Warren County in its entirety may soon be named a Foreign-Trade Zone (FTZ).
The Warren County Industrial Park is presently located within the Foreign-Trade Zone of Hamilton County.
Foreign-Trade Zones are believed to stimulate economic growth and development in the United States. Companies located in a Foreign-Trade Zone may reduce, defer or eliminate customs duties on imported materials and products. In some cases the companies pay duties only on finished products and if the products are shipped outside the U.S., they pay no duties at all.
Commissioner Les Trotman informed commissioners during a recent county commission meeting that Steve Hiatt with the Chamber of Chattanooga requested Warren County in its entirety be included in packages as a foreign trade zone.
“This is something that part of it has already been designated as foreign trade. This is something that should be good for the entire county,” said Trotman.
County Executive John Pelham said, “Our industrial park is already part of a Foreign-Trade Zone with Hamilton County. A representative from the Chamber in Chattanooga came to an industrial board meeting and explained how an opportunity had opened up for us to expand what we currently have through Hamilton County where our entire county qualifies as a Foreign-Trade Zone. So, if we have an industry anywhere, including the city limits or elsewhere in the county, they can apply for that status if they so desire. There is no cost to the county at all. All we have to do is draft a letter and send it to them stating that we request for the entire county to be named a Foreign-Trade Zone.”
Foreign-Trade Zone Benefits:
• Duty Exemption on Imports: If merchandise is re-exported after being placed in a FTZ or shipped to another FTZ and then re-exported, no duty is ever paid.
• Relief from Inverted Tariffs: Generally, if foreign merchandise is brought into a Foreign-Trade Zone or subzone and manufactured into a product that carries a lower duty rate, then the lower rate applies. For example, a Foreign-Trade Zone user imports a motor (which carries a 5.3 percent duty rate) and uses it in the manufacture of a vacuum cleaner (which has a 1.4 percent duty rate). When the vacuum cleaner leaves the FTZ and enters the commerce of the U.S., the duty owed on the motor drops from the 5.3 percent motor rate to the 1.4 percent vacuum cleaner rate.
• Duty Elimination on Waste and Scraps: No duty is charged on most waste and scrap from production in Foreign-Trade Zones.
• No Duty on Rejected or Defective Parts: Merchandise found to be defective or faulty, may be returned to the country of origin for repair or simply destroyed. Whichever choice is taken, no duty is paid. Many companies suffer from the "double duty crunch." That is, they pay duty on imported merchandise, find it to be faulty and return it to the country of origin for repair, and then pay duty again when the merchandise reenters the United States. If you are a Foreign-Trade Zone user or Subzone, the "double duty crunch" is never a problem, because your merchandise never enters the commerce of the United States.
• Duty Deferral: No duty is ever charged on merchandise while it is in a Foreign-Trade Zone, and there is no limit on the length of time merchandise may be kept in a Foreign-Trade Zone. By deferring the duty, capital is freed for more important needs.
• No Duty on Domestic Content or Value Added: The "value added" to a product in a FTZ (including manufacture using domestic parts, cost of labor, overhead, and profit) is not included in its dutiable value when the final product leaves the Zone. Final duties are assessed on foreign content only.
• No Duty on Sales to the U.S. Military or NASA: No duty is charged on merchandise sold from a Foreign-Trade Zone to the U.S. Military or NASA, returned to the country of origin for repair or simply destroyed. Whichever choice is taken, no duty is paid.