Foreign Trade Zones have the ability to aid the global shippers in minimizing their operational expenses and maximizing their savings. They also have the ability to speed-up the clearance of the customs by eliminating unnecessary paperwork. On today’s global economy, the manufacturing of goods is radically changing. It is just so uncommon nowadays to create a certain parts in one country and the other parts on another location. As the worldwide trade widens, the importance for the Free Trade Zone is also expanding.
The Basic and the Benefit of Free Trade Zone in USA
The Great Depression paved the way for the Free Trade Zone to advance and encourage the foreign marketing as well as to minimize the operational expenses for the US-based company that is engaged in world trade. But the FTZ today is far from the Foreign Trade Zone during the old age. Today, it can be referred to as a geographical location wherein the business merchandise (foreign or domestic), will receive the same level of treatment from the custom similar to what treatment it would receive if it is out of range of the Free Trade Zone in USA. Manufacturer, distributor, and Importers are eligible to activate the FTZ to reduce duty, eliminate or defer imported goods.
FTZ in the states of U.S such as Free Trade Zone in Miami are governed by the CBP (Custom Border Protection) that is under the Homeland Security. Each state in the US is maintaining at least one, and most of them have a number of manufacturing operations. Foreign Trade Zone has the ability to help sustain the employment opportunities in the US since the nature of their employment is in the manufacturing sector. Other benefits of FTZ include the ff.
One of the leading advantages of Free Trade Zone in USA would be their capacity to enhance the competitive position of the company. They would be able to prevent importing duties in the event that the goods are handled within the FTZ in USA. With the FTZ, the importer or exporter may opt to pay the duty rate on the foreign material or the finished product. For instance, for a car company whose part is manufactured on different location, it may be beneficial for the company to pay the duty rate of the finished product rather than by part.
Normally, the customs will need to process the entry for every shipment but with FTZ all this unnecessary process will be eliminated, and the importer doesn’t need to spend on the processing fee of every entry. They can also execute a ZTZ or Zone-to-zone transfer wherein they will not be required to pay duties when they transfer a material from one Free Trade Zone to another.
Based on the current nature of the economy, the Foreign Trade Zone will continue to be a major factor in the international trade. Their multitude of benefits also ensures expansion and growth for the business.