Free Trade Zones, also known as Foreign Trade Zones are specific geographic areas designated for storing imported goods. The effect of the designation is that import duties on the merchandise are deferred until the items are actually shipped to a buyer within the U.S. Zones are highly regulated by the U.S. Treasury Department. There are around 250 general and over 500 special purpose zones in the United States. Each port of entry is entitled to establish a zone open to any legal business operations. Each zone may have designated special purpose sub-zones that are generally operated by one company.
There are 250 general purpose Foreign Trade Zones located throughout the United States. Most are associated with a Port of Entry. The 500 Special Purpose sub-zones are located near companies whose facilities are used to manufacture goods from imported materials but are not located near a general purpose zone. A municipality or state may also apply to have a sub-zone located in its sphere of influence. Use the link below to locate a Foreign Trade Zone in any state.
Benefits of the Zones
Companies that import goods for distribution or raw materials for manufacture may reap significant benefits from locating in a zone. Since the zone is technically still foreign soil, duties and tariffs do not have to be paid on landing. This helps a company manage its cash flow more efficiently because they do not have to pay the duty until they actually ship the merchandise. If they re-package or manufacture the goods and then ship them out of the country, they never have to pay the tariff. Communities benefit from the zones as economic engines creating jobs and revenue for the local government.
General purpose zones are most often located within a port or an industrial park adjacent to a port. They are open to all companies and are most often utilized for warehousing or distribution. Re-packaging of goods is allowed in these zones. If a manufacturing company imports significant amounts of raw materials, they may apply for a special sub-zone that overlays its plant. This allows them to bring in the materials, produce the goods and then pay a duty based on the value of the finished goods when the item is shipped.
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