The government of the United States of America (US) created the Foreign Trade Zone (FTZ) to ease customs procedures for companies within US that continually engage in trading activities beyond the US boundary.
This analytical treatise reviews the current revision of the FTZ by the Foreign Trade Zones Board and its legal implications.
The Foreign Trade Zones Board reviewed several regulations governing the FTZ activities. Unlike the previous regulations, the reviewed regulation of 2012 dictates that an applicant of the FTZ tariffs must specify business activities within the FTZ (Murray, 2012).
For instance, production is now separated from processing and manufacturing through the amended 15 CFR 400. Thus, there should be a special authorization note for any production activity within the FTZ.
When requesting for a permit for production, the revised standards in the amendment 15CFR 400 (37) demands that the contender must provide a clear list of the groups of the finished product and its components in line with the production authorization document (Fennell, 2012).
Besides, the list must indicate compliance to trade proceeding regulations such as anti counterfeiting and anti-dumping bills.
In addition, under the new regulations, the Foreign Trade Zone Board is mandated with the role of providing adequate and comprehensive information within its domain.
This information includes components, raw materials, and products that are authorized within the FTZ as indicated in the amendment 15CFR 400.14 (C) of 2012 (Fennell, 2012). Under the new regulations, any zone grantee is empowered to gain full control however as a public utility party.
The rates charged by the government for allocation of space within the zone have been revised to be fair and reasonable within the market rates. Moreover, the grantees are expected by the law to treat applicants fairly and equally when allocating space and rates.
These regulations are aimed at making the US FTZ competitive. Among the immediate benefits expected following these changes include improved methodology of duty exception and deferral, especially for the manufacturing and processing applicants.
For instance, the amendment 15CFR 400.14 (C) of 2012 empowers the applicants or businesses within the FTZ enjoy the benefits of inverted tariff since most of business activities within this zone have relatively low rates of duty (Fennell, 2012).
Following successful implementation of the proposed changes, companies within the FTZ that import raw material will have the opportunity to afford a fair playing ground with finished goods manufactured in countries such as China.
Since the imported material are subjected to several compliance and customs formality obligations, the proposed changes within the FTZ regulation will ensure complete control of illegal business activities and improve in customer trust on products (Neville, 2011).
Since the proposed changes in the FTZ regulation target low duty products, many businesses within the Foreign Trade Zone are likely to benefit from improved sales.
As a result of improved sales, the profits are likely to double within a short period of time as projected in the case of the Yankee Candle Company.
Upon successful qualification to the status of the FTZ, this company has reduced the cost of production since the duty taxes on its imported raw material have been zero rated (Neville, 2011).
Conclusively, the changes proposed by the Foreign Trade Zone Board of the US are likely to contribute positively to the competitiveness of American business operating in the international business arena.
These companies are likely to double their export volume since the costs of production are reduced.
References
Fennell, W. (2012). The U.S. Department of Commerce Issues Revised Foreign-Trade Zones Regulations. Web.
Murray, M. (2012). Foreign Trade Zones. Web.
Neville, M. (2011). Legal Fiction, True Savings: Has your company paid heed to the potential benefits foreign trade zone status can confer? If not, listen up. Web.