Foreign Trade Zone (FTZ)

What Is a Foreign Trade Zone?

A Foreign Trade Zone (FTZ) is a secure area supervised by U.S. Customs and Border Protection, in which customs fees, such as duties and tariffs, are deferred for goods stored within. These fees don’t come due until the goods are withdrawn from the FTZ for consumption. The resources available to importers who make use of such zones can include warehousing, access to multiple modes of transportation, and industrial parks where those who use the zone can build facilities of their own.

Other than the obvious advantages of deferring payment of certain customs taxes, FTZs also offer the following benefits to importers who operate within them:

• Excise taxes and duties are not incurred on goods exported from the zone
• Security requirements established by CBP protect items in the FTZ from theft
• Users who import goods into the zone for manufacturing/transformative purposes may generally elect to pay the duty on the imported materials or the finished product, whichever is more advantageous to the user

Foreign and domestic goods of all kinds can be placed in an FTZ so long as they are not prohibited by law or subject to one of the following conditions:

• Certain merchandise subject to regulation by a Partner Government Agency (PGA), such as explosives
• Any goods the FTZ Board deems to be detrimental to the public good

Additionally, some products such as alcoholic beverages, tobacco, and firearms cannot be manufactured in these zones as they are subject to an internal revenue tax.

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What is a Foreign Trade Zone?