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FTZ (Foreign Trade Zone)


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The Concept of Foreign Trade Zones (FTZ)

What is a Foreign Trade Zone (FTZ)?

A **Foreign Trade Zone (FTZ)** is a secure region that is "in or near" a U.S. Port of Entry and is considered outside the CBP territory. CBP processes and duty payments do not apply to foreign goods in the FTZ until they leave and enter the U.S.

Advantages of Utilizing an FTZ

  • Import raw materials, parts, or partially finished products with a lower duty rate.
  • Compete with international producers by assembling products without duty before leaving the FTZ.
  • Export items in-bond without paying duty to the United States.
  • No duty drawback required for goods imported into an FTZ and then exported.
  • Optimize MPF payment at $485 on all goods imported during the zone week by declaring customs weekly.

How to Establish an FTZ?

Businesses must apply to the FTZ board to transform their spaces. The FTZ will start operating 9 to 12 months after the board reviews the application.

Operational Requirements for FTZ

  • Implement strict security measures and reliable inventory software for real-time accountability.
  • The "Operator" of the FTZ is accountable for unreported items leaving the area.
  • Customs ensures duty payment on goods leaving the area for consumption in the United States.
  • CBP imposes severe penalties for any unaccounted inventory.

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