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Foreign Trade Zone (FTZ)

What is a Foreign Trade Zone (FTZ)?

A United States Foreign Trade Zone is a physical, secure area within the US, often located in or close to a Port of Entry. An FTZ is considered outside of the Customs territory of the United States, and so shippers can avoid paying customs duties on items while they remain inside a zone.

FTZs can help shippers reduce costs, streamline the import/export process, and manage compliance. Some benefits of using FTZs are: consolidated customs entries (and therefore, customs entry fees), deferred customs duties, lower tariff class assignments for items changed or built within the zone, and the ability to test or modify items pending FDA or other government approval.

Any item not prohibited by US law or declared exempt (determined by US Customs and Border Protection (CBP)) can be placed in an FTZ for an unlimited amount of time. Once inside the zone, importers can elect to store, use, or re-export the items according to a list of pre-approved actions.

Actions permitted within an FTZ include:

  1. Assembly
  2. Consolidation
  3. Salvaging and destruction
  4. Exhibition
  5. Manipulation
  6. Testing
  7. Manufacturing
  8. Mixing
  9. Processing
  10. Relabeling and repackaging
  11. Compliance reviews
  12. Sampling
  13. Shipping
  14. Storing

Note: Internationally, Foreign Trade Zones are also known as Free Trade Zones.

For more information in Foreign Trade Zones and the benefits they could provide to your business, see our FTZ overview.

Related Terms

Customs Broker Customs Bond Customs Clearance Fee

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