What Is a FTZ?

A Foreign Trade Zone (FTZ) is a site in or near a U.S. Customs port of entry where foreign and domestic merchandise is generally considered to be international commerce. Foreign or domestic merchandise may enter this enclave without a formal Customs entry or the payment of Customs duties or government excise taxes.

Zone procedures provide one of the most flexible methods of handling domestic and imported merchandise. Entrepreneurs are using FTZs with a creativity that portends a new beginning of real benefits for global orientation. Companies both large and small are taking advantage of the direct savings. Companies large and small and in nearly every industry have found profitable homes in FTZs, and the list is growing.

Merchandise in a Zone can be:

• Stored • Displayed • Assembled • Tested • Repaired • Manufactured • Sampled • Manipulated • Salvaged • Re-labeled • Mixed • Destroyed • Re-packaged • Cleaned • Processed If the final product is exported from the United States, no U.S. Customs duty or excise tax is levied. If, however, the final product is imported into the United States, Customs duty and excise taxes are due only at the time of transfer from the FTZ and formal entry into the United States. The duty paid is the lower of that which is applicable to the product itself or its component parts. Thus, Zones present opportunities to realize Customs duty savings by Zone users.