FTZ #186 covers 9 counties in Maine and is administered by Central Maine Growth Council and the City of Waterville.
The U.S. foreign-trade zone (FTZ) program is an economic development tool to (i.) decrease overall costs, (ii.) increase supply-chain pace, and (iii.) provide the FTZ user with a more competitive cost structure. There were over 200 FTZs active across the U.S. in 2014, with a total of 311 active production operations.
The federally managed FTZ program includes three distinct opportunities to save money in supply chains and to lower overall operations costs:
1. Duty delay and/or duty reduction:
All goods entering the U.S. are subject to a “duty rate” based on formulas for imports from U.S. Customs and Border Protection (CBP). Under normal programs, duties are paid at the time of entry into the commerce of the United States. However, under the FTZ program, duties are only paid on goods when they are removed from the FTZ, producing a strong cash-flow benefit to the users who store goods in their FTZ. However, in an FTZ, the duty is not paid on the components that arrive in the zone. Only when the finished products are removed from the zone is the duty calculated (based on the duty schedule of the finished good, not the components), and the lower duty is due to be paid when the product is removed or sold from the zone.
2. Inverted Tariff:
In situations where zone manufacturing results in a finished product that has a lower duty rate than the rates on the foreign imported products (inverted tariff), the finished products may be entered at the duty rate that applies to the foreign import.
3. Merchandise processing fees:
These fees on each bill of lading are paid when a Customs entry is filed with CBP. The fee is paid based on the value of the goods documented. When entered in the commerce of the U.S, the goods are considered “domestic” and can be moved after the entry fees are paid to CBP. In an FTZ environment, the FTZ operator only pays one entry fee per week, regardless of the number of entries filed.
How does your business OR community evaluate whether operating in a FTZ would benefit a business?
For businesses, municipalities, and economic development agencies looking to evaluate the applicability of a business operating within an FTZ environment, a straightforward method of assessment are the following questions:
• Do you manufacture, assemble or process with imports?
• Do you scrap, reject, destroy, waste, or return some of your imports?
• Do you export previously imported materials?
• Do you regularly pay more than $485 per week in merchandise processing fees (MPFs)?
IF a business can answer “YES” to any of the above, then operating within an FTZ may be recommended. For more detailed information about FTZ benefits, visit FTZ Online.