Title
Consider a memorandum/resolution authorizing a letter of no objection regarding an application for Foreign Trade Zone designation to be submitted by Dongjin Semichem Texas, Inc.
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DATE: May 20, 2025
TO: Kent Cagle, City Manager
FROM: Wallis Meshier, Exec. Dir. Of Dev. Serv.
SUBJECT: Letter of no objection regarding an application for Foreign Trade Zone designation
BACKGROUND AND FINDINGS:
A Foreign Trade Zone (FTZ) is a federal program designed to assist U.S. based manufacturers and distributors to compete with those who are manufacturing and distributing abroad. Businesses located within an FTZ are considered outside of the U.S. Customs territory, which allows companies to store, process, manufacture, and re-export foreign and domestic goods without paying customs duties until the goods leave the zone for the domestic market.
FTZ's encourage investment in the U.S. and the creation of American jobs by allowing U.S. businesses to operate with equivalent customs treatment to businesses conducted off-shore. In order to take advantage of the tax benefits associated with being in an FTZ, Dongjin Semichem Texas, Inc. intends to apply to join FTZ 183.
Benefits to a U.S. based businesses located in a FTZ include:
* Duty Deferral. No duty on imports until they leave the FTZ for domestic destination.
* Duty Exemption. No duty on items brought into the FTZ and exported, as these items never enter Customs territory.
* Inverted Tariff. Where FTZ manufacturing results in finished product with lower duty rate than the rate on foreign input, finished product may be entered at the duty rate that applies to its condition as it leaves the zone - if approved by FTZ Board.
* Logistical Benefits. Companies using FTZ procedures may have access to streamlined customs procedures (e.g., "weekly entry" or "direct delivery").
* Scrap/Waste. Duty may be reduced on foreign articles that become scrap/waste through FTZ activity.
* Other Benefits. No state or local ...
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