If your business is already benefiting from some type of customs tariff-reduction program, you may want to look into moving your operations to a Foreign Trade Zone (FTZ). Doing so will likely save you money, streamline your operations, reduce your paperwork and improve your overall market competitiveness and flexibility.
Below are answers to a few basic questions about FTZs and how they can benefit your business.
What Is a Foreign Trade Zone?
An FTZ is a designated site (usually near a customs port of entry) where foreign or domestic items are allowed to enter the United States without the payment of normal customs duties or government taxes. This helps global firms with US-based operations become more competitive on the world economic stage. FTZ tax breaks and other benefits offset the higher cost of doing business in the United States versus a foreign country, which usually has more affordable labor rates and cheaper real estate.
What Merchandise Can Be Included in an FTZ?
Only items that can be lawfully imported in the United States are allowed to enter Foreign Trade Zones in the country. Illegal merchandise (such as drugs and some types of weapons) that is banned from entering any of the country’s ports is not allowed in an FTZ.
Some FTZs are not licensed or equipped to handle dangerous or specialty items such as explosives. In this case, such materials will not be allowed into FTZs that are not designated to receive said items. The Foreign Trade Zone Board, which oversees FTZs, may also block the entry of any merchandise that it deems potentially harmful or detrimental to public health and interest.