FOREIGN TRADE ZONE
THE PORT OF NEW ORLEANS
THE BOARD OF COMMISSIONERS of the Port of New Orleans received a grant of authority to administer a Foreign Trade Zone (FTZ) in 1946. It was the second port to become a FTZ grantee. FTZ 2 is available for a wide range of manufacturing, processing and warehousing activities. Warehouses and manufacturing facilities throughout the Greater New Orleans area can apply to become FTZ subzones or general purpose sites to take advantage of FTZ benefits. Subzones generally include manufacturing facilities. Oil and gas refining and shipbuilding and repair have traditionally been the focus of New Orleans area FTZ subzones. General purpose sites are used for warehousing and much of the activity in New Orleans general purpose sites are related to the storage of commodities that are traded on international exchanges. Combining the benefits of a Foreign Trade Zone with the transportation advantages available along the banks of the Mississippi River has proven to be beneficial to many companies. The Port of New Orleansâ€™ modern facilities provide access to international markets for containerized and breakbulk cargo. Superior connections to barge, rail and truck transportation make Greater New Orleans the ideal site for distributing merchandise throughout the United States. When you combine this transportation hub with Louisianaâ€™s motivated workforce and low utility costs, you have the perfect climate for FTZ.
FOREIGN TRADE ZONE
BENEFITS THE FOREIGN TRADE ZONE PROGRAM was created by Congress in 1934 to stimulate growth for U.S. companies competing on the international stage by allowing delayed or reduced duty payments. A Foreign Trade Zone is a secure area located at or near an international port of entry that is legally outside of U.S. Customs Territory. Without incurring duties, merchandise located in the zone may be stored, sampled, tested, assembled, manufactured, manipulated, mixed, processed, tested, repackaged, relabeled, repaired, cleaned, salvaged, exhibited, displayed and destroyed. Retail trade is prohibited in a Foreign Trade Zone.
Reduced Merchandise Processing Fees
Duties are eliminated when you assemble or manufacture a product in a zone and then export it. Duties are eliminated on waste, scrap and rejected or defective parts.
Instead of making customs entries and paying Merchandise Processing Fees on each shipment, Zone users may be able to consolidate those shipments into a weekly entry and pay a single Merchandise Processing Fee. Brokerage costs may also be reduced with fewer entries.
Duty Inversion Duties can be lowered when you assemble or manufacture a finished product for consumption in the United States that has a lower duty rate than the individual imported components.
Duty Deferrals Until merchandise moves out of a Foreign Trade Zone and into U.S. commerce, duties are deferred resulting in a cash flow advantage for the owner of the merchandise.
Quotas Merchandise that is subject to quotas can be held in a Foreign Trade Zone in anticipation of a change of the quota that would allow the product to enter U.S. commerce.
Flexibility Shippers can increase flexibility with just-in-time delivery and reduced customs delays.
FOREIGN TRADE ZONE
STATISTICS • Louisiana ranks 2nd among the states for the value of merchandise entering a U.S. Foreign-Trade Zone.
• Some $691 million in merchandise was exported from New Orleans Foreign Trade Zone sites.
• Louisiana has six Foreign-Trade Zones.
• 2,855 people were employed in New Orleans Foreign-Trade Zones and 17,650 were employed in Louisiana Foreign-Trade Zones.
• Louisiana Ranks 11th among the states for the value of merchandise exported from a U.S. Foreign-Trade Zone. • About $16.3 billion worth of merchandise was received in the New Orleans Foreign Trade Zone in 2010.
FOREIGN TRADE ZONE
FREQUENTLY ASKED QUESTIONS Does a warehouse or manufacturing facility have to be located on Port-owned property in order to become a FTZ? No. Any facility that is within 60 miles or a 90-minute drive of the Port is eligible to apply to become a general purpose site. How long does it take to get approval from the Foreign Trade Zonesâ€™ board for FTZ designation? Under the new Alternative Site Framework, applications can be processed in 30 days. Maximum processing time is five months. Most applications take one to two months.
What kind of merchandise can be placed in the zone? Any merchandise that is not prohibited from entry into the territory of the U.S. may be admitted to a zone. If applicable, import licenses or permits from other government agencies may still be required to bring the merchandise into the zone. What information do I need to evaluate if a Foreign-Trade Zone is right for my business? It is essential to understand the duties that you pay on the products that you import. If you manufacture products with imported inputs, you need to know the duty rates for those finished products. It is helpful to know how much you pay in Merchandise Processing Fees and how much they cost your business. Once you have that information, contact the Port and weâ€™ll help you calculate the potential benefits. What are the costs associated with applying for and maintaining a zone? The costs for getting a Foreign Trade Zone site approved and activated vary by type of business.
Please refer to the Port of New Orleans website (www.portno.com) to see the latest Foreign Trade Zone Schedule.
What is the administrative burden of maintaining a zone? Being a foreign-trade zone operator requires that the operator have inventory controls and a higher level of security than might otherwise be required.
P.O. Box 60046, New Orleans, LA 70160 www.portno.com | 800.776.6652
Gary LaGrange, PPM
Pat Gallwey, PPM
President & CEO
Chief Operating Officer
Real Estate & Business Development Manager
T: 504. 528.3203
T: 504. 528.3305