Foreign Trade Zone Benefits Touted for Local Businesses

By Jana Adkins, SCVBJ Writer
Santa Clarita Valley Business Journal – April 2014

Touting the benefits of Santa Clarita’s Foreign Trade Zone, the region’s economic development entity sponsored a seminar in March for local businesses.

A Foreign Trade Zone (FTZ) may allow companies to import or export materials or goods directly into or from the designated zone duty-free.

Importing into a FTZ, which serves as an official U.S. port and Customs, creates significant savings for clients by reducing time spent at port and duties paid.

And foreign and domestic merchandise is not subject to duty fees or federal excise taxes until it leaves the designated FTZ for U.S. consumption.

Deferring duties and taxes allows companies to save money while the goods are in storage, awaiting distribution to the customers at a later date.

For companies exporting to other countries, a company exporting materials or goods that first came into the FTZ can bypass the bureaucracy of filing for a duty drawback and then waiting months to get any U.S. taxes or duties paid back, said John Bevacqua, vice president of logistics and new business development with AMS Fulfillment.

For a U.S. manufacturer that first imports its materials into a FTZ and then produces a product, the products can be exported through the FTZ, and duty fees are only levied against the finished product – not the original materials, Bevacqua said. Using the FTZ saves companies money, making their products subject only to foreign taxes and duties, he said.

Santa Clarita’s FTZ was secured by AMS Fulfillment from U.S. Customs and Border Protection in August 2012, after the city of Palmdale carved out a swatch of land from FTZ No. 191 and activated it for the warehouse inventory, distribution and third-party order fulfillment company in Valencia.

The FTZ provides opportunities for companies to grow by deferring and reducing fees and taxes associated with importing materials, which is a tremendous benefit for us to offer here in the Santa Clarita Valley, said Holly Schroeder, president and CEO with the Santa Clarita Valley Economic Development Corporation.

“We’re working in an international global economy, and it’s important for companies to take advantage of the opportunities associated with foreign trade,” Schroeder said. “It’s a priority for the EDC.”

Without the FTZ, companies would have to pay duties as soon as the goods arrived at a U.S. port.

Although AMS secured the FTZ designation, the company opened the benefits to other companies in the area because, as an economic benefit, it helps all companies in the region grow, and increased business creates jobs.

“Competition is good,” said Ken Wiseman, CEO and managing partner for AMS Fulfillment at the time the company was approved for FTZ status. “It’s never been anything bad.”

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