Information Summary .. Foreign-Trade Zones Board .. Import Administration

INFORMATION SUMMARY

Foreign-trade zones are designated sites licensed by the Foreign-Trade Zones (FTZ) Board (Commerce Secretary is Chairperson) at which special Customs procedures may be used. These procedures allow domestic activity involving foreign items to take place prior to formal Customs entry. Duty-free treatment is accorded items that are reexported and duty payment is deferred on items sold in the U.S. market, thus offsetting Customs advantages available to overseas producers who compete with producers located in the United States. Subzones are special-purpose zones, usually at manufacturing plants. A site which has been granted zone status may not be used for zone activity until the site or a section thereof has been separately approved for FTZ activation by local U.S. Customs officials, and the zone activity remains under the supervision of the Bureau of Customs and Border Protection, U.S. Department of Homeland Security. FTZ sites and facilities remain within the jurisdiction of local, state or federal governments or agencies.

LEGAL AUTHORITY AND REQUIREMENTS
	FTZ Act of 1934 (19 U.S.C. 81a-81u) est. FTZ Board (Commerce, Treasury) to license and regulate FTZ's.
	FTZ Board regulations (15 CFR Part 400).
	Customs regulations (19 CFR Part 146).

REVIEW CRITERIA
	Each U.S. port of entry is entitled to a zone project -- more only if need is shown.
	Applicants (usually public entities) must have a suitable plan including provisions for facilities and financing.
	Need for the proposed zone must be shown in terms of the local economy and overall economic development objectives.
	Subzones/Zone manufacturing applications are reviewed under "public interest" criteria -- authorization is limited to activity that is consistent with trade policy and yields net positive economic effects, taking into account potential impact on other domestic plants.
	Subzone applicants must demonstrate a significant public benefit in addition to meeting the general manufacturing criteria.

USER BENEFITS
	No duties on or quota charges on reexports.
	Customs duties and federal excise tax deferred on imports.
	In situations where zone manufacturing results in a finished product that has a lower duty rate than the rates on foreign inputs (inverted tariff), the finished products may be entered at the duty rate that applies to its condition as it leaves the zone -- subject to public interest considerations.
	Foreign goods and domestic goods held for export are exempt from state/local inventory taxes. FTZ status may also make a site eligible for state/local benefits which are unrelated to the FTZ Act.

PUBLIC BENEFITS
	Help facilitate and expedite international trade.
	Provide special Customs procedures as a public service to help firms conduct international trade related operations in competition with foreign plants.
	Encourage and facilitate exports.
	Help attract offshore activity and encourage retention of domestic activity.
	Assist state/local economic development efforts.
	Help create employment opportunities.

CURRENT STATISTICS
U.S. communities with zones: over 250
States with zone projects: 50
Pending cases for new zones and expansions: 60
Value of merchandise handled by zones: over $490 billion
Employment at active zone facilities: over 340,000
Exports: $30 billion
Of incoming zone shipments, over 60% is of domestic status (most of this figure represents domestic origin goods, but a small percentage would be duty paid/duty free foreign items).

ADDITIONAL INFORMATION
	The FTZ regulations, application guidelines, locations of zones and contact persons, details of FTZ Board actions, and other information can be found on the FTZ Page
	U.S. Customs and Border Protection information on FTZs can be found on the CBP Web Site
	Orders delegating certain FTZ Board authority from the Secretary of Commerce to the Assistant Secretary for Import Administration can be found here