Foreign Trade Zones

Foreign Trade Zones // Warehousing Solutions

Foreign Trade Zone (FTZ): What Is It and How Does It Work?

A foreign trade zone (FTZ) is a designated area within a country’s borders where goods can be imported, processed, and re-exported without being subject to customs duties or taxes.

FTZs are typically located near ports or airports but can also be established in other areas to promote economic development. Access World uses them to deal with imported or exported goods. By using an FTZ companies can defer or reduce customs duties and to streamline their supply chain.

How Does an FTZ Work?

When goods are imported into an FTZ they are considered to be outside of the country for customs purposes. This means that they are not subject to customs duties or taxes until they are transferred out of the zone and into the domestic market. As a result companies can hold imported goods in an FTZ indefinitely and allowing them to defer or reduce customs duties until the goods are needed for domestic consumption or re-exported.

To operate within an FTZ companies must obtain a permit from the local customs authority. This permit allows them to import goods into the FTZ. Companies must also comply with local laws and regulations, including labor and environmental standards.

Conclusion

In summary a foreign trade zone is a designated area within a country’s borders where goods can be imported, processed, and re-exported without being subject to customs duties or taxes. FTZs can help companies reduce customs duties, streamline their supply chain and improve their competitiveness in global markets. If you are considering using an FTZ please consult with one of our experts.

For more information, please visit U.S. Customs and Border Protection and National Association of Foreign-Trade Zones (NAFTZ).