Why You Should Trade in the Foreign Trade Zone.
In the Foreign Trade Zone, a particular area on the map, the charges that come with trade between two states such as custom tax are not levied. This area is also normally referred to as the Free Trade Zone. Conducting trade through FTZ brings about a wide range of benefits. These are advantages that come with trading through the FTZ.
The first and common advantage of trading through the FTZ is duty exemption. The commercial companies that opt to trade in the FTZ will not have to go through the Customs duty process that is both inconvenient and time consuming. Companies that usually deal with goods that are easy to break or manufacturing processes that result in a large amounts of scrap will stand a good chance when working in the FTZ. This is due to the fact that the goods that are destroyed by users within this are not required to have their customs duty paid for.
There are challenges that are associated with the us of bonded warehouse or temporary boding programs in the import of goods. For instance, the amount of time in which you can maintain a hold onto your goods is limited. When importing goods in the FTZ, the merchandise will be able to remain within it for as long as need be. This is because of duty deferral on imported goods within the FTZ.
There is a fee attracted by the processing of merchandise referred to as MPF or Merchandise Processing Fee. When carrying out business within the FTZ, users are only required to pay MPF for goods that are getting into the U.S Customs territory. There is a significant reduction of these charges when you are operating from within the FTZ. For more info, view here.
The users of FTZ can also avoid Quota.
for instance, the inputs that are subject to Quota can be manufactured into
goods that are not subject to Quota. This can also be seen in the situation where imports subject to quota are being retained within the FTZ hence allowing users to buy discounted inputs and also to get new merchandise in the new quota.
Another benefit that comes with trading in the FTZ zone is inverted tariffs. Since goods that have been produced within the FTZ using their manufacturing authorization can enter the US Customs territory at the duty rate that applies to their final condition, the tariffs involved are lower.
The fact that the Harbor maintenance fee is not paid when imports arrive, it is paid quarterly , is one of the other advantages of trade within the FTZ.