software, and establishment of operational procedures, says Juna Kim, YCA’s import/export
director. Internally, YCA’s management,
import/export compliance group, and information technology team worked on the project.
Yamaha decided to establish two FTZs, one in
the Los Angeles area and another near Chicago.
The importer wanted to retain full control of
compliance with the complex FTZ regulations.
Yet the company felt it did not make economic
sense to go through the lengthy and expensive
site-approval process, and then to hire and
train employees to set up and operate FTZ
facilities, Kim says. The solution: become
licensed as a foreign trade zone user, and lease
dedicated space in established FTZ warehouses
operated by experienced, trustworthy third
parties.
HARMONIZING OPERATIONS
Today, YCA works with third-party warehouse
operators Schafer Brothers in Long Beach, Calif.,
and DSC Logistics in Elwood, Ill. These licensed
FTZ operators set up segregated areas for YCA
within their facilities. They handle receipt, storage, pick/pack, and shipping, and they ensure
that security mandates are met. The importer,
meanwhile, controls and manages the day-to-day decisions and transactions, as well as compliance with the stringent customs and inventory control requirements.
To ensure compliance and enable electronic
data sharing, YCA licensed the FTZQW software
module from QuestaWeb. The software,
approved by CBP for electronic filing, plugs
into a centralized product database of
export/import information in QuestaWeb’s
global trade management system, which YCA
also uses. In addition to the comprehensive
information required for import/export operations and regulatory compliance, the database
holds all of the pertinent information for any
type of FTZ transaction, according to Wayne
Slossberg, QuestaWeb’s vice president. Because
regulations require FTZ users to document
every movement into and out of foreign trade
zones as well as every activity within the facili-
WHAT CAN FTZS
DO FOR YOU?
Foreign trade zones (FTZs) offer qualified
importers a host of benefits. These will vary
with the individual company’s situation, but
they include the following:
• Certain types of merchandise can be
imported into a zone without undergoing formal customs entry procedures or incurring
import duties.
• Customs duties and excise taxes are
deferred until goods leave the FTZ for U.S.
consumption.
• If the merchandise never enters U.S. commerce, the importer does not pay duties or
taxes on those items.
• When imported parts or materials are
incorporated into a finished product while
they are in an FTZ, the importer pays the duty
rate for the finished product when it leaves
the zone instead of paying the typically higher rates for the parts and materials.
• Merchandise can be held duty-free with
no time limits.
• Merchandise in FTZs generally is exempt
from state and local inventory taxes.
• The Merchandise Processing Fee (MPF)
can be paid weekly rather than on individual
entries.
• Other benefits may include faster transit
times, better inventory control, and tighter
security.
ties, “there has to be cradle-to-grave information,” he says.
The software automatically generates all
required documents and reports, and files them
with the proper regulatory agencies. These
include an annual report to the Foreign Trade
Zone Board, monthly activity permit reports,
inventory control reports, and removal audit
reports, among others. The system handles input
from the two FTZs but maintains the complete
