Foreign Trade Zone
New Bedford’s Foreign Trade Zone Corporation offers a unique “tax abatement” opportunity that is recommended to any company that currently imports or plans to import, directly or indirectly, through purchases from importers.
New Bedford is a designated Foreign Trade Zone grantee. This means it can sponsor applicable companies and developers to realize unique financial benefits specifically offered to Foreign Trade Zones. These benefits include, but are not limited to:
A firm can move its current inventory of domestic or duty-paid merchandise into a Zone (or develop a Zone around its existing facilities). Duty is paid on imported material only after it has remained in the Zone during its normal inventory cycle (versus paying duties once it arrives in the U.S. before it is delivered to the site.)
Imported items may be held in a foreign trade zone indefinitely, without paying U.S. Customs duties.
Tariffs are never paid on goods that are exported from the FTZ. Unlike a drawback program that refunds previously paid tariffs, Zones allow a company to avoid payment altogether.
Goods may be destroyed in the FTZ, and all tariffs do not have to be paid, and waste or scraps are never assessed any duty.
Duty Reduction (a.k.a. Inverted Tariffs)
Unique to manufacturing operations, imported components that undergo a “substantial transformation” into a final product with a different Customs classification for duty assessment, may benefit from inverted tariffs. The inverted tariff occurs on a final product that would have had a lower duty rate if imported as a finished product, rather than the duty rate that is assessed on all its imported components separately. For example, the final product is manufactured from the imported components within the FTZ, and then, entry is made on the final product into the U.S. Duty is assessed at the finished-product rate, but only applies to the foreign component of that finished product. Duties are never paid on U.S. value-added. If some components have duty rates lower than the rate of the final product, the importer may “fix” those rates at their current levels.
In a Foreign Trade Zone, merchandise may be assembled, relabeled, manipulated, manufactured, mixed, stored, salvaged, processed, tested, cleaned and/or sampled. Company activities must meet qualification standards set by 15 CFR Part 400 and the U.S. Customs regulations.
Application for FTZ status must be made to the federal Foreign Trade Zones Board. If you need further assistance, please email George Krikorian, Director of Finance, at the New Bedford Port Authority.