The Dos and Don’ts of a Foreign Trade Zone


Originally published in Law 360 on August 24, 2012.

Imagine a corporation in the business of building and leasing warehouses to manufacturers, in particular, manufacturers that import raw materials to be manufactured here in Arizona. The hypothetical corporation owns a large plot of undeveloped land in Maricopa County upon which it would like to construct a warehouse. But, in order to build the warehouse, it needs construction financing and tenants who are willing to pre-lease space in the warehouse. The corporation needs to make its property as attractive as possible to would-be manufacturing tenants. But how?

Now imagine a manufacturer in the business of assembling goods. While it produces final goods in the United States, most of its raw materials are imported from outside the country and are subject to tariffs. Moreover, the tariffs on the imported raw materials are higher than the tariffs on the final product. The manufacturer needs to find cost-saving measures that will help it compete in a globalized market. What can it do?

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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