1. Foreign-Trade Zones: Supporting
U.S. Competitiveness and Jobs

2. The basics
• A foreign-trade zone (FTZ) is a location designated by
the U.S. FTZ Board where special customs procedures
may be used.
• The FTZ program was created by Congress in 1934.
• FTZs help encourage activity and value-added at U.S.
facilities in competition with foreign alternatives by
allowing delayed or reduced duty payments on foreign
merchandise, as well as other savings.
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3. The basics (cont.)
• FTZ sites/subzones are sponsored by limited number
of local “grantee” organizations.
• Before a company can conduct FTZ activity at a site
authorized by the FTZ Board, the company must get
CBP approval for “activation” of the space to be used.
• All FTZ activity is under CBP supervision. Companies
operating in FTZs must meet CBP requirements for
security and inventory control.
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4. Public benefits of FTZ program
• Help facilitate and expedite international trade.
• Help firms conduct international trade-related
operations in competition with foreign facilities.
• Help attract offshore activity and encourage retention
of domestic activity.
• Assist state/local economic development efforts.
• Help create and maintain employment opportunities.
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5. Potential FTZ benefits for users
• Duty Exemption (on re-exports). No duties or quota
charges.
• Duty Deferral (on imports). Customs duties and
federal excise tax deferred.
• Inverted Tariff (on imports). In FTZ manufacturing or
“kitting” activity, imported inputs can have higher duty
rates than the finished product to be entered into U.S.
commerce. The FTZ Board may allow applying the
lower finished-product duty rate to the foreign inputs.
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6. Potential FTZ benefits for users (cont.)
• Logistical Benefits. Companies using FTZ
procedures may have access to streamlined CBP
procedures (e.g., "weekly entry" or "direct delivery").
• Other Benefits: Poss. benefit on imported production
equip. to be used in FTZ. 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 unrelated to the FTZ Act.
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7. Modernizing the FTZ program
• FTZ Board’s emphasis has shifted to facilitating
designation of sites for companies’ use.
• Optional “Alternative Site Framework” (adopted in
2008, incorporated into regulation in 2012) radically
simplifies and expedites bringing FTZ to companies.
• 2012 regulations (first overhaul in 20 years) streamline
and accelerate procedures wherever possible.
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8. Alternative Site Framework (ASF)
• Developed in consultation with FTZ grantees and users
through 18-month process.
• Shifts focus to bring FTZ to companies as quickly and
simply as possible.
• Largely eliminates concerns associated with
speculative designation of FTZ sites (e.g., fairness of
having only a few property owners benefit from
advance designation, CBP difficulty in providing input
on site designation when future use unknown).
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9. Alternative Site Framework (cont.)
• A grantee that is approved to use the ASF serves a
specific “service area” (generally list of counties).
• Within service area, simple 30-day process to bring
FTZ to companies. In sync with speed of business.
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10. New regulations (2012)
• Complete overhaul of regulations through extensive
public comment process (incl. regional forums)
• Major changes needed to keep pace with speed of
business and ASF improvements.
• For ordinary requests for “production” authority, much
less paperwork; decision timeframe cut to 120 days.
• Faster, simpler processes reduce costs of access to
FTZ program, increase companies’ participation.
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11. Questions?
For more information: www.trade.gov/ftz
For questions later, contact:
Liz Whiteman
Elizabeth.Whiteman@trade.gov or
(202) 482-0473
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