Foreign Trade Zones

Are you an importer or exporter looking for opportunities to better manage duty fees?

APICS Milwaukee Chapter serves the supply chain community with education and information needed to compete in today’s world. Foreign Trade Zones (FTZ) can provide benefits to help manage duty fees.

What is an FTZ?

FTZ’s are designated sites considered outside of U.S. Customs territory for specific purposes. Typically FTZ's are located within the warehousing or manufacturing facilities of organizations seeking FTZ advantages. Merchandise may be brought into an FTZ and stored or processed there without being subject to the customs laws of the United States and oversight of the zone operations is the responsibility of U.S. Customs & Border Protection (CBP).

FTZ’s are secure areas under CBP supervision that are generally considered outside CBP territory upon activation. Located in or near CBP ports of entry, they are the United States' version of what are known internationally as free-trade zones. It is the intent of the U.S. foreign-trade zone program to stimulate economic growth and development in the United States. In an expanding global marketplace there is increased competition among nations for jobs, industry and capital. The FTZ program was designed to promote American competitiveness by encouraging companies to maintain and expand their operations in the United States.

Port Milwaukee outlines the following savings and benefits available through Port Milwaukee's FTZ program:

  • Overview & Benefits: Fundamentally, the FTZ designation provides the ability to defer, reduce, or eliminate Customs duties on imported goods admitted to a zone. Among a variety of other benefits, the highlights are:

  • Deferral of Duties: As a rule, Customs duties are paid when the merchandise enters into U.S. Customs territory. Since the FTZ is considered outside of Customs territory, the duties are delayed until the products exit the zone. This provides cash flow savings and allows companies to keep funds accessible for operational necessities while the merchandise remains in the zone. Unlike bonded warehouses, there is no time limit on the length of time that merchandise can remain.

  • Reduction of Duties: Operators of Foreign Trade Zones are allowed to elect the zone status of the merchandise upon admittance to the zone. This status determines the duty that will be applied to the foreign merchandise when it exits the zone. Operators may elect the duty rates that apply to either the foreign inputs or the finished product produced in the FTZ, whichever is lower.

  • Elimination of Duties - Exports & Scrap: For merchandise that is produced and re-exported or scrapped material that is wasted in production within the zone, the products never technically enter the U.S. market. Therefore, Customs duties are completely eliminated.

  • Weekly Entry: For companies that file a significant volume of Customs entries, a substantial way to save is through filing only one entry per week - rather than filing one entry for each shipment as is normally required by federal law. This results in a reduction in the overall amount due for Merchandise Processing Fees (MPF) owed for each entry.

To learn more about the FTZ program and possible benefits for your organization, please contact FTZ 41 Administrator Jazmine Jurkiewicz at 414-286-8133 or via email at [email protected].

APICS Milwaukee will also be hosting a FREE webinar to learn more about the Port Milwaukee on October 22nd from Noon-1:00 PM CST. Register today!

While the world around us is always changing, it’s imperative that supply chain managers keep learning and adapting to be successful. At APICS Milwaukee, we are here to help you with the education and information needed to remain competitive.