Foreign Trade Zones
A Foreign Trade Zone (FTZ) is a physical site located within the U.S., but considered outside the U.S.A. customs territory for duty purposes.
This means imported goods may be admitted or delivered into de FTZ without formal customs entry or the payment of duty and MPF fees. (U.S. goods may also be brought into the FTZ.)
FTZ allow avoidance, reduced or delayed duty payments on foreign merchandise, in addition to other savings.
While in the FTZ, merchandise may be assembled, exhibited, cleaned, manipulated, manufactured, mixed, processed, relabeled, repackaged, repaired, salvaged, sampled, stored, tested, displayed, & destroyed.
The FTZ reflects U.S. trade policy. Its purpose is to encourage activity and jobs within the U.S. in competition with foreign alternatives.
Importers Use Foreign Trade Zones to:
- Store merchandise until sold, delaying payment of duty and MPF.
- Warehouse & distribute merchandise in the U.S., delaying payment of duty and reducing MPF.
- Warehouse & distribute merchandise for export, eliminating payment of duty and MPF fees.
- Inspect for defects and avoid duty on merchandise that is returned or destroyed.
- Manipulate imported goods by combining (possibly with domestic goods) into kits to reduce or avoid payment of duty.
- Manufacture imported & domestic goods, delaying and avoiding payment of duty on parts and components used in a finished goods with an “upside down tariff”.
What are the Benefits of A Foreign Trade Zone?
The benefits are both financial and operational.
- Duty Deferral
- Duty Elimination
- Merchandise Processing Fee (MPF) Reduction
Simplified Procedures:
Upon arrival at the port of entry, goods move into the FTZ without CBP formalities. Blanket authority to admit goods immediately into the FTZ is available. Goods leaving the FTZ can be declared on a weekly entry that summarizes all activity. FTZ inventory control & reporting requirements may be automated and integrated with ERP systems.
