There may not be one in your neighborhood quite yet, but Foreign Trade Zones (FTZs) are definitely on the rise. From a scant eight in 1970, the number of FTZs has now soared to 263. And that's good news for importers. Why? Because depending on the nature of your business, making use of a Foreign Trade Zone could save you a lot of money.
By definition, a Foreign Trade Zone is a government-sanctioned site where foreign and domestic materials remain in a kind of international commerce limbo. While they remain in the zone, the materials may be stored, manipulated, mixed with domestic and/or foreign materials, used in assembly or manufacturing processes, or exhibited for sale without triggering the payment of U.S. Customs duties and excise taxes. Though the FTZ may technically lie within the United States' boundaries, the goods residing there are essentially considered to be goods without a country—and so, remain outside U.S. Customs' clutches.
FTZs were created in 1934 to "expedite and encourage foreign commerce." From a customs perspective, goods in a North Mississippi foreign trade zone are treated the same way as those located in, say, China. Imports may flow directly into the zone and be held there indefinitely duty free. Duty is assessed only when those goods are shipped out of the zone into the United States.
FTZs can offer a number of benefits, including:
The advantages to be gained from doing business in a foreign trade zone vary by industry and company, but U.S. companies involved in importing would do well to examine this option carefully. For more information on Foreign Trade Zones, visit the National Association of Foreign Trade Zones Web site at www.naftz.org.