F O R E I G N -T R A D E   Z O N E   # 1 0 6

O K L A H O M A  C I T Y

FTZ EVALUATION TIPS

Items to Consider When Investigating FTZs

  1. Look Before You Leap
  2. Why FTZ Cost/Benefit Studies Are Critical
  3. Keys To Information Gathering
  4. Limitations: Special Commodity Issues
  5. FTZ Considered In Context With Other Trade Agreements
  6. Specific FTZ Benefits to Evaluate
  7. Review Of Start-Up And Annual FTZ Costs
  8. Summary

Look Before You Leap

  • FTZ operations can deliver substantial financial savings and operational flexibility.
  • FTZs do create additional costs and obligations.
  • FTZs are not meant for every U.S. importer and exporter.


Why FTZ Cost/Benefit Studies Are Critical
  • When doing a FTZ cost/benefit analysis, be thorough. Your FTZ study is only valuable when all pieces of the import/export puzzle are considered.
  • Consider FTZ results over an extended period of time, particularly if facts and laws are expected to change in the area.




Keys To Information Gathering

  • Go to the source of the information.
  • Specific company data is critical.
  • Know exactly what information you need and how you will use it.
  • Identify a sponsor to coordinate information from different departments.

Limitations: Special Commodity Issues

  • Always check for product-specific limitations in FTZ or customs laws.
    • Example: Steel Safeguards Case (Proclamation 7529, March 2, 2002)
  • See published FTZ Board Orders for similar products and processes.
  • Any grant limitations from FTZ Board?
    • Example: Textile Product Restrictions (Order No. 1110, July 20, 2000), Standard Shipyard Restriction (Order No. 1210, February 25, 2002)


FTZ Considered In Context With Other Trade Agreements

  • FTZ studies must consider the interplay between FTZ benefits and trade agreements relevant to the importing/exporting activity at hand.
  • Trade agreements can create FTZ limitations or may produce better results without U.S. FTZ operations.


Specific FTZ Benefits to Evaluate

  • MPF savings
    • Reduced through weekly entry, if U.S. consumption
    • Eliminated if products exported from zone out of U.S.
  • Broker fee savings
    • Mirrors scenario of MPF savings
  • Flexibility through direct delivery and weekly entry processes.
  • Ability to cure problems with merchandise.
  • Quotas generally inapplicable in FTZs, although benefits restricted.




Review Of Start-Up And Annual FTZ Costs

  • FTZ fees and anticipated third-party payments
    • FTZ Board, Department of Commerce fees
    • Additional general purpose zones..... $3,200
    • Non-manufacturing special purpose subzone..... $4,000
    • Manufacturing special purpose subzone..... $5,500
    • Expansions..... $1,600
  • Grantee fees
    • Application fee
    • Annual user fee
  • Consultant fees
  • Local government agreements
  • Employee requirements both for implementation and ongoing employee needs
  • Inventory control and record keeping needs - internal information technology
  • Physical security requirements
  • Bond cost



Summary

  • Cost/benefit studies are essential.
  • Accurate company-specific information is the key to good decision-making.
  • FTZ is one factor among many that importers/exporters should consider.
  • FTZ cannot be viewed in isolation.
  • FTZ is not for every company.
  • With careful planning, a FTZ can provide substantial benefits well worth the costs.

   

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