NORTH BAY – The U.S. Department of Commerce gave final approval to an application submitted by the Port of San Francisco last October to expand its Foreign Trade Zone (FTZ) No. 3 service area to include portions of Sonoma and Napa Counties, in addition to Contra Costa, Marin and Solano counties.
The former service area was limited to San Francisco and San Mateo counties.
“This is an excellent opportunity for North Bay businesses to enhance their competitiveness in the local economy,” said Ben Stone, Executive Director of the Sonoma County Economic Development Board.
“Three leading manufacturers, including local medical and technology firms, have expressed strong interest in becoming part of this zone. We are also conducting FTZ seminars and an Export University for local businesses to acquaint them with the new Foreign Trade Zone program.”
Over the years, the nationwide FTZ program has allowed American companies to obtain a more competitive position vis-a-vis their overseas counterparts, and to also help subsidize job growth. It does this by deferring, reducing or eliminating customs duties paid on imported goods by importers, distributors, manufacturers and processors.
“Foreign Trade Zones are one tool to reduce logistics costs, which translates into savings for a company’s bottom line and enhances their competitiveness in the global economy,” said Jim Maloney, Maritime Marketing Manager at the Port of San Francisco, grantee of FTZ No. 3.
All firms within the newly approved zone who wish to participate can secure FTZ site status under the Alternative Site Framework (ASF) program within 30 to 45 days from the receipt of their application. Without this accelerated program the process has taken up to 8-12 months in the past.
Concern has arisen in the business community as to how the geographical boundary was established for the FTZ, specifically, why towns such as Cloverdale and Calistoga – for examples -- were excluded.
According to Mr. Maloney, the U.S. Customs Service typically limits the range of an FTZ to locations 60 road miles or within a 90-minute commute from the port city.
“Should firms in Cloverdale, Calistoga or other communities outside of the Alternative Site Framework wish to participate in the new FTZ they can apply as a sub-zone and pay annual dues to the port. Approval of sub-zone status usually takes about 10 months.”
Mr. Maloney said firms seeking to relocate or start a business are inquiring about the new FTZ so they can take advantage of the opportunities and benefits. These benefits include:Duty Deferral – Duties are paid on goods only as they leave the FTZ to be sold, thereby improving cash flow.Duty Reduction – Items can be packaged, manufactured or utilized as part of another product. If a lower duty applies to the finished product, only that amount is paid.Duty Elimination – If a product is re-exported, or sold to the military, no duty is paid. Likewise, documented waste, scrap or faulty products incur no duty charge. An accounting of the failure rate is required to be sent in a memo to the U.S. Customs Service.Additional Benefits – FTZ members can avoid multiple processing fees, in a range from $25 to $485 based on the value of products, for each shipment of merchandize by aggregating several shipments subject to a one-time weekly fee. By combining weekly shipments in a single document, the company can also save up to 80 percent on Customs House Broker fees assessed on individual shipments.No duty is paid on domestic content or value added to a product, including the cost of labor, use of domestic parts, overhead and profit. Final duties are assessed on the value of foreign content only.