A Foreign Trade Zone (FTZ) is a secure geographical area “in or adjacent” to a U.S. Port of Entry that is considered to be outside of CBP territory.
Merchandise foreign to the U.S. won’t be subject to CBP procedures and duty payments until the goods leave the FTZ and enter the U.S.
The United States enacted the Foreign Trade Zone Act of 1934 to allow local manufacturers to compete with foreign enterprises.
Companies who are looking to convert their facilities will need to apply with the FTZ board. After the board reviews your application a 9-12 month process will follow before your FTZ is up and running. Customs will require tight security and robust inventory software to provide real-time accountability of any goods moving in and out of the zone. The “Operator” of the FTZ is liable for any goods that leave the zone and are unaccounted for, and Customs needs to ensure that duty is paid on any item leaving the zone for consumption into the United States. Heavy fines are issued by CBP for any unaccounted inventory.
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