FTZ Basics

What is a foreign trade zone?

A FTZ is a restricted site, in or near a US Customs Port of Entry, that is treated by Customs (for purposes of the tariff laws and Customs entry procedures) as being outside the Customs Territory of the United States. Under FTZ procedures, foreign and domestic merchandise may be admitted into the FTZ’s for operations such as storage, exhibition, assembly, manufacture and/or processing – without being subject to formal Customs entry procedures, the payment of Customs duties or the payment of Federal excise taxes.

When merchandise is removed from a FTZ, Customs duties may be eliminated if the goods are then exported from the United States.

If the merchandise is formally entered into US commerce, Customs duties and excise taxes are due at the time of transfer from the FTZ.

For merchandise that is manufactured in the FTZ (with the approval of the Foreign Trade Zones Board
in DC) the importer may elect to pay Customs duties at the lower rate of either the finished product or
its foreign components. In this manner, use of a FTZ can result in the reduction of Customs duties owed by companies that manufacture products in a FTZ (ie – BMW, Mercedes-Benz, Ford, GM, Chrysler, Caterpillar, etc.).

Types of FTZ's