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A Foreign Trade Zone (FTZ), U.S. Customs and Border Protection (CBP) writes[1], is a secure area supervised by CBP, but treated as being outside United States trade boundaries.  Companies utilizing an FTZ have the legal opportunity to pay lower duty rates or possibly avoid paying them altogether as merchandise does not incur duties until it exits the FTZ into the United States Customs territory.  This gives companies that utilize an FTZ the ability to save money and manage their cash flow.

Duty Exemption/Reduction

It is possible to completely avoid paying duties by utilizing an FTZ.  Except for exports to Canada and Mexico, there are no duties on re-exports meaning that a company can import to a FTZ and then export to another country without ever having to pay duties or excise tax.

If a company plans to eventually have their merchandise enter the United States market, they can also save money by utilizing an FTZ.  While in the FTZ the company’s merchandise is not subject to U.S. duties meaning the company will not have to pay duties until the merchandise is entering consumption to CBP territory.  Companies are normally able to choose to pay the duty rate applicable on the foreign material or the duty rate on the finished product, allowing companies to choose whichever option is to their advantage.

Merchandise Processing Fee Reduction

The Merchandise Processing Fee (MPF) is another way companies can save by utilizing an FTZ.  When using an FTZ, companies only have to pay MPF when their goods are entering U.S. Customs territory.  Merchandise Processing Fees, NAFTZ writes[2], are currently charged at 0.3464% of the total estimated value of the shipment, having a minimum fee of $27.23 and a maximum fee of $528.33 for each entry.   Companies using a FTZ can file a single entry for all the goods they ship from the FTZ in a consecutive seven-day period.  Normally companies would have to file one entry for each shipment (other than merchandise subject to live entry).

Sentry BioPharma Services, Inc. (Sentry) FTZ

Sentry BioPharma Services, Inc. (Sentry) is a provider of contract GMP cold chain storage and distribution services for its clients’ pharmaceutical materials. Sentry’s entire facility offering several different cold chain storage options is an FTZ and, as such, the benefits mentioned above are available to its clients. For example, imported APIs that will ultimately be sent to a U.S. CMO may be held at controlled temperature GMP storage until needed to be formally cleared through Customs to be used in manufacturing. Similarly temperature sensitive materials may be transported by bonded truck from the nearby Indianapolis airport to Sentry’s facility (a 15 minute trip) and be placed directly into the appropriate GMP storage environment without any risk of a Customs, USDA or FDA delay for the material to be cleared for further transport within the U.S.  Sentry also offers custom batch record controlled labeling, kitting, and packaging services and materials such as investigational drugs can come to Sentry’s FTZ, be labeled, kitted, packaged, stored in a controlled cold chain environment according to GMP requirements, and shipped out at any time to foreign clinical sites without ever having to clear U.S. Customs. Sentry’s FTZ is also often utilized for stockpiling of imported finished dosage stock or API to be used for commercial launch in the U.S. pending FDA approval of the appropriate BLA, NDA, etc.

Visit Sentry’s website, or contact us by e-mail at https://sentrybps.com/contact-us, bd@sentrybps.com, or by telephone at 1-866-757-7400 or 001-317-856-5889 (International) to find out how Sentry’s cold chain FTZ storage can benefit your company.

[1] “About Foreign-Trade and Contact Info,” U.S. Customs and Norder Protection, accessed September 20, 2021, https://www.cbp.gov/border-security/ports-entry/cargo-security/cargo-control/foreign-trade-zones/about

[2] “FTZ Basics & Benefits,” NAFTZ, accessed September 20, 2021, https://www.naftz.org/ftz-resources/ftz-basics-benefits/