International Trade Free Trade Zone Foreign Trade Zone Country Business Info Special Trade Zones Export processing zones


Foreign Trade Zone :

  • A foreign - trade zone is a designated location in  the United States where companies can
    use special procedures that help encourage U.S. activity and value added - in competition
    with  foreign  alternatives  -  by  allowing  delayed  or  reduced  duty  payments  on  foreign merchandise, as well as other savings.

    A site which has been granted zone  status may not be used for zone activity until the site
    has  been  separately  approved  for  FTZ  activation  by  local  U . S. Customs  and  Border Protection (CBP) officials,and the zone activity remains under the supervision of CBP.FTZ sites and facilities remain within the  jurisdiction  of  local, state or federal governments or agencies.

 What is the ASF? 

The " alternative  site  framework " ( ASF )  is  an  optional  framework  for  organizing  and designating sites that allows zones to use quicker and less complex procedures to obtain
FTZ designation for eligible facilities.

To  reorganize  under  the  ASF, each  zone  grantee will  propose a " service  area " . Once
approved by the FTZ  Board ,a subzone or usage - driven site can be designated anywhere in  the service area within 30 - days using a simple application  form . The ASF allows zone designation  to  be  brought  to  any  company  that  needs it , eliminating the need for  zone  grantees to predict where the zone will be needed and pre-designate sites. 

 Who is on the Foreign-Trade Zones Board? 

    The Foreign - Trade  Zones  Board  is  comprised of the Secretary  of  Commerce  and  the
    Secretary  of  the  Treasury . The  Board  is chaired  by  the Secretary  of  Commerce . The
    Commissioner of U.S. Customs and Border Protection also plays a key role, as it did prior
    to  its  recent  move  from Treasury to the  Department of  Homeland Security ,providing a
    position during the  FTZ  Board  voting  process with respect to customs security , control, and resource  matters . The  Board  has  delegated  action  authority on most matters to a Committee of Alternates, which is composed of the Assistant Secretary of Commerce for Enforcement and Compliance and the Deputy Assistant Secretary of the Treasury for Tax, Trade, and Tariff Policy.

     What are the benefits to a zone user? 

    • Duty Exemption. No duties on or quota charges on re-exports.
    • Duty Deferral. Customs duties and federal excise tax deferred on imports.
    • Inverted Tariff. In situations where zone production results in a finished product that has a lower duty rate than the rates on foreign inputs (inverted tariff), the finished products may be entered at the duty rate that applies to its condition as it leaves the zone (requires prior authorization).
    • Logistical Benefits . Companies  using  FTZ  procedures  may  have access to streamlined
      customs procedures (e.g. " weekly entry " or " direct delivery " ).
    • Other  Benefits . Foreign  goods  and  domestic  goods  held  for  export  are  exempt  from state / local  inventory  taxes .  FTZ  status  may  also  make  a  site  eligible  for state/local benefits  which are unrelated to the FTZ Act.

       What Activity is Permitted in Zones? 

      Merchandise in a zone may be assembled, exhibited, cleaned, manipulated, manufactured,
      mixed , processed , relabeled , repackaged , repaired , salvaged , sampled , stored, tested, displayed and destroyed . Production activity  must  be  specifically authorized  by the FTZ Board. ( Production  activity  is defined as activity involving the substantial transformation of  a foreign  article  oractivity  involving a change inthe condition  of the article which  results in a change in   the customs classification of the article or in its eligibility  for entry  for  consumption.)Retail trade is prohibited in zones.

     How do I know if a zone is right for my community/company? New Zone :
    The first things that should be done are 1 ) to assess the level of international
    trade in the  area   and  if there is a need for zone services for local   companies and 2 ) to
    determine if is an existing zone ( s ) adjacent to the CBP port ( s ) of entry that will already
    serve companies needs . A new zone can only be approved if the applicant demonstrates
    that the existing zone (s) will not meet the " convenience of commerce . " The application
    requirements are extensive and the process is lengthy (requiring approx.10 months after
    the FTZ Board " dockets " the completed application ) . Also ,if the zone is approved there
    are security  and  operating   requirements  that may be cost  prohibitive if  there is  not  a
    strong need for zone services . It may be much more efficient ( from time , resource , and
    cost perspectives) to discuss with the existing zone ( s ) the sponsorship of subzones for
    companies in your community.
    Subzone / usage-driven site: If a company is interested in pursuing FTZ designation for its
    facility , the process under the FTZ Board's  2012 regulations is quick ( as little as 30 days
    with  a  maximum  time  of 5 months , depending  on  the  specific procedure  used  by  the applicant) and straightforward. The FTZ Board staff and the grantee of your nearby FTZ(s) can provide guidance on specific procedure to follow.
    Production  Authority : Any  company  interested  in  applying for production authority in a zone should perform a cost - benefit analysis to make sure that the FTZ benefits outweigh the  costs of operating  in  the  zone . The  first  step  to request  production  authority is to submit a " Production Notification " The standard  timeframe  for the FTZ Board to make a decision on  a  production  notification  is  120  days  from  submission .  If  the  FTZ  Board determines  not  to  authorize  certain  activity  at  the  end of the notification process , the applicant  may  choose  to  use the more extensive " application " process  for production authority.

 

 Where can a Zone be Located? 
Zone sites must be within or adjacent to a U.S. Customs and Border Protection(CBP) port  of  entry . The adjacency  requirement  can  be  satisfied  if one  of  the following factors is met:

     

    The  zone or subzone site is within the  limits of a CBP port of entry.The zone or subzone site is  within  60  statute miles of the outer limits of a CBP port of entry.
    The zone or subzone site is within 90 minutes ' driving time  from the outer limits
    of a CBP port of entry as verified by the CBP Service Port Director.
    For  subzones  only : subzone sites that are outside the 60 miles / 90 minutes driving time  from  the  outer limits of the CBP  port of entry  may alternatively  qualify  to be considered adjacent if they work  with  the  CBP Port  Director  to  ensure that proper oversight measures are in place.

    Evaluate Your Potential FTZ Duty Savings using the (Worksheet for FTZ Production). 

       This worksheet can help you easily gauge potential FTZ duty savings. 
     - Enter the requested information and the worksheet will automatically calculate
       estimated FTZ duty savings.  
     - Use additional copies of the worksheet for additional inputs or finished product-
       input combinations.

     Definition of "Production": 


     " Activity  involving the substantial  transformation of a  foreign article resulting in a new and  different  article  having  a different  name , character , and use , or activity involving  a  change   in  the  condition  of  the  article  which  results  in  a change  in the customs classification of the article or in its eligibility for  entry  for consumption  (15  CFR 400.2(o))." For  most companies , this  means that if the HTSUS number of  any  foreign status component changes, production authority is needed.

     

    The table below contains request formats,as well as
    links to pages which provide additional information :

    Request

    Application Format

    Samples

    For Additional Information

     Production  Notification:

    FTZ Production Notification

     

    Production Notifications and Applications Page

     Production  Application:

    FTZ Production Application

    Sample Manufacturing Application

    Production Notifications and Applications Page