The "goods" on Foreign Trade Zones
As more and more companies are exploring international business opportunities, Foreign Trade Zones (FTZ) are becoming more and more popular. Why? The following is a brief Q & A about Foreign Trade Zones in Ohio:
What is a Foreign Trade Zone?
Federally designated, a Foreign Trade Zone is an area where foreign and domestic merchandise is considered to be involved in international commerce, outside the jurisdiction of customs duties and excise taxes. Each FTZ is associated with a US Customs port of entry and each zone has specific geographic areas, which are subject to strict internal and external handling procedures. There are eight FTZs in Ohio. They include:
- Akron-Canton Regional Airport
- City of Cininnati
- City of Cleveland
- City of Dayton
- City of Findlay
- City of Toledo
- Clinton County (Wilmington/Airborne)
- Franklin County (Rickenbacker)
In addition to these general-purpose zones, sub-zones may be created in remote areas. Sub-zones extend the advantages of zone occupancy to a manufacturer without requiring that the production facility be moved into the zone.
Why is it desirable to do business in a Foreign Trade Zone?
A Foreign Trade Zone offers a duty-free, quota-free, secured site where goods can be stored, cleaned, re-packaged, assembled, manufactured, and so on. Until the goods formally become US commerce, outside a FTZ, duties and Ohio inventory taxes on these goods are not due. And they're never collected if the goods are re-exported.
Who uses Foreign Trade Zones?
- Manufacturers, such as Honda of America, so they can reduce duty rates on imported parts and delay payment of duty until the finished automobile enters US commerce
- Companies that use bulk packaging to ship items from overseas, but want to re-package for marketing in the US
- Importers whose shipments exceed annual quotas for their merchandise
- European firms manufacturing a product with foreign and US parts for re-export, because they find technology and transportation are better in the US
- Many others, for various money-saving reasons
If you're interested in learning more about things like: duty deferral and avoidance; federal, income and inventory tax avoidance; insurance cost reduction; and other advantages of conducting business in a FTZ, please feel free to e-mail or telephone your local Columbia Gas of Ohio economic development representative.
Information provided by the Ohio Department of Development.
