New Foreign Trade Zones To Boost The Marine Industry
There’s big news for South Florida’s marine industry and it comes in the form the first recreational marine foreign trade zone in the United States. The first-of-its-kind 16-site FTZ subzone will serve to alleviate duty and taxes on imported boat parts and foreign-built yachts, providing them with the same Customs treatment they’d receieve if outside the commerce of the United States. Traditionally, a foreign trade zone is one specific physical location, such as a portion of a seaport or airport. In the past businesses would have to relocate into a FTZ to take advantage of its protections. But in 2012, the laws were changed to allow alternate site framework, which lets businesses incorporate the FTZ in their existing locations. Last year, the Marine Industries Association of South Florida was given the greenlight by the US Department of Commerce to act as the operator of the subzone. Regarding this exciting, business-generating new law, Karen Reese, the FTZ Administrator for the City of Ft. Lauderdale was quoted as saying, “Strengthening our marine industry by creating an environment that will encourage more business is the key reason to pursue Foreign Trade Zone activity.”
Back in January of 2017 meetings began between United States Customs and Border Protection officers, MIASF, US Immigration Services and key industry players with more than a dozen shipyard, supplier and marina companies to determine the inner workings of the zone at each proposed location. Over a dozen businesses have signed up and all are thrilled at the potential. In early June, approval was officially granted for world-renown Lauderdale Marine Center and Bahia Mar Yachting Center to become the first of 16 designated marine FTZ subzones. For the time being, these approved sites will be offering a handful of slips to be utlized as the FTZ, not the entirety of the facility. Over the coming months, more businesses are expected to be granted FTZ designation. With so many exciting options and opportunities stemming from the new designations and with the first subzone located in the Yachting Capital of the world, the South Florida yachting industry will start seeing the many benefits of this legislative update trickling down soon. President of Lauderdale Marine Center, Doug West commented that, “Gaining designation as a foreign trade zone will allow us to establish mutually beneficial business relationships with builders, brokers, and yacht management.”
The Benefits of Marine Foreign Trade Zones
The new marine foreign trade zone law is certainly a perk that will help to further the yachting industry in many ways. Foreign-built yachts can be brought into designated foreign trade zones for a period of time without the need to pay the typical 1.5 percent import duty. This means that these vessels which were once off-limits to prospective US buyers can now be shown to them from the FTZ. Brokerage firms will be able to attract more viewings and put forth more marketing efforts by now having a place for brokers to legally and locally show foreign-flagged vessels to US buyers. All boats in a designated FTZ can be shown for sale and demonstrated which includes sea trials and surveys.
Selling or showing foreign-flagged vessels to US residents while in US waters is still not allowed outside of an FTZ due to regulations under the current cruising license policies. Additional benefits from the new Foreign Trade Zones include major refit projects, since all imported parts can defer their duties while the yacht is in the zone. Once a project is complete, the vessel can depart the United States without being required to pay duties or taxes. Also, new builds that have been brought into the US within the past three years can use the Foreign Trade Zone to file for a refund on previously paid duties. Vessels will also be able to come and go as needed from the FTZ site to accommodate various things such as owners trips and yacht charters.
The first US yachting event to reap the benefits of South Florida’s new foreign trade zones will be the 2017 Fort Lauderdale International Boat Show which kicks off on November 1st. In the past, foreign-made yachts exhibited in the show that had not paid the 1.5% import duty prior would be totally off-limits to US buyers – unless they had purchased a boat show bond. Now a boat show bond won’t be necessary and these yachts can be viewed by anyone, US citizen or not, resulting in many more opportunities to make a sale. The news of the FTZ designation comes on the heels of Bahia Mar Marina’s announcement that it has extended the show’s lease until 2050, putting murmurings of an unclear future to rest.