Quad Cities Foreign Trade Zone
Foreign Trade Zones (FTZs) are designated sites within the United States where foreign and domestic merchandise is considered to be outside the U.S. Customs territory. In addition to several other benefits, FTZs allow companies to defer, alter or in some cases eliminate duties. Use of a Foreign Trade Zone can save companies money, increase efficiency and provide flexibility in the way they operate their business.
Companies that are located with 60 miles or 90 minutes of the Quad Cities Port of Entry can apply to operate in Quad Cities FTZ #133. The counties within this service area include:
- Henderson, Henry, Mercer, Rock Island, and Warren Counties in Illinois
- Cedar, Clinton, Des Moines, Dubuque, Henry, Jackson, Johnson, Jones, Lee, Louisa, Muscatine, Scott and Washington Counties in Iowa
Companies that apply for a site containing production activity within FTZ #133 can typically be approved within four months.
Cost Saving Benefits
Duty Deferral: Customs duties are paid only when merchandise is shipped into U.S. Customs and Border Protection territory. Inventory held in an FTZ is exempt from duty payment until shipped, which can provide companies with significant operational cash flow relief.
Duty Elimination: No duties are paid on merchandise exported from a FTZ, or on merchandise that is defective, damaged or obsolete, or on waste or scrap.
Elimination of Drawback: The duties paid on exported merchandise may be refunded through a process called drawback, however, the drawback law is complex and expensive to administer. Through the use of a FTZ, the drawback process and cost may be eliminated.
Inverted Tariff: Users may elect a zone status on merchandise admitted to the zone. Importers may pay the duty rate applicable to either the parts or the finished product, whichever is lower.
No Duty on Domestic Content or Value Added: The “value added” to a product in a foreign trade zone (including manufacturing using domestic parts, cost of labor, overhead and profit) is not included in its dutiable value when the final product leaves the zone. Final duties are assessed on foreign content only.
Merchandise Processing Fees: FTZ users can save significantly on Merchandise Processing Fees (MPF). Companies outside an FTZ pay a MPF per shipment. Within a zone, there is one weekly charged, capped at $485. Eliminating the per-shipment charge translates into significant savings over a year if a company routinely pays more than $485 per week in MPF.
Supply Chain Efficiencies
The FTZ allows greater supply chain efficiencies by moving goods in and out of the zone on an expedited basis. When shipping in the zone, users may obtain permission from customs to move merchandise directly from the port of arrival to the FTZ without undergoing commercial selectivity exams. When shipping out of the zone, users may also obtain permission to ship weekly based on an estimate approved by customs before the start of the business week.
Consider Using an FTZ if:
- You import significant value of product and or/expect imports to grow
- You re-export a substantial percentage of imports
- You hold significant value of inventory
To learn more about Quad Cities FTZ #133 or arrange a free feasibility analysis, call 563.322.1706.