Free Trade Zone and the Oakland Foreign Trade Zone

Foreign Trade Zones Description

Foreign Trade Zones (FTZ) were established to stimulate desired economic activity in the community consistent with national policy. Zones are designated to create employment, not simply divert it from one region of the country to another.

FTZ’s are special zones that are considered to be located “in foreign commerce”, that is they are considered legally outside the customs territory of the United States. The U.S. government established these special areas as a way to compete with manufacturing overseas.

Essentially, FTZ’s let companies combine cheaper imported components and raw materials, through manufacturing or assembly operations, with U.S. labor and distribution services.

Operating in a foreign trade zone can save money because goods within an FTZ are not subject to import duties until they leave the zone and enter domestic commerce.

If they are exported directly from the zone and never enter domestic commerce, they are not subject to import duties at all.

 In addition, importers that use FTZ’s can choose to pay duties on either imported parts and materials or on the finished product that leaves the zone, whichever is less.

 Finally, zone users are exempt from paying duties on labor, overhead and profits for foreign merchandise that leaves the FTZ.

Benefits derived by businesses using FTZs include:
• Delayed tariff payments on imported products;
• Choice of finished product tariff rate for goods further processed inside the FTZ, subject to public interest consideration;
• Complete tariff avoidance if products are exported directly from the FTZ or if products are assembled, packaged, and then exported;
• Payment of duties only on the value of the foreign components, not on labor, overhead, or profit;
• Exemption from state/local inventory taxes on foreign merchandise;
• Potentially lower insurance premiums due to customs security requirements, which provide protection against theft and defalcation; and
• Temporary or complete avoidance of quota restrictions.

The East Bay is home to one foreign trade zone located in Oakland.

Oakland Foreign Trade Zone

Pacific American Services LLC (PAC-AM) provides integrated logistics services in Northern California that serve the world. PAC-AM's distribution centers are conveniently located to the ports, rail yards and international airports within the San Francisco Bay Area.

Since 1990, PAC-AM has operated one of the largest General Purpose Foreign Trade Zones on the West Coast, the Oakland Foreign Trade Zone #56.

Here are just a few of the benefits of using PACAM's specially designated FTZ facilities (PDF):

* Duty deferral, reduction and/or elimination of U.S. Customs duties on imported products
* Distribution savings reducing Merchandise Processing Fees (MPF)
* Lower inventory costs and improved cash flow
* Streamlined import/export documentation entry procedures

Oakland Foreign Trade Zone Contact Information

Pacific American Services, LLC

Linda Childs
Chief Executive Officer
9401 San Leandro Street
Oakland, CA 94603
Phone: (510)568-8500
Fax: (510)568-4483
Email: solutions@pac-am.com
Website: http://www.pac-am.com/services-ftz.html