OVERVIEW / HISTORY

The Foreign-Trade Zone (FTZ) program encourages activity at U.S. storage and manufacturing facilities by making them competitive with foreign sites. This is done by allowing deferred or reduced (and sometimes eliminated) duty payments on foreign merchandise admitted into a zone. FTZ benefits may deter companies from moving to foreign locations to reduce operating costs.

Enhancing Competitiveness
FTZs help businesses reduce production-, transaction-, and logistics-related costs through lowered duty rates and special-entry procedures, and by encouraging domestic production.

Creating and Retaining Jobs
By helping local employers remain competitive, FTZs allow them to maintain or increase employment.

HISTORY

The U.S. Foreign-Trade Zones program was created by Congress in 1934 during the Great Depression to stimulate international trade and create domestic jobs and investment in the United States. Companies may bring foreign and domestic merchandise into zones for storage, testing, relabeling, displaying, manufacturing, and for the eventual entry into U.S. commerce or export from the United States.

All U.S. Customs duties are deferred while merchandise is in a zone and, in many instances, these duties, and sometimes excise taxes, can be substantially reduced or eliminated through zone use.

FTZ growth has been dramatic. In 1970 there were 16 zones around the country. Today, there are more than 257 approved general-purpose zones and 289 production facilities.

Similar zone programs operate in 135 countries.