The Greater Kansas City Foreign Trade Zone, Inc. (GKCFTZ) is a regional grantee of the national FTZ program. GKCFTZ has been the grantee since 1974 and was the first non-profit organization to be designated a grantee. GKCFTZ sponsors both Foreign-Trade Zone No. 15 in Kansas City, Missouri and Zone No. 17 in Kansas City, Kansas. Zone 15 serves FTZ needs in 22 contiguous counties in the western half Missouri. Zone 17 presently serves 9 counties in metropolitan Kansas City, KS.
A Foreign-Trade Zone is an area within the United States that is outside of Customs territory for purposes of collection of US Customs duties and fees. Foreign goods and merchandise admitted duty-unpaid to a Foreign Trade Zone where they can be stored, processed, repackaged, transformed destroyed or otherwise handled by company employees providing value-added work before they leave the FTZ (when a formal entry is filed) or exported. FTZ users enjoy many cost-saving benefits in cost of goods stored, produced/assembled in FTZ’s as well as cost reductions in transportation, distribution and other components of their supply chains.
Among the many benefits FTZ users enjoy are the following:
1. U.S. Customs Duty Deferral: The user does not pay customs duties or federal excise taxes on imported raw materials, components or finished products until the material is sold in the U.S. If the user imports the material into the zone and then exports it back out – no US Customs duties are paid. If the user brings the goods into the zone and it arrives damaged or is damaged, destroyed lost in FTZ-related processing, it is removed from inventory and no duties are paid. The reduced cost of imported products also lowers those elements of costs for warehousing, transportation and distribution that are affected by the cost of the imported product (ie: insurance, bonding, etc).
2. Merchandise Processing Fee (MPF): This fee is charges by Customs on each entry filed by an importer. FTZ users’ whose goods are “admitted” duty-unpaid to FTZ’s and that are subsequently “entered” are allowed to file consolidated entries on a weekly basis and pay one MPF entry fee to Customs. A significant savings.
3. Inverted Tariff: Imported components to products processed, manufactured, or assembled in a FTZ resulting in transformation of these components into a finished product can elect to pay the Customs duty on the finished product or the products imported components, whichever is less.
There are many other benefits including direct delivery of imports to FTZ (where users can break Customs seals and admit goods into their inventory systems), Zone-to-Zone transfers, and others that improve supply chain velocity, reduce inventory costs and improve accountability. FTZs are recognized as a “best industry practice” by USCBP because they significantly improve supply chain security.