FOREIGN-TRADE ZONE

PROGRAM AND BENEFITS

FOREIGN-TRADE ZONE

THE PORT OF NEW ORLEANS

THE BOARD OF COMMISSIONERS of the Port of New Orleans received a grant of authority to administer a

Foreign-Trade Zone (FTZ) in 1946. It was the second port to become an FTZ grantee.

FTZ 2 is available for a wide range of manufacturing, processing and warehousing activities. Warehouses and manufacturing

facilities throughout the Greater New Orleans area can apply to become FTZ subzones or general purpose sites to take

advantage of FTZ benefits. Subzones generally include manufacturing facilities. Oil and gas refining and shipbuilding and

repair have traditionally been the focus of New Orleans - area FTZ subzones. General purpose sites are used for warehousing,

and much of the activity in New Orleans general purpose sites are related to the storage of commodities that are traded on

international exchanges.

Combining the benefits of a Foreign-Trade Zone with the transportation advantages available along the banks of the Mississippi

River has proven to be beneficial to many companies. The Port of New Orleans’ modern facilities provide access to international

markets for containerized and breakbulk cargo. Superior connections to barge, rail and truck transportation make Greater New Orleans

the ideal site for distributing merchandise throughout the United States. When you combine this transportation hub with

Louisiana’s motivated workforce and low utility costs, you have the perfect climate for a bustling FTZ.

THE FOREIGN-TRADE ZONE PROGRAM was created by Congress in 1934 to stimulate growth for U.S.

companies competing on the international stage by allowing delayed or reduced duty payments. A Foreign-Trade Zone is a

secure area located at or near an international port of entry that is legally outside of U.S. Customs Territory. Without incurring

duties, merchandise located in the zone may be stored, sampled, tested, assembled, manufactured, manipulated, mixed,

processed, tested, repackaged, relabeled, repaired, cleaned, salvaged, exhibited, displayed and destroyed. Retail trade is

prohibited in a Foreign-Trade Zone.

FOREIGN-TRADE ZONE

BENEFITS

Duty Elimination Duties are eliminated when you assemble or manufacture a product in a

zone and then export it. Duties are eliminated on waste, scrap and rejected

or defective parts.

Duty Inversion Duties can be lowered when you assemble or manufacture a finished

product for consumption in the United States that has a lower duty rate

than the individual imported components.

Duty DeferralsUntil merchandise moves out of a Foreign-Trade Zone and into U.S.

commerce, duties are deferred resulting in a cash flow advantage for the

owner of the merchandise.

Reduced Merchandise Processing FeesInstead of making customs entries and paying Merchandise Processing

Fees on each shipment, zone users may be able to consolidate those

shipments into a weekly entry and pay a single Merchandise Processing

Fee. Brokerage costs may also be reduced with fewer entries.

QuotasMerchandise that is subject to quotas can be held in a Foreign-Trade Zone

in anticipation of a change of the quota that would allow the product to

enter U.S. commerce.

FlexibilityShippers can increase flexibility with just-in-time delivery and reduced

customs delays.

FOREIGN-TRADE ZONE

STATISTICS

• Louisiana ranks 2nd among the states for the value of merchandise entering a U.S. Foreign-Trade Zone.

• Louisiana Ranks 11th among the states for the value of merchandise exported from a U.S. Foreign-Trade Zone.

• About $16.3 billion worth of merchandise was received in the New Orleans Foreign-Trade Zone in 2010.

• Some $691 million in merchandise was exported from New Orleans Foreign-Trade Zone sites.

• 2,855 people were employed in New Orleans Foreign-Trade Zones and 17,650 were employed in Louisiana Foreign-Trade Zones.

• Louisiana has 6 Foreign-Trade Zones.

Foreign-Trade Zone 2 Perimeter Map

General-purpose Foreign-Trade Zone sites must be within 60 miles or 90 minutes driving time of a U.S. Customs and Border Protection Port of Entry.

FREQUENTLY ASKED QUESTIONS

Does a warehouse or manufacturing facility have to be

located on Port-owned property in order to become a FTZ?

No. Any facility that is within 60 miles or a 90-minute drive of the Port is

eligible to apply to become a general purpose site.

How long does it take to get approval from the Foreign-Trade

Zone’s board for FTZ designation?

Under the new Alternative Site Framework, applications can be processed in

30 days. Maximum processing time is five months. Most applications take one

to two months.

What kind of merchandise can be placed in the zone?

Any merchandise that is not prohibited from entry into the territory of the

U.S. may be admitted to a zone. If applicable, import licenses or permits from

other government agencies may still be required to bring the merchandise

into the zone.

What information do I need to evaluate if a Foreign-Trade Zone is

right for my business?

It is essential to understand the duties that you pay on the products that you

import. If you manufacture products with imported inputs, you need to know

the duty rates for those finished products. It is helpful to know how much you

pay in Merchandise Processing Fees and how much they cost your business.

Once you have that information, contact the Port and we’ll help you calculate

the potential benefits.

What are the costs associated with applying for and maintaining a zone?

The costs for getting a Foreign-Trade Zone site approved and activated vary

by type of business.

Please refer to the Port of New Orleans website (www.portno.com) to

see the latest Foreign-Trade Zone Schedule.

What is the administrative burden

of maintaining a zone?

Being a Foreign-Trade Zone operator

requires that the operator have inventory

controls and a higher level of security

than might otherwise be required.

FOREIGN-TRADE ZONE

P.O. Box 60046, New Orleans, LA 70160 www.portno.com | 800.776.6652

Gary LaGrange, PPMPresident & CEO

T: 504. 528.3203

E: glagrange@portno.com

Pat Gallwey, PPMChief Operating Officer

T: 504. 528.3305

E: patg@portno.com

Chris DonnerDirector, Foreign-Trade Zone #2

T: 504.528.3322

E: donnerc@portno.com

Photo compliments of ExxonMobil.