Thursday, July 2, 2015

Your FTZ (Foreign Trade Zone)

On Jul 1, 2015, at 8:03 PM, TS wrote:

I do have a question that you might help me understand, there is something about my city and special import/export stuff.
Will this impact me and if so, how?

Hey TS,

FTZ's have been around a long time, they were designed to help big business avoid tariffs and regulations.   I've never seen an instance where an FTZ benefitted a small business.  The one to which you refer is #176, meaning there are 175 others, and my home town, Seattle has a couple, one being the Boeing plant.  I suspect outside of industrial big business applications, they are otherwise decorations and make-work for econ-dev cheerleaders.  As you go through the list of benefits, one thinks "so what?"  For example:
Exports: Foreign merchandise in the zone may be re-exported free of duty and federal excise tax.
Well, I can import anything I want, pay duty, and re-export and recover 99% of the duty with duty-drawback and none of the cost and paperwork of doing it through a FTZ, which will be far more onerous than 1% of anything.

They sound exciting, but they really have no useful application.  Now, if instead of Foreign Trade Zones USA allowed Free Trade Zones, like the communists allow in Hong Kong, then we'd be talking about something beneficial.


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