Evaluation Tips

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pallet imageHere are some tips to keep in mind when evaluating the value of a Foreign-Trade Zone.

Key Items

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

Look Before You Leap

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

Why FTZ Cost/Benefit Studies Are Critical

• When doing a Foreign-Trade Zone 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 Gathering Information To Determine Cost Benefits

• 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.
• See published FTZ Board Orders for similar products and processes.
• Identify any grant limitations from FTZ Board.

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

• Savings on merchandise processing fees
• 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.

Review of Start-Up and Annual FTZ Costs

• FTZ Board fees
• Grantee fees 
• Consultant fees
• Inventory control and record keeping needs
• Bond cost