A foreign-trade zone (FTZ) is a defined physical area within the United States that, for customs purposes, is treated as if it is outside U.S. borders. FTZs are often at ports, airports, or industrial parks. Companies may use FTZs for both storage/distribution activities or, after specific approval by the U.S. FTZ Board, for manufacturing.

Glossary of FTZ Terms

Why would I want to consider manufacturing in a FTZ?

When you manufacture in a FTZ, your company is treated (for purposes of customs duties) like it's located outside the United States. That can mean that U.S. import duties don't have to be paid on imported components coming to your factory. If your finished product is ultimately shipped to the U.S. market, you may have the option of paying the finished product duty rate rather than the component duty rate. (Many finished products have lower duty rates – or are duty-free – than their components.) And if you re-export the finished product, you don't ever pay any duties on the component materials. There are other potential savings, too, like avoiding duties on imported materials that become scrap, and possible administrative savings and efficiencies.

What is involved in getting authority to manufacture in a FTZ?

To manufacture in a FTZ, you work with your local foreign trade zone to put together an application. The U.S. FTZ Board has created simplified procedures to make the benefits of the FTZ program accessible to a broad range of companies. The FTZ Board can then uses the information from those forms to makes decisions on whether to approve individual applications.

What does the FTZ Board base its decisions about applications on?

The Board reviews applications to make sure they are not inconsistent with U.S. trade policy and that the proposed activity would have a positive impact on the U.S. economy.

Do I already have to be located in a FTZ to apply?

No. If it's practical, you may choose to relocate to an existing FTZ site – there are more than 200 FTZs all across the United States, many of which encompass multiple sites. However, if it's not practical for you to relocate to an existing zone site, the FTZ Board has a procedure for you to work with your local FTZ to create a "subzone" at your facility.

Is there a fee to apply?

There is no fee to apply for manufacturing authority within an existing zone. For subzone applications, there is a one-time application fee (either $4,000 or $6,500, depending on the number of products).

How do I get in touch with my local FTZ?

The FTZ Board has contact information for the FTZ closest to you.

What next?

The best place to start is with the "Simplified Savings Estimator" available on the manufacturing center page. We also have more frequently asked questions, or take a look at our application page. If there's anything we've missed – the FTZ Board's staff is also available to help guide you.