Foreign-Trade Zones (FTZ) are secure areas under U.S. Customs and Border Protection (CBP) supervision that are generally considered outside CBP territory upon activation. Located in or near CBP ports of entry , they are the United States’ version of what are known internationally as free-trade zones.
How many foreign-trade zones are there in the US?
There are over 230 foreign-trade zone projects and nearly 400 subzones in the United States.
Where are free-trade zones located?
Free-trade zones are organized around major seaports, international airports, and national frontiers —areas with many geographic advantages for trade. Examples include Hong Kong, Singapore, Colón (Panama), Copenhagen, Stockholm, Gdańsk (Poland), Los Angeles, and New York City.
How do foreign-trade zones work?
Foreign-Trade Zones allow companies to bring items onto US soil without paying the duty tax , allowing them to store these goods free of tariff charges, or use parts to manufacture a finished product that can then be exported without the US import/export surcharges.
How do you get a foreign-trade zone?
- Apply Online.
- Designate what type of authority you wish to have (e.g., general purpose, subzones, and production)
- Pay a fee to enter an FTZ.
- Activate your license through the U.S. Customs and Border Protection (CBP).
What is the world’s largest free-trade zone?
The world’s largest free trade zone – The European .
Who is in charge of a foreign trade zone?
FTZs operate under the oversight and supervision of US Customs and Border Protection , as part of the United States Homeland Security Council. Even though FTZs are considered to be outside the Customs territory of the United States, they are on US soil.
Who benefits from free trade zones?
- Deferral, reduction, or elimination of certain duties. ...
- Relief from inverted tariffs. ...
- Duty exemption on re-exports. ...
- Duty elimination on waste, scrap, and yield loss. ...
- Weekly entry savings. ...
- Improved compliance, inventory tracking, and quality control. ...
- Indefinite storage.
What is a free trade country?
A free trade area is a group of countries that have few or no barriers to trade in the form of tariffs or quotas between each other . Free trade areas tend to increase the volume of international trade among member countries and allow them to increase their specialization in their respective comparative advantages.
What do you mean by free trade zones?
A free trade zone is a specified area within a country jurisdiction . In this area, goods may be landed, stored, handled, manufactured or re-configured and re-exported without being subject to any customs duties. ... Free trade zones are usually located around the major seaports and international airports.
What is the purpose of a foreign trade zone?
A foreign-trade zone is a designated location in the United States where companies can use special customs procedures that help encourage U.S. activity and value added – in competition with foreign alternatives – by allowing delayed or reduced duty payments on foreign merchandise, as well as other savings.
What can be done in free trade zones?
What can be done in a Foreign-Trade Zone? Any merchandise that is not prohibited from entry into the U.S. may generally be admitted into a Zone . Manufacturing, processing and any activity that results in a change of the tariff classification can occur in a Zone but must be specifically approved by the FTZ Board.
What is foreign trade with example?
Foreign trade is the exchange of capital, goods, and services across international borders or territories . In most countries, it represents a significant share of gross domestic product (GDP). ... Without international trade, nations would be limited to the goods and services produced within their borders.
Why do countries carry on trade with each other?
Countries trade with each other when, on their own, they do not have the resources , or capacity to satisfy their own needs and wants. By developing and exploiting their domestic scarce resources, countries can produce a surplus, and trade this for the resources they need.
What is the export processing zone?
An Export Processing Zone (EPZ) is a Customs area where one is allowed to import plant, machinery, equipment and material for the manufacture of export goods under security , without payment of duty.
What is a Foreign Trade Center?
Authorized by the Foreign-Trade Zones Act of 1934, a FTZ is a federally approved location within the United States , which is considered outside of US Customs territory where domestic and foreign merchandise may be placed without formal customs entry and without payment of duties and taxes.
