Yamaha’s
“HYBRID” approach
to foreign trade zones
The musical
instruments maker
wanted to import
through an FTZ,
but neither of the
traditional approaches
seemed a good fit.
That’s when it decided
to improvise.
As any importer will tell you, bringing goods into the country is a complex process that’s subject to many laws and regulations. It can be costly, too. A host of fees,
duties, and taxes come with the territory. On top of that,
if an importer fails to adhere to the regulations, the U.S.
Bureau of Customs and Border Protection (CBP) can
assess fines that will make any CFO sit up and take
notice.
The challenge for many importers, then, is to comply
with customs regulations while reducing the cost of
bringing goods into the United States. That’s a challenge
Yamaha Corporation of America (YCA) has successfully
met. The importer of musical instruments and audio-visual equipment found it could achieve both of those
objectives by importing through foreign trade zones
(FTZs).
Foreign trade zones are government-approved facilities
within the United States where foreign and domestic merchandise is considered to be outside of U.S. customs territory. FTZs help importers compete with low-cost goods
entering the U.S. market by allowing them to defer,
reduce, or avoid duty payments as well as some taxes and
fees. For example, importers don’t pay duties on merchandise until it leaves the zone for U.S. consumption. If the
goods never enter U.S. commerce—if they are subsequently exported, for instance—then the importer pays no
duties on those items. (For more about the benefits of foreign
trade zones, see sidebar.)
YCA knew that using FTZs would significantly reduce its costs.
Before it could go ahead and do that, however, the importer had to
decide which of the two conventional operating models to follow: outsource the entire process, or handle everything—including setting up
