EXPLORING THE POSSIBILITIES:
FOREIGN TRADE ZONES
Joe Kiely, Town of Limon
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What is an FTZ?
What Are the Benefits a
Company Locating in
Colorado?
What are the Local
Benefits?
A Look at Colorado’s
International Trade
Do FTZs exist in Colorado?
An Invitation to Be
Included in the Service
Area
What Is a Foreign Trade Zone?
The Foreign-Trade Zone Program was
created by the U.S. government to facilitate
international trade and increase the global
competitiveness of U.S.-based companies.
The program, which has existed since the
1930s, continues to thrive and change to
better meet the needs of American
companies in the global economy.
An FTZ is an area within the United
States, in or near a U.S. Customs port
of entry, where foreign and domestic
merchandise is considered to be
outside the country, or at least,
outside of U.S. Customs territory.
Customs duties and excise taxes are
due only at the time of transfer from
the FTZ for U.S. consumption. If the
merchandise never enters the U.S.
commerce, then no duties or taxes
are paid on those items.
• FTZs are designated sites
licensed by the FTZ Board
(Commerce Secretary is
Chairperson) at which special
CBP procedures may be used.
• A site which has been granted
zone status may not be used
for zone activity until the site
or a section thereof has been
separately approved for FTZ
activation by local CBP
officials.
Company
Benefits
Duty Deferral
• Goods imported into the U.S. are
subject to duty paid through the U.S.
Customs and Border Protection (CBP).
• FTZs affect the timing of the duty
payment. If a product or good is
moved into the U.S. outside an FTZ,
duty is due upon arrival in the U.S. If
the same product or good is moved
into an FTZ, the duty is deferred as
long as the product or good remains in
the FTZ.
• The good can be moved from one FTZ
to another FTZ and the duty is still
deferred.
Federal income taxes are
unchanged.
All other federal regulations
apply.
Inverted Duty for Manufactured
Products
• When components of a final product come
together in a final product, instead of duty
being paid at the rate due on each
component, the duty is paid only upon the
final product and at a lower rate.
Avoid Personal Property Tax
• Products or goods stored in an FTZ are
not subject to inventory tax, i.e.
personal property taxes.
• Local government may require payment
in Lieu of Taxes
Marketing
• The business may benefit from having a
presence in the U.S.
Local
Benefits
Increased Real Property
Taxes
• While the goods stored in an FTZ are
exempt from personal property taxes,
facilities within an FTZ are subject to
real property taxes.
.
Increased Jobs
• FTZs have a multiplier effect on local
employment. Job creation follows a
wide range of FTZ activities—
assembly, manufacturing and
distribution.
U.S. Subsidiaries of Global
Companies Play a Vital Role in
Colorado’s Economy
 U.S. subsidiaries own over $28
billion in gross property, plant and
equipment.
 U.S. subsidiaries own $2.5 billion in
commercial property in Colorado.
 U.S. subsidiaries announced 14
“Greenfield” projects in Colorado in
2010, creating an estimated 2,587
new jobs.
Marketing
• An FTZ provides another reason to do
business within and with this area.
Colorado
Trade
Import Flows - Value - All Commodities
Foreign
Total M$ in Total M$ in % Change Total M$ in % Change
Destination
2002
2011 2002-2011
2040 2011-2040
Canada
$1,552
$6,572
323%
$16,249
147%
Mexico
$436
$1,086
149%
$4,096
277%
Rest of Americas
$128
$197
54%
$577
192%
Europe
$1,004
$1,691
68%
$6,169
265%
Africa
$14
$56
301%
$164
195%
SW & Central Asia
$84
$277
228%
$903
226%
Eastern Asia
$1,649
$2,404
46%
$8,593
257%
SE Asia & Oceania
$442
$941
113%
$2,801
198%
Total
$5,309
$13,223
149%
$39,552
199%
Import Flows - Weight - All Commodities
Foreign
Total KTons Total KTons % Change Total KTons % Change
Destination
in 2002
in 2011 2002-2011
in 2040 2011-2040
Canada
2,407
6,471
169%
11,858
83%
Mexico
100
158
57%
587
271%
Rest of Americas
166
321
93%
815
154%
Europe
386
293
-24%
869
196%
Africa
25
200
704%
441
121%
SW & Central Asia
75
326
337%
826
153%
Eastern Asia
457
643
41%
2,211
244%
SE Asia & Oceania
163
289
77%
770
167%
Total
3,778
8,702
130%
18,377
111%
Today, the bulk of U.S. FTZ activity
occurs in subzones. Subzones, which
carry all zone benefits, consist of a site
or sites that are designed for a specific
company or use for either
warehousing or manufacturing. They
account for 85% of all merchandise
received in zones and 74% of all zone
exports.
… U.S. Foreign Trade Zones:
Background and Issues for Congress
Colorado
FTZs
Colorado Springs FTZ #112
• Colorado Springs Foreign Trade Zone,
Inc.
• No Activity
.
Denver FTZ No. 123
• City and County of Denver
• 2012 Currently 1 Companies
• 100% Oil/Petroleum
• Vestas… application for Subzones
• Pillow Kingdom … application for
Subzone
U.S. Subsidiaries of Global
Companies Play a Vital Role in
Colorado’s Economy
 U.S. subsidiaries own over $28
billion in gross property, plant and
equipment.
 U.S. subsidiaries own $2.5 billion in
commercial property in Colorado.
 U.S. subsidiaries announced 14
“Greenfield” projects in Colorado in
2010, creating an estimated 2,587
new jobs.
Marketing
• An FTZ provides another reason to do
business within and with this area.
Proposed
Service Area
Why be included in Service
Area?
• Allows quicker response to potential
clients
• Inclusion in Service Area makes getting
a sub-zone a shorter process
• Strengthens the Regional Economy!
Would You Provide a Letter
of Support for Our
Application to the FTZ
Board?
QUESTIONS?