FTZs Prove Beneficial to Companies
In today’s highly competitive global economy, companies are seeking every advantage to dominate in the market place. Because many US companies rely on foreign suppliers to provide parts, they are faced with significant import duties, taxes and other fees. Naturally, these companies are exploring cost cutting measures, including Foreign-Trade Zones (FTZ). “Foreign-Trade Zones in the Electronic Industry“, a white paper published by ATC Logistics & Electronics, points out the many benefits of FTZs.
According to annual reports from the Foreign-Trade Zones Board, the combined value of shipments into FTZs jumped from $177.8 billion in 1997 to $502 billion in 2007, with no slowdown in sight. The benefits of FTZs are obvious in regards to import charges. Duty savings opportunities make an immediate impact on import expenses and improve a company’s cash flow by:
- Deferral – Goods within an FTZ will only be charged import duties once they are withdrawn from the zone and enter the US commerce
- Reduction – If multiple goods, for example a cell phone and its battery, are packaged into a single unit within an FTZ, there is only one duty charge upon entry, as opposed to multiple fees
- Elimination – In the event that goods within an FTZ are shipped out of the US, there is no duty
Manufacturers must explore every option to reduce their import costs and can gain a tremendous amount from utilizing FTZs. For more on FTZ benefits, visit the Integration Point website.
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