How FTZ's Work

A Foreign-Trade Zone (FTZ) is an area of land within the United States, located at or near a U. S. Customs port-of-entry, where foreign and domestic merchandise is generally considered to be in international commerce (not in U. S. Commerce Territory). Foreign merchandise may enter this area without formal Customs entry or the payment of Customs duties or government excise taxes.

If the merchandise is later exported from the Zone, no U.S. Customs duty or excise tax is levied. If the final product is imported into the United States, Customs duty and excise taxes are due, but only at the time they leave the FTZ and enter U.S. Customs Territory.

In cases where foreign components are brought into the Zone and combined into a new product, the user may elect to pay the lower of the duty applicable to the product or to the component parts, and no duty must be paid on the portion of the value of the product created by domestic parts or labor in the Zone.

Finally, Zone procedures provide an extremely flexible method of handling domestic and imported merchandise, allowing users to save time, transportation and handling charges.

An FTZ provides U.S. businesses the opportunity to save both money and time on goods sourced abroad.