A Foreign Trade Zone (FTZ) is a designated, secure location where imported raw materials or goods and product that will be exported can be stored, processed, repaired, repackaged, or finished before being (re-)exported or entered into the domestic marketplace. Materials and goods that are brought into an FTZ are exempt from customs duties for as long as they remain in the zone.
The Foreign-Trade Zone program was created in 1934 by Congress as an incentive to encourage companies to keep investment and jobs in the United States and not move production offshore. U.S. FTZ's are counterparts to free trade zones in other parts of the world.
Is a Foreign Trade Zone Right for Your Company?
FTZ's are ideal for companies that meet one or more of the following criteria:
- Import a high volume of product
- Import high-value products
- Currently use other U.S. Customs tariff-reduction programs (e.g. Duty Drawback, Bonded Warehouse, Temporary Importation Bonds
- Import components for final assembly or packaging into a finished product
- Have a high volume of scrap
Benefits of Working with a Company Authorized to Operate within an FTZ
The benefits of working with an authorized FTZ operator are:
- Duty Deferral: Product in the FTZ is not subject to U.S. Customs duties or excise tax until it enter the U.S. market for domestic consumption
- Duty Exemption: Product re-exported (from the FTZ to back overseas) remains exempt from U.S. Customs duties and federal excise tax
- Inventory Taxes: Goods in the FTZ held for export are exempt from state and local inventory taxes.
- Disposed of Product Exemption: Damaged product disposed of within the FTZ remains exempt from U.S. Customs duty and excise tax
- Inverted Tariff: Authorized product finished in the FTZ that has a lower duty rate than the rates on foreign inputs, can be entered into the U.S. market at the lower duty rate
- Logistical Benefits: Streamlined customs procedures may be available for companies using the FTZ
- No Time Limit: Product may remain in the FTZ indefinitely
- Security: FTZ locations are secured under U.S. Customs and Border Patrol regulations
Typical Zone Users
These types of companies typically make use of FTZ's:
- Automotive assembly plants
- Automotive OEM suppliers
- Distributors
- Ecommerce merchandisers
- Pharmaceutical companies
- Electronics and computer manufacturers
- General manufactures
- Food processors
- Petrochemical companies
About ASW
Located in FTZ #181, ASW’s Akron/Mogadore operations are strategically located to quickly access over 60% of the U.S. population and more than 50% of Canada’s. A partnership with ASW offers foreign and domestic companies an opportunity to defer, reduce, or eliminate duties and tariffs on imports.