Foreign Trade Zone: Benefits & Models for Success

Written by Expeditors
2 minute read

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Are you an importer interested in the opportunity to defer duty and tax or reduce costs associated with duty and tax altogether?

Free Trade Zones (FTZ) might be a viable option.

FTZ programs have many forms including Foreign-Trade Zones (U.S. only), export processing zones, special economic zones, bonded warehouses, and maquiladoras.

Each country has their own set of rules and regulations for use and operation of FTZ, however, the general goals of an FTZ is to encourage job creation, use of local products and services, and streamline customs processes.

An increasing number of companies are also utilizing free trade zones as a means to reduce exposure to duties and taxes through accepted programs.

In the U.S., a Foreign-Trade Zone is a defined area, where foreign and domestic merchandise is considered outside the U.S. Customs territory.

Talk to an Expeditors logistics expert to further evaluate if utilizing FTZ is  right for your company. 

Merchandise may be admitted for storage, repackaging, manipulation, destruction, and with prior approval by the Foreign Trade Zones Board, manufacturing and processing, without formal Customs entry procedures or payment of Customs duties and taxes.

Duties and taxes are applicable only at the time the merchandise leaves the Zone and enters the U.S. territory. Merchandise may also be destroyed within or exported from the zone without duty payment.


Customs Entry: Goods withdrawn into the US are eligible for weekly entry and MPF is capped at $498

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Duty Exemption: No U.S. Duty, MPF, Federal Excise Taxes, or Anti-Dumping Duties Applied to Re-Exports
Inverted Tariff Relief: Manufacturing companies

Inverted Tariff Relief: Manufacturing companies may elect the duty rate of either the imported inputs or finished products

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Duty Deferral: Unlimited storage period, U.S. Duty and Federal Excise Taxes Deferred until Withdrawn into U.S.

Destruction/Scrap: Duty will not be assessed on product destroyed or scrapped

Companies will want to consider the capital cost, time investment, and compliance risks to determine if a Foreign-Trade Zone program is the right fit!

Download the below whitepaper to learn more about how Expeditors can support FTZ in your supply chiain!

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Blog was originally posted on February 5, 2018 2 PM

Topics: Risk Management, Cargo Claims


Written by Expeditors

2 minute read