What is a Foreign Trade Zone? 

An FTZ is a specially designated area that is considered to be outside the customs territory of the U.S. In an FTZ:

• Foreign and domestic merchandise may be brought in without being subject to payment of customs duties.

• Merchandise including raw materials, components and finished goods, may be stored, sold, exhibited, repacked, assembled, sorted, graded, cleaned, or otherwise manipulated prior to re-export or entry into the national customs authority.

• Duties are imposed on the merchandise (or items manufactured from the merchandise) only when the goods pass from the zone into an area of the country subject to customs.

Benefits of a Foreign-Trade Zone

FTZ programs offer competitive advantages that allow companies to keep their manufacturing and distribution operations in the U.S., instead of moving them overseas to reduce costs:

• No duties on imported goods that are later re-exported

• Delayed payment of duties on goods that enter the U.S. market

• Manufacturing-specific benefits—with case-by-case approval by the FTZ Board—that can include reduction of duties if a lower tariff rate applies to the finished product leaving the zone than the tariff rates that would have applied on foreign components (also known as an “inverted tariff”)

• Elimination of duties on waste, scrap, and rejected or defective parts

• Reductions in merchandise processing fees because zone users may be able to file a single-customs “entry” (and pay a single fee) per week rather than making multiple entries during the course of a week

In addition, companies are able to:

• Run more efficient inventory control systems

• Participate in special Customs procedures, such as direct delivery, to expedite the movement of cargo

FTZ #63 Advantages

• 10 minutes from the nation’s capital, Washington, D.C.

• Access to a consumer market of 5.8 million people

• Exceptional access to three international airports, the deep-sea Port of Baltimore, and major rail lines

• Major interstate highways, including I-95 (from Maine to Miami), Route 1, Route 301, Route 50, and I-295

• Significant office, warehouse, industrial, and manufacturing/distribution space

• Most competitive lease/purchase rates per square foot in DC/Maryland/Virginia

• Highly skilled and diverse workforce

• EDC direct assistance to companies

Using a Foreign-Trade Zone

Once a zone location has been established, companies are required to “activate” the zone with U.S. Customs and Border Protection (CBP) prior to beginning FTZ operations. To begin this process, EDC staff will work with you through the following steps:

• Discuss your plans for an FTZ

• Perform a cost-benefit analysis to determine whether the FTZ program would benefit you

• Submit a Letter of Intent to express interest in FTZ participation

• Work with a consultant to ensure company’s compliance with FTZ Board and U.S. Customs and Border Protection regulations

• Submit application to EDC

• EDC submits application to FTZ Board

• The company can begin importing as an FTZ company within 30 days of submitting completed and approved application

FTZ-related Resources

• FTZ Board

• National Association of Foreign Trade Zones