Foreign-Trade Zone (FTZ)

A Foreign-Trade Zone (FTZ) is a designated location in the United States where companies can use special customs 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. FTZ sites and facilities remain within the jurisdiction of local, state, or federal governments or agencies.

What's the difference between an FTZ and a Customs Bonded Warehouse?

An FTZ is a designated geographical area within the United States but is not considered part of United States commerce. However, a Bonded warehouse is within United States Customs territory Therefore, a formal Customs entry must be filed for goods to enter the warehouse.

Advantages to an FTZ include:

• Goods do not go through an official Customs entry process when first stored in the warehouse. This allows for duty payment to be delayed, reduced or even eliminated in some cases.
• FTZ warehouses also don’t have regulations as strict as bonded warehouses. For example, goods imported into an FTZ can be stored, manipulated, or manufactured without being subject to import duties or taxes until they enter the commerce of the United States, but only a specific class of Bonded warehouses can do perform those operations.

But Customs bonded warehouses are also an attractive option.

Advantages to a Customs bonded warehouse include:

• No duty is collected until the product is withdrawn for consumption. This allows importers greater control over their finances.
• Goods can be stores for up to five years
• If an importer is unable to find a buyer in the U.S., the goods can be exported without paying duty.

What is an ASF?

The “alternative site framework” (ASF) is an optional framework for organizing and designating sites that allow 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”. Within an approved service area, a subzone or usage-driven site can be approved 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.

What are the forms of zone sites?

• Magnet Sites: usually located at ports or industrial parks. They are open to multiple zone operators.
• Subzones/Usage-driven sites: approved for a specific company/use.