FTZ Basics

What is a foreign trade zone?

A FTZ is a restricted site, in or near a US Customs Port of Entry, that is treated by Customs (for purposes of the tariff laws and Customs entry procedures) as being outside the Customs Territory of the United States. Under FTZ procedures, foreign and domestic merchandise may be admitted into the FTZ’s for operations such as storage, exhibition, assembly, manufacture and/or processing – without being subject to formal Customs entry procedures, the payment of Customs duties or the payment of Federal excise taxes.

When merchandise is removed from a FTZ, Customs duties may be eliminated if the goods are then exported from the United States.

If the merchandise is formally entered into US commerce, Customs duties and excise taxes are due at the time of transfer from the FTZ.

For merchandise that is manufactured in the FTZ (with the approval of the Foreign Trade Zones Board
in DC) the importer may elect to pay Customs duties at the lower rate of either the finished product or
its foreign components. In this manner, use of a FTZ can result in the reduction of Customs duties owed by companies that manufacture products in a FTZ (ie – BMW, Mercedes-Benz, Ford, GM, Chrysler, Caterpillar, etc.).

FTZ Activites

Merchandise entering a FTZ may be –

  • assembled
  • stored
  • repaired
  • sampled
  • salvaged
  • mixed
  • repackaged
  • processed
  • displayed
  • tested
  • manufactured
  • manipulated
  • relabeled
  • destroyed
  • cleaned

Types of FTZ’s

General Purpose Zone (GPZ) – a GPZ is established for multiple activities by multiple users. The FTZ/GPZ must be located within 60 statute miles (or 90 minutes driving time) from the outer limits
of a US Customs Port of Entry (in our case the Port of Shreveport). While activities including storage,
inspection and distribution are permitted at all FTZ’s, other activities including processing or manufacturing require special permission from the governing Foreign Trade Zones Board in DC. Sub Zones (SZ) – when a firm wants FTZ-status for its own plant or facility, and when the existing FTZ/GPZ cannot accommodate the firm’s proposed activity, the designation “SubZone” (SZ) may be granted. There is no legal difference in the types of activity that may be undertaken in GPZ’s or SZ’s.

History of FTZ’s

Congress created FTZ’s in 1934 by the enactment of the U.S. Foreign Trade Zones Act (19 U.S.C. 81au) and its implementing the FTZ Board Regulations (15 CFR Part 400) and the US Customs Service Regulations (19 CFR Part 146).

There are 252+ authorized FTZ’s and 427+ SubZones – we are FTZ #234.

  • over 2,800 firms use FTZ/SZ’s
  • over 340,000 people are employed at facilities operating under FTZ/SZ status
  • the total value of merchandise moving through FTZ/SZ’s amounts to over
  • $160 billion annually

Competitors using FTZ

Caterpillar, Peoria, IL
(tractors)Deere & Co., Davenport, IA
(construction eqpt)

Deere-Hitachi, Kernersville, NC
(hydraulic excavators)

Komatsu, Chattanooga, TN
(construction eqpt)

Komatsu, Ripley, TN
(mining eqpt)Komatsu, Miami, FL
(construction eqpt)

Volvo Construction Eqpt., Ashville, NC
(Construction eqpt)

ALSO, all major US-base shipyards