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A Brief Background of the Foreign-Trade Zones Program

10/10/2006

By Greg Jones

 

The Foreign-Trade Zones program was created in 1934 in an attempt to mitigate some of the destructive effects of the 1930 Smoot-Hawley Tariffs. It was intended to “expedite and encourage foreign commerce” in the United States by designating certain geographic areas as Foreign-Trade Zones, in or adjacent to Customs Ports of Entry, and under the oversight of the U.S. Bureau of Customs and Border Protection. Commercial merchandise would be treated, for Customs purposes, as though it were outside the commerce of the United States. Since 1986, regulatory oversight for FTZ sites has been conducted on an audit-inspection basis.

The FTZ program lowers the costs of U.S.-based operations engaged in international trade by allowing them to store, repackage, repair, manipulate, use in manufacturing or processing foreign merchandise in a Zone, free of tariffs and ad valorem taxes while the merchandise remains in the Zone. The result is the creation and retention of U.S.-based economic activity that results from those operations.

In a General-Purpose Zone, any number of firms may operate, limited only by the Zone’s physical limitations. Subzones are single firm sites designated for a special purpose (typically manufacturing) when the operation cannot be accommodated within the General-Purpose Zone project serving the area.

The Foreign-Trade Zones program offers duty exemption on re-exports, relief from “inverted tariffs,” improved logistics, cash flow through duty deferral, no duty on value added, Zone-to-Zone transfers, no duty on damaged or nonconforming items, and duty avoidance on government and military sales. Due to the changing global trade environment, use of the program has increased phenomenally over the last thirty-five years. Companies use it to improve their bottom line, and communities use it as part of their industrial recruitment and retention strategies.

Jones began working in the FTZ program in 1986, and has been an active member in the National Association of Foreign Trade Zones (NAFTZ) since 1987. He served as president of the NAFTZ from 1993 to 1995, and was designated as an Honorary Life Member in 2000. The Foreign-Trade Zone Corporation (www.ftzcorp.com) is a service provider offering FTZ cost-benefit analyses, FTZ Board applications, training, assistance in designing, creating and managing Zone projects, and its SmartZone® Foreign-Trade Zone management software (www.ftzsoftware.com).

    

FTZ Articles
10/30/2017

The FTZ program continues to serve as a reliable tool for American communities and their business constituents.

9/26/2016

Looking for a tool that serves U.S.-based manufacturers to boost operating margins? Learn about the U.S. Foreign-Trade Zones (FTZs) program. 

7/20/2016

The FTZC was awarded 'Best Local Company To Work For' by Lagniappe Magazine. Learn more about why people want to work for and with the FTZC.  

6/22/2016

Learn more about the Foreign Trade Zone Corporation (FTZC) and its SmartZone Software Suite in an article from Supply Chain World Magazine.  

9/3/2015

Still think FTZs are just about large water ports? Think again and learn here how FTZs can be instrumental in helping your globalization efforts. 

9/22/2014

Import values into Zones has tripled in the last decade and businesses continue to save money using the FTZ program. 

5/27/2014

Industrial and development parks through out the United States are discovering that Foreign-Trade Zone status (FTZ) can be a beneficial tool for bringing new economic development to their area.  Read why Neosho, MO is seeking a Foreign-Trade Zone.

9/17/2013

Foreign-Trade Zones Board adopted a comprehensive rewrite of its regulations in 2012. Greg Jones explains how this decision, along with past decisions, have affected the success of FTZs and how FTZs are used by businesses to help compete globally.

5/10/2013

Scott Sheldon and FTZC Announce Partnership to Place Deeper Value on Supply Chain Solutions.

9/22/2010

Foreign Trade Zones: Relief from inverted tariffs enables U.S.-based manufacturers to produce their goods and sell them in the American marketplace, and maintain the operating margins that are essential to their survival. 

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