It’s helpful to view the FTZ Program as a logistics strategy rather than a geographic area that is not considered to be in U.S. Customs Territory.  Depending on the nature of your zone operations and where your imports are sourced or destined, you may benefit from:

Duty Elimination – Foreign Merchandise that enters your zone is exempted from duty if re-exported

Duty Deferral – Duty is paid only when imported merchandise leaves the zone, not when it enters, moving the time duty is paid closer to the time of sale of merchandise

Duty Reduction – Through an “inverted tariff,” the duty on an assembled product or manipulated merchandise may be less than the cumulative duty normally paid on imported components or product inputs (e.g. the duty on a computer is less than the duty of its imported components)

Streamline Customs Procedures – Zone users may use “Weekly Entry” or “Direct Delivery” instead of repetitive Customs procedures that require time and additional paperwork

Avoid Duty Drawback – Zone procedures can eliminate the need to apply for return of duty (drawback) when Customs later determines it was not due (as in the case of re-export, calibration and examination)

Time/Value Savings –  the benefits listed above allow zone users to reduce the time their money is in someone else’s pocket thus optimizing their cash-flow and the time/value of their money

Avoid Duty on Scrap – Zone users do not pay duty on portions of imported merchandise that are lost in the course of manufacturing or production

Avoid Inventory Taxes – foreign merchandise (and domestic merchandise) is exempt from inventory and excise tax while located in an FTZ

Reduce Insurance Costs – Insurance for merchandise within an FTZ  often costs less because goods are bonded in a more secure and monitored location

Reduce QA costs – foreign merchandise enters a zone that is inspected and does not pass the zone user’s quality assurance criteria may be re-exported without payment of duty or applying for duty drawback