Lauderdale Marine Center was granted the nation’s first marine Foreign Trade Zone (FTZ) designation at its facilities in Fort Lauderdale on June 7. "This has…
Over the last few years, several foreign trade zones (FTZ) have been established in South Florida. Currently, there are hundreds of these zones throughout the U.S. and seven FTZ marinas in Fort Lauderdale, with one more zone in progress. There is one FTZ each in Miami, West Palm Beach, and Fort Pierce.
“The entire concept tends to be confusing,” said Michelle Terorotua, director of marine, aviation, and compliance at Compass Logistics & Marine in Fort Lauderdale. Terorotua has worked with South Florida marinas to assist them in becoming foreign trade zones. Compass can also help yachts apply and get their paperwork together to comply with FTZ requirements.
At its very basic definition, U.S. Customs and Border Protection explains, “Foreign-Trade Zones (FTZ) are secure areas under U.S. Customs and Border Protection (CBP) supervision that are generally considered outside CBP territory upon activation. Located in or near CBP ports of entry, they are the United States’ versions of what are known internationally as free-trade zones.”
Since the purpose of FTZ is to encourage foreign commerce, these international commerce zones have duty and tax benefits. “Under zone procedures, the usual formal CBP entry procedures and payments of duties are not required on the foreign merchandise unless and until it enters CBP territory for domestic consumption,” CBP states.
While these areas may be outside CBP territory after they’re activated as FTZ, vessels are still subject to U.S. federal, state, and local laws within these zones, including normal immigration procedures. Terorotua explained that the zone area is the entire approved facility, but only the activated slips are FTZ.
Any foreign-flagged vessel can use the foreign trade zone.
The point of the zones is to sell the boat. Foreign-flagged vessels can be shown to U.S. or foreign buyers in U.S. waters without needing a boat show bond. However, a vessel sale cannot be completed while in the FTZ.
The slip must be activated before it can be used as FTZ. “Each slip is ‘activated’ with CBP as it is needed for an FTZ vessel, and then deactivated once the vessel is permanently departed from the FTZ slip,” Terorotua said.
With written CBP permission, vessels can leave the FTZ territory for a maximum of 120 days for sea trials, yard work, or boat shows without needing to reapply for FTZ approval, but the vessel must return to the same zone. During those 120 days, CBP may also call the boat back for inspection.Once in the zone, there are no minimum or maximum stays, but these FTZ slips are in demand.
“During our season (arguably mid-September to mid-May), most marinas are full and have waiting lists. Keep in mind that these FTZ marinas are also ‘regular’ marinas. There are no slips held aside just for FTZ,” Terorotua said.
She recommends planning as far in advance as possible to anticipate demand, especially as area boat shows approach.
According to Pier Sixty-Six, vessels can transfer from one FTZ to another, but they must get approval first.
While there are excellent benefits to using an FTZ, there are also limitations to consider.
Entertaining is not allowed. “We call it the No Fun Zone because if the boat is in the Foreign Trade Zone, the owner is not allowed to use it, not for any personal use,” said Megan Lagasse, marine director at Pier Sixty-Six marina. The yacht owner cannot stay on board; the captain and crew are the only people permitted to remain to take care of maintenance, and they must submit a crew list.
“The vessel cannot leave the dock without CBP’s permission,” Terorotua said. She also emphasized that a logbook must be kept for all persons boarding the vessel while they’re berthed in the FTZ.
Once a boat enters the FTZ, it must surrender its cruising permit, which is subsequently canceled. In addition, the FTZ marina must hold the vessel’s original registry until the boat leaves the FTZ permanently.
While a boat for sale can be shown, the sale cannot be closed in an FTZ. To ensure the boat is not subject to duty from its time in the U.S., they must submit arrival documentation from their next foreign port of call.
“You must touch foreign soil and send back proof of arrival in the form of an entrance to that country or their equivalent,” Terorotua said.
There are costs to operate and activate FTZ slips for the marinas and yards, both ongoing fees and activation fees, so costs could vary depending on where your boat is berthed. Pier Sixty-Six charges a broker’s fee but no other dockage extras, while another marina charges $1.50 more per foot per day to be in the zone. The boat is still responsible for the usual marina fees during their stay.
The FTZ also requires a subrogation bond equal to one time the potential duty or a maximum of $500,000. According to Pier Sixty-Six, “This bond lasts for a full year and covers the vessel at all boat shows. This bond ties a vessel directly to the facility of which it is checked into. The bond cannot be transferred from facility to facility.”
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