Foreign Trade Zones (FTZ) are duty free areas under U.S. Customs that are deemed to be outside the customs territory of the United States. These are meant to boost exports of the nation. The Foreign-Trade Zones Board (consisting of the Secretary of Commerce and the Secretary of the Treasury) grants authority for setting up these zones by virtue of the provisions of the Foreign-Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u), and the Board’s regulations (15 C.F.R. Part 400). The Executive Secretariat of the Board is within the Import Administration of the U.S. Department of Commerce.
The purpose is that raw materials and semi-finished goods can be imported free of customs duty into these zones for eventual exports after value addition and processing.
Payment of duties is not required on imported goods entering these zones unless these are diverted for domestic or home consumption. Domestic goods moved into these zones for export are considered as good as exported and are accordingly entitled to the benefits of excise tax rebates and drawback on exports upon entry into these areas. FTZ areas and activities are under the control and supervision of federal, state and local governments and agencies and promote these zones, which are run as public utilities with official rates. A zone has ready to use storage space for leasing out to users with access to all modes of transportation. Most zones have an industrial park with plots where users can construct their own set up facilities. (More : http://www.trade.gov/ftz)
