A Foreign Trade Zone (FTZ) is a federally designated area in which certain import and export activities can receive favorable treatment insofar as federal tariffs. Examples include:
- A company whose facility is located within an FTZ or a Sub-Zone of an FTZ is allowed to import raw materials and component parts, subject these articles to repackaging, manufacturing and-or assemblage, and to export them from the US without incurring import tariffs.
- In addition, companies may benefit from importing component parts into the US, assembling these parts into a finished product and then releasing the finished products into the US market. The benefit is derived from the fact that the tariff would be paid on the finished product instead of the component parts and that tariff is typically lower than the accumulated tariffs on the imported component parts.
- A location in an FTZ or Sub-Zone can also help with a company's cash flow inasmuch as long as an imported product remains in bonded storage, there is no import tariff. The tariff would be applied when the products are is released into the US market. This is especially helpful for companies whose US markets are highly seasonal.
While there are currently four (4) designated FTZ's in Louisiana, it is not necessary for a company to be physically located within the boundaries of one of these zones to receive the FTZ benefits. Federal law allows the designation of FTZ Sub-Zones that are non-attached appendages of full FTZ's. It is common to have a Sub-Zone that encompasses a single plant site. The Sub-Zone simply contracts with one of the FTZ's, usually the closest one, for the record-keeping, filings and other administrative processes required by the federal government in regards to importation of goods into the US. Contact the Ascension Economic Development Corporation for more information on how to benefit from this program. |
