Glossary
What is a Foreign Trade Zone (FTZ)?
A Foreign Trade Zone (FTZ) is a secure US site legally treated as outside customs territory, where goods can be stored, handled or manufactured before duty is paid. Duty falls only when the goods leave the zone for US commerce. |
How does an FTZ work?
Goods enter without a formal customs entry and without duty. Inside the zone they can be stored, inspected, repacked, assembled or manufactured under approval. Duty is assessed only when they are withdrawn into US commerce — and if they are re-exported instead, no US duty is ever paid on them.
Why manufacturers use them
- Duty deferral, holding cash while goods sit in the zone
- Inverted tariff relief, where a finished product carries a lower rate than its components
- Duty eliminated altogether on re-exports, and on scrap and waste
- Weekly entry filing, which reduces merchandise processing fee costs
FTZ or bonded warehouse?
A bonded warehouse suspends duty for storage, with limited manipulation and a time limit. An FTZ permits manufacturing, has no general time limit, and can change the tariff classification of what is inside it. They are different tools for different problems, and the FTZ programme dates back to the Foreign-Trade Zones Act of 1934.
iCustoms keeps zone admissions and withdrawals reconciled, so the duty position is always defensible. |
