Foreign-trade zones (FTZs) are secure areas located in or near U.S. Customs ports of entry, but legally considered to be outside the Customs territory for the purpose of tariff laws and Customs entry procedures.
You may contact the Executive Secretary, of the Foreign-Trade Zones Board, Department of Commerce (202-927-2862), the National Association of Foreign-Trade Zones, Washington, D.C. (NAFTZ) (202-331-1950), and the nearest Customs port in which you are interested in doing business.
With foreign-trade zones, unlike other similar programs (bonded warehouses and temporary importing under bond) administered by Customs, there is generally no time restraints on merchandise remaining in a zone, whether or not subject to duty. Domestic and foreign goods may be admitted to a zone without being subject to Customs duties or certain excise taxes. Goods may be exported from a zone generally, free of duty and tax.
If you are interested in establishing a zone, the applicant for a zone must submit an application to the Foreign-Trade Zones Board, who review and approve applications to establish, operate, and maintain foreign-trade zones (contact the FTZ Board for guidelines for completing an application ). Contact the Customs Port Director nearest the location you have in mind, to discuss your zone project. (FTZs must be located at or near a Customs port of entry).
Applications for a zone grant can be rather involved and expect a somewhat lengthy approval process, perhaps a year or more. (New General Purpose Zone applications take about 18 months and a New Subzone about 12 months)
No, the grant of approval is issued by the Foreign-Trade Zones Board. However, before operations can take place, the zone operator (or grantee/operator) shall make written application to the Customs Port Director to obtain approval of activation of a zone.
There are two types of foreign-trade zones - General Purpose Zones and Subzones. General Purpose Zones are usually an industrial park or port complex whose facilities are available for use by the general public. Subzones are sponsored by General Purpose Zones and are normally single-purpose sites for operations that cannot be feasibly moved to or accommodated in a General Purpose Zone.
Merchandise admitted into a zone may be stored, exhibited, repacked assembled, distributed, sorted, graded, cleaned, processed, tested, labeled, repaired, mixed with foreign or domestic merchandise otherwise manipulated, destroyed, or manufactured.
Zone status is generally at the option of the applicant for admission or the owner of the merchandise. There are cases where the status is dictated by law, regulation, or special conditions contained in the zone grant.
Merchandise in non-privileged status will be classified in its condition at the time of legal transfer from the zone For instance, if merchandise is admitted to a zone with non-privileged foreign status, manufactured into a new product with a lower duty rate, the duty owed upon legal transfer from the zone for consumption will be assessed at the lower duty rate of the "new" product.
Merchandise in privileged foreign status shall be classified and appraised in its condition at the time the privilege is requested and through proper application to the port director. Sometimes it is to the ad vantage of the applicant to admit the merchandise in privileged foreign status. Obviously, if a product admitted into a zone has a duty rate lower than that of the finished product, then the operator would want to admit the merchandise in privileged foreign status so those components will be assessed at the lower duty rate when transferred from the zone for consumption.
Foreign-trade zones are part of a duty deferral program. Generally, payment of duties and excise taxes on foreign merchandise admitted to a zone will be deferred until the goods are transferred from the zone to the Customs territory for consumption. Merchandise may be manufactured or changed in condition while in the zone, substantially lowering the duties eventually paid; merchandise may be permanently stored, destroyed, or exported, eliminating, in most cases, the need to pay duties and excise taxes.
Under NAFTA Duty Deferral provisions, withdrawals from a zone of merchandise manufactured or changed in condition there and subsequently exported to Canada (and Mexico on or after January 1, 2001) are treated as if entered for consumption for purposes of assessing duties and fees.