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Major Puerto Rico Expansion Approved


By Greg Jones

The application to expand the General-Purpose Zone of FTZ No. 61 in San Juan, Puerto Rico was approved by the Foreign-Trade Zones Board on October 4, 2007. The expansion extends the existing zone’s boundaries to a total of 650 acres at twelve non-contiguous sites throughout San Juan and other port communities on the island.

On November 3, 2006 the Foreign-Trade Zones Board formally filed an application to expand FTZ No. 61 (approved October 20, 1980 Board Order No. 165, 45 FR 71408, 10/28/80) in San Juan, Puerto Rico to include an additional 11 sites to the existing zone.

The approval of the application signifies advancement in the economic development efforts of PRTEC, making Zone space available to a wider variety of import/export firms on the island. The extension of zone benefits will allow even more businesses to compete effectively in the international trade 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 of the Customs Territory of the United States. 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 to a Zone is shipped into US 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 US 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.


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