An Overview of the Foreign-Trade Zone Program
The FTZ program encourages activity at U.S. facilities in competition with foreign locations by allowing delayed, reduced, and sometimes eliminated, duty payment on foreign merchandise admitted to a zone, as well as other meaningful savings. In the global marketplace, many companies consider moving to foreign locations to reduce operating costs. The benefits of the FTZ program may be the competitive advantage a company needs to keep its manufacturing or distribution operations in the United States.
By reducing costs, FTZs level the playing field and improve U.S. competitiveness. FTZs help businesses reduce production, transaction, and logistics-related costs by lowering effective duty rates, allowing special entry procedures, and encouraging production closer to market. Reducing costs through FTZ use can lead to more competitive U.S. operations, thereby helping to maintain U.S. activity and jobs.
Creating/Retaining Jobs and Encouraging Investment. By helping local employers remain competitive, FTZs contribute to maintaining or boosting employment opportunities. And lower FTZ-based production costs encourage increased investment in U.S. facilities.
A History of the Foreign-Trade Zone Program
Congress passed the U.S. FTZ Act in 1934, in the midst of the Great Depression, as a way to expedite and encourage international trade while promoting activity and investment in the United States. Similar types of “zones” exist in 135 countries and although they differ in some aspects, all have streamlined customs procedures and the potential for reduced or eliminated duty payments.