Jan Frantz: Trade zone continues to drive local economy

On March 31, Foreign-Trade Zone 43, headquartered at the U.S. Customs and Border Protection Port of Battle Creek, submitted statistics to the U.S. Commerce Department for its annual report to Congress. According to the report, during 2015 exports from Foreign-Trade Zone 43 reached a value of $49.9 million. That’s $1.5 million more in exports than the total value of exports from FTZ 43 in 2014.

A driver of economic activity, FTZ 43 places 14 counties in Southwest Michigan in an enviable position for investment and job creation. In 2015, 1,951 people were employed in Foreign-Trade Zones in the 14-county service area of FTZ 43.

After an arduous process in late 2012, 14 counties in the service area of FTZ 43 were preapproved by consensus of the governmental agencies for FTZ designation, including Allegan, Barry, Berrien, Branch, Calhoun, Cass, Clinton, Eaton, Ingham, Ionia, Jackson, Kalamazoo, St. Joseph and Van Buren counties.

As this editorial is written, additional companies in the 14-county service area consider the advantages of an FTZ designation to favorably impact their bottom line, or to keep their operations on a level playing field with global competitors. From an economic impact, the advantages are inarguable.

Why do companies elect to participate in the Foreign-Trade Zone program? For firms that import raw materials or inputs, or export finished products, the impact can be significant in cutting costs and increasing operational efficiencies:

• Reduce or eliminate tariffs: It is not uncommon for parts or raw materials to have a higher duty rate than the final product. Within an FTZ, companies may select the lower duty rate when the product leaves the zone. Sometimes, duty is altogether eliminated.
• Delay duty: Distribution firms may warehouse imported goods for extended periods. No duty is owed to U.S. Customs until the merchandise leaves the zone. If goods are exported, no duty costs apply. There is no time limit for merchandise remaining in a zone.
• Reduce paperwork and Customs processing fees: FTZs allow a company to notify Customs about shipments on a weekly basis. With Customs approval, frequent importers using Weekly Entry procedures can accrue a substantial savings.
• Improve logistics: FTZs are considered a best practice by the Customs-Trade Partnership Against Terrorism, permitting direct delivery of containers to zones.

The local upswing in exports from FTZs signifies expanded use of the FTZ program. New frameworks in the FTZ regulatory environment provide rapid response to the needs of FTZ users, and flexibility in establishing new FTZ sites. In the service area of FTZ 43, new production sites can be approved within 30 days. That’s a vast improvement over the 2-year average of years past.

Established in 1978, FTZ 43 is a ready and willing partner to facilitate supply chain enhancement, industrial investment, and international trade and development. I have no doubt next year’s FTZ 43 statistics will continue to impress.

Jan Frantz is the administrator of Foreign-Trade Zone 43