The southeast Alabama region boasts an array of international investment in the area. A number of companies are represented in the area from the likes of France, Japan, and Sweden. Moreover, out of some 450 manufacturers located in the area, approximately 100 of the companies deal with importation or exportation of their products.

Utilizing the Port of Mobile or the Panama City Port facilities, companies can transport their products to serve the international arena. In addition, the area has rail service provided by CSX, Norfolk Southern, and Bayline Railroad. Service to major ports of Mobile, Panama City, and Jacksonville are provided access via rail service from the Dothan area.

Foreign Trade Zone Benefits in the Dothan Area

The Dothan metropolitan area is also one of six sites in the State of Alabama designated as a General Purpose Foreign Trade Zone (FTZ) area. It is the intent of the U.S. FTZ program to stimulate economic growth and development in the United States. In an expanding global economy there is increased competition among nations for jobs, industry and capital. The FTZ program was designed to promote American competitiveness by encouraging companies to maintain and expand their operations in the United States.

The FTZ program encourages U.S. based operations by removing certain disincentives associated with manufacturing in the United States. The duty on a product manufactured abroad and imported into the U.S. is paid at the rate of the finished product rather than that of the individual parts, materials or components of the product. A U.S. based company finds itself at a disadvantage against its foreign competitor when it must pay the higher rate on parts, materials or components imported for use in the manufacturing process. The FTZ program corrects this imbalance by treating a product made in a U.S. foreign-trade zone, for purposes of tariff assessment, as if it were produced abroad.

The Dothan-Houston County General Purpose Foreign Trade Zone Number 233 offers a number of benefits to businesses:

• Benefits for Business
  For U.S.based companies involved in international trade, the FTZ program provides a means of improving their competitive position against their counterparts abroad. The fundamental benefit offered by the FTZ program to U.S. based companies is the ability to defer, reduce or even eliminate Customs duties on products admitted to the zone.
  
   
• Deferral of Duties
  Customs duties are paid only when and if merchandise is transferred into U.S. Customs territory. This benefit equates to a cash flow savings that allows companies to keep critical funds accessible for their operating needs while the merchandise remains in the zone. There is no time limit on the length of time that merchandise can remain in a zone.
  
   
• Reduction of Duties
  In a foreign-trade zone, with the permission of the Foreign-Trade Zones Board, users are allowed to elect a zone status on merchandise admitted to the zone. This zone status determines the duty rate that will be applied to foreign merchandise if it is eventually entered into U.S. commerce from the FTZ. This process allows users to elect the lower duty rate of that applicable to either the foreign inputs or the finished product manufactured in the zone. If the rate on the foreign inputs admitted to the zone is higher than the rate applied to the finished product, the FTZ user may choose the finished product rate, thereby reducing the amount of Customs duty owed.
  
   
• Elimination of Duties
  No Customs duties are paid on merchandise exported from a FTZ. Therefore, duty is eliminated on foreign merchandise admitted to the zone but eventually exported from the FTZ. Generally, Customs duties are also eliminated for merchandise that is scrapped, wasted, destroyed or consumed in a zone.
  
   
• Miscellaneous Benefits
  Elimination of Drawback: In some instances, Customs duties previously paid on exported merchandise may be refunded through a process called drawback. The drawback law has become increasingly complex and expensive to administer. Through the use of a FTZ, the need for drawback may be eliminated allowing these funds to remain in the operating capital of the company.
  
   
• Labor, Overhead and Profit
  In calculating the dutiable value on foreign merchandise removed from a zone, zone users are authorized to exclude zone costs of processing or fabrication, general expenses and profit. Therefore, Customs duties are not owed on labor, overhead and profit attributed to production in a FTZ.
  
   
• Taxes
  By federal statute, tangible personal property imported from outside the U.S. and held in a zone, as well as that produced in the U.S. and held in a zone for exportation, are not subject to State and local ad valorem taxes.
  
   
• Quotas
  U.S. quota restrictions do not apply to merchandise admitted to zones, although quotas will apply if and when the merchandise is subsequently entered into U.S. commerce. Merchandise subject to quota, with the permission of the Foreign-Trade Zones Board, may be substantially transformed in a FTZ to a non-quota article that may then be entered into U.S. Customs territory, free of quota restrictions. Quota merchandise may be stored in a FTZ so that when the quota opens, the merchandise may be immediately shipped into U.S. Customs territory.
  
   
• Zone-to-Zone Transfer
  An increasing number of firms are making use of the ability to transfer merchandise from one zone to another. Because the merchandise is transported in-bond, Customs duty may be deferred until the product is removed from the final zone for entry into the U.S. Customs territory.
  
   
• Other
  Additional benefits, sometimes referred to as intangible benefits, have begun to play a greater role in a company's evaluation of the FTZ program. Many companies in FTZ's find that their inventory control systems run more efficiently, increasing their competitiveness. FTZ users also find that in meeting their FTZ reporting responsibilities to the U.S. government, they are eligible to take advantage of special Customs procedures such as direct delivery and weekly entry. These procedures expedite the movement of cargo, thereby supporting just-in-time inventory methodologies.

For more information on the Zones program please e-mail: chamber@dothan.com