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Foreign Trade Zone

Many imported goods are subject to government regulation. Importers may have to pay duties or might not be able to import goods at all if they are subject to quota that has already been met. However, there is a way to manage these issues and have the items here in the United States without having to pay duties or worry about quotas upon their arrival. Foreign trade zones make this possible.

Foreign trade zones have been around since 1930. They are legally considered to be outside the United States, even though foreign trade zones are strategically located throughout the country. For instance, the United States government contracted with Clark Logistic Services to create one right in the nation’s leading logistics hub — St. Louis. Furthermore, it even allows goods in a foreign trade zone to be transported across U.S. territory to another foreign trade zone without requiring them to pass through customs.

Since items in a foreign trade zone are still considered to be outside the U.S., they aren’t subject to customs inspection, to import taxes or fees or to quotas. This in-limbo status allows companies to manage their exposure under customs laws in many ways:

  • Foreign raw material could be shipped to a production facility in a foreign trade zone where they could be improved or assembled then re-exported to other foreign countries, completely free of U.S. duties.
  • Companies can order large quantities of items from overseas, taking advantage of bulk discounts. They can then gradually remove them from the foreign trade zone on an as-needed basis, deferring the payment of duty tax on the shipment and conserving cash flow.
  • Importers can have items shipped directly from ports to foreign trade zones. They can then go through customs in the zone where the clearance process may move more quickly than at a clogged international port.
  • Companies can order large quantities of items subject to import quotas and stage them in a foreign trade zone. When the quota resets and the item can legally be imported into the country, the items can then leave the foreign trade zone and pass into U.S. territory.
  • Manufacturers can import items that fall into a high duty class, improve them into a different state in a foreign trade zone, then have them pass customs as a finished or partially-finished product that is subject to a lower level of tax.

Foreign trade zones have the potential to save companies time and money. However, to maximize their value, most companies are best served by partnering with an experienced 3PL provider like Clark Logistic Services. Clark can help your organization devise a strategy to maximize the benefits of the foreign trade zone program and assist you with adjusting your supply chain to take advantage of them. Fill out the form on this page to learn more.

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