The recent short-lived strike by Canadian railroad workers that shut down rail freight transportation in that country highlights the need for U.S. importers to be prepared for this and other types of supply chain snarls. Foreign-trade zones can be a valuable part of those preparation efforts.
An FTZ is a defined physical area within the U.S. that, for customs entry purposes, is treated as being outside U.S. borders. In FTZs companies can use special customs procedures that allow domestic activity involving foreign items (including storage) to take place prior to formal customs entry. Goods imported into an FTZ and subject to allowable operations are not subject to duty if they are exported to other countries.
The Canadian rail strike was in effect for just a day or so before government authorities shut it down, but it could resume if labor and management representatives are unable to reach agreement on a new contract. If that occurs, companies importing goods into Canada may be unable to transport those goods to their destinations and may need to find places to store those goods until the transportation system is back online.
U.S. FTZs may be an attractive option for such storage if warehouse space in Canada is limited or the cost of such facilities is prohibitive. In such cases, ST&R professionals can work quickly with FTZ grantees and local U.S. Customs and Border Protection officials to secure new warehouse storage space at ports, airports, and industrial parks near the U.S.-Canada border. In addition, setting up such arrangements in advance of a potential emergency can save companies money and give them an advantage over their competitors.
For more information on this and other ways FTZs can benefit your business, please contact attorney Scott Taylor at (212) 549-0153 or via email.
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