What is a Foreign Trade Zone?

Foreign Trade Zone (FTZs) are defined in the Regulations of the FTZs Board (19CFR Part 400). According to it: " A Foreign Trade Zone is a restricted-access site, in or adjacent to a Customs Port of Entry, operated pursuant to public utility principles under the sponsorship of a corporation granted authority by the Board and under supervision of the Customs Service".

FTZs are treated, for the purposes of the tariff laws and Customs entry procedures, as being outside the Customs Territory of The United States. Under FTZ procedures, foreign and domestic merchandise may be admitted into zones for operations such as; Storage, Exhibition, Assembly, Manufacture, Processing, without being subject to formal Customs entry procedures, the payments of Customs duties or the payment of Federal Excise taxes.

When merchandise is removed from a Foreign Trade Zone, Customs duties may be eliminated if the goods are then exported from the United States. If the merchandise is formally entered into U.S. commerce, Customs duties and excise taxes are due at the time of transfer from the Foreign Trade Zone.

For merchandise that is manufactured in a Foreign Trade Zone with permission of the Foreign Trade Zones Board, the Importer may elect to pay Customs duty at the lower rate of either the finished product or its components. This way, operating from a Foreign Trade Zone can result in the reduction of Customs duty owed by companies that manufacture products in FTZ.

What they can do for me?

Merchandise entering a zone may be:
• Assembled
• Displayed
• Stored
• Tested
• Repaired
• Manufactured
• Sampled
• Manipulated
• Salvaged
• Relabeled
• Mixed
• Destroyed
• Repackaged
• Cleaned
• Processed

How many types of Foreign Trade Zone exist?

There are two types of Foreign Trade Zones. A General Purpose Zone (GPZ) is established for multiple activities by multiple users. A general purpose zone must be operated as a public utility and must be located within 60 statute miles or 90 minutes driving time from the outer limits of a US Customs port of entry.

FTZ projects may consist of one or multiple sites. Activities including storage, inspection and distribution are permitted at all FTZs, other activities including processing or manufacturing require special permission from the Foreign Trade Zones Board.

In instances where a firm wants Foreign Trade Zone status for its existing plant or facility, and when the existing general purpose zone cannot accommodate the firm's proposed activity, the designation of a "Subzone" may be granted. There is no legal difference in the types of activity that may be undertaken in GPZs or Subzones. .

FTZs Statistics


• Over 2,800 firms use FTZs
• Over 340,000 people are employed at facilities operating under FTZ status.
• Approximately 75% of merchandise received is domestic. Domestic status merchandise is mainly merchandise of domestic origin but includes some foreign origin goods on which Customs entry and duty payments have been made prior to zone admission.
• The total value of merchandise moving through FTZs amounts to more than $160 Billion annually.
• Exports from FTZs exceed 17 billion dollars annually and are growing fast.
• All 50 states plus Puerto Rico have established Foreign Trade Zones.
• There are more than 245 approved general-purpose zones and over 390 approved subzones in the United States