What is a Foreign Trade Zone?

A foreign trade zone is a secure or restricted-access site in or near a U.S. port of entry, authorized by the U.S. Foreign-Trade Zones Board and operated under the supervision of the United States Customs Service. An FTZ is an area physically located in the United States, but (metaphysically) located outside the Customs territory of the United States.

Foreign Trade Zone Benefits

The following are benefits that can be attained from using a Foreign Trade Zone:

  1. No duty is ever paid on re-exported merchandise.
  2. If the merchandise is sold domestically, no duty is paid until it leaves the zone or zones.
  3. If foreign merchandise is manufactured into a product with a lower duty rate, the lower duty rate applies on the foreign content when duty is paid.
  4. Merchandise in a zone may be stored, repackaged, manufactured, manipulated, destroyed, altered or changed.
  5. No duty is charged on most waste and scrap from production in an FTZ.