Board for permanent and Temporary Interim Manufacturing Authority, applications for General-Purpose and Subzone status, activation with Customs and Border Protection (CBP), integration of Zone procedures with existing company inventory systems, implementation of SmartZone® FTZ inventory control system (www.ftzsoftware.com), training, and ongoing FTZ management support. In addition, the Foreign-Trade Zone Corporation is a long-time member of the National Association of Foreign-Trade Zones (NAFTZ).