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Sharp Receives Foreign Trade Zone Designation for Lehigh Valley Operation

By Nicole Radzievich Mertz on November 28, 2022

Sharp received a Foreign Trade Zone designation for some of its operations in the Lehigh Valley. An FTZ  allows businesses to defer, reduce or eliminate their customs duties and other tariffs or taxes. (Photo Courtesy of Sharp)

Sharp, a global leader in pharmaceutical and biotech packaging, is helping clients reap the benefits of the Lehigh Valley’s Foreign Trade Zone, a location in the U.S. customs territory where businesses can defer, reduce or eliminate their customs duties and other tariffs or taxes.

The designation serves the company’s clients at its Allentown campus and Macungie and Bethlehem facilities. Sharp already has the designation at its Conshohocken location in Montgomery County.

“The Foreign Trade Zone in the Lehigh Valley saves our clients both time and finances related to contract services we perform in the Lehigh Valley, which is already a desirable region for Sharp’s clients because of its location in the heart of the Northeast supercluster of life sciences companies,” said Jeff Benedict, Sharp’s Chief Commercial Officer. “The savings and efficiencies are critical for companies in this highly regulated, growing industry across oral solid and cold chain bioscience products.”

Benedict said the FTZ allows for clients to have Sharp store or package products under FTZ rules in order to be well ahead of a specific timeline especially if it is a new product launch or bulk products from a foreign site that is not approved yet in the U.S. market. The streamlined customs paperwork and procedures as well as priority pier-side movement are critical to Sharp’s pharmaceutical and biotech clients who are looking to get their commercial products and life changing clinical trial drug candidates to patients. In addition, deferred customs duties on imports are important to managing budgets, he said.

Sharp employs about 1,300 in the Lehigh Valley and 2,000 worldwide and with anticipated growth in business in the Lehigh Valley, he said there’s potential for Sharp to hire more staff to support clients utilizing the FTZ, which became effective in March.

Sharp’s team encompasses a breadth of clinical trial supply and commercial packaging experts including mechanics, warehouse and logistics specialists and technicians, packaging and artwork designers, production technicians, project and account managers, chemists and quality assurance.

Sharp employs 1,300 people in the Lehigh Valley. (Photo Courtesy of Sharp)

The FTZ application process took Sharp about six months to complete. Sharp worked with QAD Precision to support FTZ locations. Sharp learned about the opportunity in a symposium organized by the Lehigh Valley Economic Development Corp. (LVEDC).

Sharp’s inclusion in the FTZ allows the company, with the proper authority from the U.S. Foreign Trade Zones Board (“FTZ Board”) and U.S. Customs & Border Protection (“CBP”), to package, assemble, manufacture, mix, process, relabel, repackage, sample, store, test, and destroy bulk drug product.

The U.S. Customs duty benefits on the activity carried out are dependent upon the situation:

  • If the merchandise never enters the U.S. commerce and is exported under ‘in-bond’ procedures, then no U.S. duties or taxes are ever paid on those items.
  • Customs duties and excise taxes are paid when the products leave the zone and enter U.S. commerce.
  • In an FTZ production/manufacturing environment, when the duty rates on imported parts/components are higher than the duty rate on the finished product assembled in the FTZ, the FTZ Board may approve use of the lower finished product duty rate resulting in a duty reduction or “inverted tariff” benefit.
  • Duty payment on production equipment imported for use in the FTZ could be delayed.
  • Foreign goods and domestic goods held for export may be exempt from state/local inventory taxes in jurisdictions that impose ad valorem taxes on inventory.

FTZs can help facilitate and expedite international trade, help firms conduct international trade-related operations in competition with foreign facilities, help attract offshore activity and encourage retention of domestic activity, assist economic development efforts, and help create and maintain job opportunities.

LVEDC is the grantee for Lehigh Valley Foreign Trade Zone #272, and sponsors applications from companies that want to establish an FTZ for their business. Interested companies should contact Stephanie Wean, LVEDC Program Manager, at [email protected].

Other companies in the Lehigh Valley’s FTZ #272 include Primark, BMW, Cooper Tire, Grundfos Pump, Piramal Critical Care, and Geodis Logistics.

In 2021, 751 to 1,000 employees worked in the Lehigh Valley’s FTZ. Between $250 and $500 million worth of goods were exported to markets outside of the U.S., meaning duties were not paid because the goods did not enter the U.S. Commerce, federal reports say.

There are 197 active FTZs in the United States.

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