posted on March 06, 2012 16:54
Genesee County could soon become a federal Foreign Trade Zone, enabling local businesses to enter and compete in the global marketplace without costly tariffs on imported goods.
The Genesee County County Economic Development Center applied for a Foreign Trade Zone (FTZ) designation last year, for the entire area of Genesee County. If approved, eligible local companies within the FTZ may import goods from overseas and delay the tariffs owed on those goods. The tariff is then only paid when the goods are shipped outside the FTZ, within the United States.
If a company re-ships those goods overseas, no tariff is ever paid, in what is informally known as an "exchange."
There are many possible benefits to a local company under an FTZ, but three major ones are:
- A company may import an unlimited amount of goods into the FTZ and store them tariff-free, only paying the tariff on goods that are used and/or shipped outside the FTZ;
- A company may import goods tariff-free (i.e. sugar), incorporate them in a manufactured good (i.e. cookies) at a factory within the FTZ, and ship that product back overseas without ever paying a tariff;
- A company may import a normally-tariffed good (i.e. engine parts), incorporate them into a non-tariffed manufactured good (i.e. engines) at a factory within the FTZ, and ship them within the U.S. tariff-free.
The FTZ has the potential to save companies thousands of dollars a year in tariff costs.
One large Genesee County manufaturer, Liberty Pumps Inc., estimates savings of up to $50,000 per year with the FTZ designation. Liberty also expects to become competitive in the global pump marketplace by eliminating the costly tariffs on some imports and exports.
"It really puts us on a level playing field," says purchasing manager Jeff Cook.
On Tuesday, U.S. Senator Chuck Schumer released a letter urging the government to grant Genesee County its FTZ designation, so that Liberty Pumps could enter the global marketplace. The GCEDC has a meeting Thursday which could lead to expedited federal FTZ approval.