WFWhelanCo
ss_truck ss_boat ss_plane ss_train
FTZ - Foreign Trade Zone

Foreign Trade Zones were created in the United States to provide special customs procedures to plants engaged in international trade-related activities. Duty-free treatment is accorded items that are processed in FTZs and then re-exported and duty payment is deferred on items until they are brought out of the FTZ for sale in the U.S. market. This helps to offset customs advantages available to overseas producers who compete with domestic industry.

Benefits:

  • Duty Deferral
  • Elimination of Duty
  • Destruction
  • Duty Reduction
  • Light Assembly
  • Distribution

The FTZ Board (composed of representatives from the U.S. Departments of Commerce and Treasury) has its operational staff in the International Trade Administration’s Import Administration.

FTZs are considered to be outside of U.S. Customs Territory for the purpose of customs duty payment. Therefore, goods entering FTZs are not subject to customs tariffs until the goods leave the zone and are formally entered into U.S. Customs Territory.

Merchandise that is shipped to foreign countries from FTZs is exempt from duty payments. This provision is especially useful to firms that import components in order to manufacture finished products for export. There is no time limit on goods stored inside a FTZ and certain foreign and domestic merchandise held in FTZs may be exempted from state and local taxes. This allows firms to minimize their costs while their products are waiting to be shipped. In addition, quota restrictions are in some cases waived for items entering a FTZ; however, the restrictions would apply if the items were to enter the U.S. market.

A variety of activities can be conducted in a FTZ, including assembly, packaging, destroying, storing, cleaning, exhibiting, re-packing, distributing, sorting, grading, testing, labeling, repairing, combining with foreign or domestic content, or processing. Manufacturing and processing require specific FTZ Board approval.