The Logistics & Distribution Center of the Americas
Benefits of a Zone
Due to modernization tendencies and to increased competitiveness among markets - with its consequential impact on the enterprising landscape - more and more businesses have begun to implement innovative cost-savings measures. This trend has refocused the strategic aims of enterprises worldwide, hence making operational efficiency and streamlining critical to a business’s bottom line.
When businesses become established in Foreign Trade Zone # 61, they can expect to reduce their overhead costs by enjoying:
Exemption from customs duties and tariffs on merchandise originating abroad;
No time limits on the storage of goods; final destination also need not be specified;
Exporting or transferring goods to another zone or sub-zone without incurring customs duties or tariffs;
Option to pay customs tariffs and duties only upon entry into the country; in other words, payment for duties or tariffs can be deferred until a sales transaction is executed;
Tax exemption on all inventoried foreign and domestic merchandise stored in the foreign trade zone.
Potential reimbursement of duties paid on merchandise held at the free trade zone for the eventual purpose of exportation;
Option to pay the lowest rates on components or on final products;
Elimination of duties that normally apply to value-added activities such as manufacturing or assembly;
Exemption from duties and tariffs that apply to all goods or products that are decommissioned or destroyed in the zone;
Exemption from quota systems that the U.S. government establishes for certain sectors - merchandise is accepted even if products are restricted by a quota system;
Excellent security and protection that is upheld by federal prosecution, should merchandise be wrongfully appropriated
Benefiting Enterprises
The foreign trade zone offers services to more than 40 businesses from across different industries such as: audiovisual equipment, electronic equipment, pharmaceutical products, chemical products, perfumes & cosmetic products, alcoholic beverages and shoes, among others. The foreign trade zone makes Puerto Rico one of the major re-exportation and distribution centers to the Caribbean and Latin America, and also a hub point for all major distribution destined to the Caribbean, South and Central America.
For these reasons, the foreign trade zone initiative is of critical importance to Puerto Rico’s overall economic development. During 2004, FTZ 61 received merchandise valued at $ 172,527,228 - $ 129,575,003 from the United States and $42,952,225 from abroad. Likewise, FTZ 61 exported merchandise valued at: $105,099,314 to the United States, $24,930,298 to international destinations, $72,370,138 into Puerto Rico, and $ 175,831 to other trade zones.
It should be noted that during 2003, the combined foreign trade zones currently operating in Puerto Rico – FTZ 61, FTZ 7 and FTZ 163 - were amongst the top 15 foreign trade zones in the United States in terms of value of merchandise received, value of merchandise exported, jobs created, and number of companies using the services or making use of the incentives provided by the FTZ program. Specifically, in terms of the value of incoming goods, Puerto Rico held the thirteenth place within the US, with $ 4.3 billion (USD) worth of merchandise. Likewise, Puerto Rico’s FTZs exported goods valued at $ 360 million (USD). Moreover, Puerto Rico ranks tenth in terms of number of jobs created within free trade zones – 9,612 people employed across all zones. Lastly, Puerto Rico holds the second position in the US for number of businesses using services or incentives offered by a free trade zone, surpassed only by the state of Texas
A breakdown of industries and businesses benefitting from relocating parts or their entire operations to FTZ 61 reveals the following:
Top Five Categories of Foreign Status Merchandise Received (2003)
Electronic Equipment
Chemical Products
Veterinary Products
Pharmaceutical products
Toys
$7,068,749
$6,723,935
$2,825,426
$2,299,979
$1,561,209
Companies With Operations Within The General Purpose Zone # 61, Boundaries
Puerto Rico Exports, Inc.(Prexco)
U.S.F. Worldwide
Sea Air Systems
Almacenes del Castillo
Overseas of the Caribbean, Inc.
Anthem Express World Transport, Inc.
Castell Exports, Inc.
Cosmopar, Inc.
El Morro Ship Chandler
Triangle Cargo Services, Inc.
Caribel Fragrances, Inc.
Renwick Corporation
SMT Duty Free PR, Inc.
InPack Distribution & Logistics Services
Innova Trading Corp.
P. F. Palos, Inc.
Puerto Rico Freight Systems
Sorce: The S.J. Foreign-Trade Zone No. 61, Annual Report 2003
What is a subzone?
Foreign Trade Zone # 61 may also extend its coverage to more businesses through the creation of sub-units that come to be identified as “sub-zones”. A sub-zone is a restricted area within the boundaries of a business operational site, usually of a manufacturing nature, that allows for activities not easily transferable to a foreign trade zone to also benefit from the general-purpose foreign trade zone; sub-zones are sponsored by general-purpose trade zones.
In such instances, the participating business assumes the rights and privileges of the foreign trade zone by being considered part of the sponsoring general-purpose trade zone’s boundaries - the business site becomes an extension of the general-purpose trade zone. In such cases all regulations and parameters that apply to the general-purpose trade zone also become effective for the sub-zone. Examples of some sub-zones sponsored by FTZ #61, which have been created in distinct parts of the Island, include:
• Pfizer Pharmaceuticals LLC (Formerly Searle, & Co.)
• Pfizer Pharmaceuticals LLC (Formerly Searle LTD.)
• Glaxco Smith Kline (SB Pharmaco, Inc.)
• Merck Sharp & Dohme Quimica de P.R., Inc.
• Merck Sharp & Dohme Quimica de P.R., Inc.
• IPR Phamaceutical, Inc. (Astra Zeneca)
• IPR Phamaceutical, Inc. (Astra Zeneca)
• Baxter International
• Shell Chemical Yabucoa, Inc. (Formerly PR Sun Oil Co)
• Pepsi-Co Manufacturing International, Limited
• Pfizer Pharmaceuticals LLC 61A
Regulations inside the San Juan Foreign-Trade Zone # 61
All warehousing spaces in FTZ 61 comply with the requirements set forth by the relevant customs authorities. In addition to compliance with such oversight authorities, FTZ 61 facilities also meet the administrating agency’s (Puerto Rico Trade ) operational requirements. Some of these requirements include the following:
Overhead fire control sprinkler system backed up by a 200,000 gallon tank
Loading and unloading docks to facilitate high-volume transfers
Wide driveways and green (common) areas
Armed security 24 hours a day
Roll-up steel doors
Reinforced cement flooring with support capacity for 800 1,200 lbs per square feet
Lighting fixtures and electrical transformers within the locale
Water, electricity and telephone utility services
Site Access
Foreign Trade Zone # 61 is available to its users 24 hours a day, seven days a week. Business hours for transactions with US Customs and Border Protection Service authorities are 8:00 am to 4:30pm, Monday through Friday, except on days in which local and federal holidays are observed.
Leasing Terms
General Tenancy Commitment:
• Five (5) year lease agreement contract
