by Zachary Finnegan, International Trade Advisor
With WNY Foreign Trade Zone’s proximity to the CanAm border, it is not uncommon for shippers to export into the U.S. to our facility only to then export to Canada or another country. Since goods held in an FTZ are still considered international freight, they can be exported from our facility without ever incurring customs duties.
Why is this important? In the situation detailed above, if the shipper would import into the U.S. only to export without utilizing an FTZ, it would pay the relevant duties, which it would then be able to recoup later through a process called “drawback.” While drawback is a reliable process – it is money you’re entitled to, of course, based on import/export policy – it is also a lengthy one.
A practical example of this is a U.S. company importing goods from Germany to hold – without altering or assembling in any way – for ultimate distribution to customers in Canada. Because of the import, applicable duties would be paid at the time of receipt, and once the goods were then exported into Canada, the shipper could go to U.S. CBP for a refund of those duties paid.
By using an FTZ for this purpose, shippers can avoid paying the up-front duties and the process of trying to recapture the funds already paid to the government. For importers who have pieces of their supply chain on both sides of the CanAm border, using an FTZ in this instance can provide cash flow advantages by saving you from having to front the payment of duties.
There are many benefits to using a Foreign Trade Zone. For easy reference, check out our web site at www.wnyftz.com, and then give us a call at (716) 823-2142, and let us walk you through how WNYFTZ can benefit you specifically.
This post is the third in a series of posts about the benefits of doing business in a Foreign Trade Zone. Western New York Foreign Trade Zone Operators manages the Foreign Trade Zone in Lackawanna, NY, ten minutes from the Peace Bridge between the U.S. and Canada.