What is a foreign trade zone?
A foreign trade zone is a designated area in which foreign and domestic merchandise is generally considered by the U.S. government as being outside U.S. Customs territory. Merchandise may be brought into an FTZ without a formal customs entry, import quotas and most other import restrictions. Duties and excise taxes are not assessed until the merchandise enters U.S. commerce. The Port of Houston Authority is manager of a foreign trade zone which includes many privately owned and port-owned sites located throughout Houston and Harris County, Texas. The Houston Zone offers users special benefits. For example, customs duties on imported goods entering the FTZ can be delayed until the cargo is removed from the zone. No duty is paid if the merchandise is exported directly from the zone. Benefits of Using a Foreign Trade Zone Storage: Foreign and domestic merchandise may be stored within the zone for an unlimited period of time, thereby avoiding all duties and excise taxes. Product Handling:
Foreign Trade Zones (FTZs) were created in the United States to provide special customs procedures to U.S. plants engaged in international trade-related activities. Duty-free treatment is accorded items that are processed in FTZs and then reexported, and duty payment is deferred on items until they are brought out of the FTZ for sale in the U.S. market. This helps to offset customs advantages available to overseas producers who compete with domestic industry. The Foreign-Trade Zones (FTZ) Board (composed of representatives from the U.S. Departments of Commerce and Treasury) has its operational staff in the International Trade Administration’s Import Administration. How can companies benefit from using FTZs? FTZs are considered to be outside of U.S. Customs Territory for the purpose of customs duty payment. Therefore, goods entering FTZs are not subject to customs tariffs until the goods leave the zone and are formally entered into U.S. Customs Territory. Merchandise that is shipped to
A. The best example for a Foreign Trade zone is a “bonded warehouse”. In the bonded warehouse arrive cigarettes directly from the producers and there no taxes are applied. Taxes are applied only when cigarettes reach the market It’s why we can offer cigarettes at a so low price. Upon arrival at the destination customs, products are taxed only when their value exceeds a certain threshold (generally in the range from 25 to 50 ). Sometimes no taxes are applied also when these limits are exceeded. Products purchased by international mail, provided their value is low, for the moment are not subject to taxation. Consequently, foreign trade zone sales, while fully respecting international mail laws and regulations, can exploit this transitional phase and make the most of the custom authority’s inability to face the new situation. This means that products can be marketed at extremely competitive prices.
