Foreign Trade Zone
Congress created Foreign Trade Zone's (FTZ) to promote American competitiveness in the global marketplace and to encourage companies to maintain and expand their operations in the United States.
FTZ's are federally designed areas where domestic and foreign commercial merchandise of every description can be held without being subject to Customs duties and other taxes. In essence the merchandise receives the same Customs treatment it would if it were outside the commerce of the United States. The program's tariff and tax relief is designed to lower the costs of U.S. based operations engaged in international trade, and thereby create and retain the employment and capital investment opportunities that result from those operations.
There are two types of zones: 1) General Purpose Zones have multiple businesses in one location, such as in an industrial park; and 2) Sub Zones, which typically house one business that occupies more than one city block.
Port of Cleveland FTZ Program
The Port of Cleveland has an active FTZ program to better position companies with reduced trade costs. An FTZ is an area that covers Cuyahoga County and parts of adjacent counties along Lake Erie, and are typically located in industrial parks, marine terminals, airports, or warehouses. The program can be an ideal way for companies that import or export products to reduce paperwork, improve cash flow, increase flexibility, and save time and money.
The Port's FTZ is administered by the Northeast Ohio Trade & Economic Consortium (NEOTEC). NEOTEC is a multi-county regional economic development partnership and also serves as grantee of FTZ 181, which covers more than 5,600 acres and 27 sites in 8 counties. The Port and NEOTEC jointly market FTZ #40.
Benefits of an FTZ
- Duty Referral: Companies can delay payments on duties until the inventory leaves the Zone.
- Duty Reduction: Companies can pay lower duty rate on assembled or manufactured finished products.
- Duty Elimination: Companies don't pay duty on products that are rejected, scrapped, destroyed or exported after arriving in the country as an import.
- Direct Delivery: Companies can seek authority to receive product and clear customs within the Zone and as a result bypass congested ports.
- Weekly Entry: Companies can reduce merchandise processing fees by combining shipments on one entry filed weekly.
- No Import Quotas: Inventory that companies store in a Zone is not subject to import quotas.