Frequently Asked Questions

Q: What is a Foreign-Trade Zone?

Q: How many Foreign-Trade Zones are there?

Q: What is the Foreign-Trade Zones Board?

Q: What is a General-Purpose Zone?

Q: What is a Subzone?

Q: How long is the approval process for a Zone?

Q: What is the involvement of U.S. Customs in the Foreign-Trade Zones Program?

Q: What is Production?

Q: What if my company wants to manufacture or change the Customs duty rate?

Q: What is a Zone-to-Zone Transfer?


Q: What is a Foreign-Trade Zone?

A: Foreign-trade zones are restricted-access sites that are considered outside the U.S. Customs territory. Companies that operate in foreign-trade zones can defer, reduce, or eliminate Customs duties on foreign products admitted into zones for storage, exhibition, assembly, manufacturing, and processing. Customs duties are not paid on products and materials exported from foreign-trade zones; they are paid only on products entered into U.S. Customs territory. Zone users may elect to pay the duty rate applicable to either the original foreign material or the finished product manufactured from the foreign material, whichever is lower. No duties are owed on scrap/waste. Zones provide the opportunity to reduce cycle time by expediting the receipt of foreign sourced material and filing summary entries only once per week. This makes many U.S. operations more cost-competitive with overseas operations.

Foreign-trade zones stimulate American economic growth and development because they encourage companies to continue and to expand their operations in the United States. Foreign-trade zones are located in all 50 states and Puerto Rico. Many well-known U.S. and multinational firms utilize the zone program as an import/export financial management tool.

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Q: How many Foreign-Trade Zones are there?

A: There are 268 General-Purpose Foreign-Trade Zones currently authorized. These Foreign-Trade Zones have more than 1,500 individual sites. These sites may be large industrial parks or a single building. There are also individual zones specifically for companies called Subzones. Currently there have been 715 subzones approved.*

*These numbers are current as of July 16, 2014.

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Q: What is the Foreign-Trade Zones Board?

A: The Foreign-Trade Zones Board, chaired by the Secretary of Commerce, administers the U.S. Foreign-Trade Zones program. The members of the Foreign-Trade Zones Board are the Secretary of Commerce and Secretary of Treasury. The office of the Foreign-Trade Zones Board is located at 1401 Constitution Ave., NW, Room 21013, Washington, DC 20230. The authority for the Board has been delegated to an eight (8) person staff. Andrew McGilvray is the current Executive Secretary of the Foreign-Trade Zones Board.

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Q: What is a General-Purpose Zone?

A: A General-Purpose Zone is typically a single multi-tenant building or an industrial park site that has been designated as a foreign-trade zone. By definition, a general-purpose zone industrial park site must be available to more than one company and is for warehousing approval only. However, under the Alternative Site Framework an individual usage-driven site may be added for one company only and is still technically considered a general-purpose zone site. If merchandise is processed, Production authority (including "kitting") for an individual company must be requested in a separate application.

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Q: What is a Subzone?

A: A special-purpose foreign-trade subzone, by definition, is for the benefit of one company only for a limited purpose that cannot be accommodated within an existing zone site. A typical subzone designation includes the acreage upon which a manufacturing or distribution facility for one company is located. The structure of a subzone application no longer includes manufacturing/production authority. This must be done with a separate application.

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Q: How long is the approval process for a Zone?

A: There are different types of applications. A new General-Purpose Zone can require six (6) to twelve (12) months for approval once it is filed by the Foreign-Trade Zones Board as there are additional steps in the approval process. A Subzone outside of an Alternative Site Framework Service Area can be approved within three (3) to five (5) months once it is filed with the Foreign-Trade Zones Board. A Request for Boundary Modification or Subzone requires thirty (30) days from the time it is filed if it is within a Service Area of the Alternative Site Framework. Alternative Site Framework Applications can be approved within five (5) to eight (8) months).

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Q: What is the involvement of U.S. Customs in the Foreign-Trade Zones Program?

A: There are over 300 U.S. Customs Port of Entries throughout the United States. U.S. Customs and Border Protection is responsible for oversight of the day-to-day operations of Foreign-Trade Zones throughout the United States. When a company wishes to “activate” and utilize the Foreign-Trade Zones Program it must request activation through a series of filings and meetings with the local U.S. Customs and Border Protection Port Director.

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Q: What is Production?

A: This means traditional manufacturing activity and “kitting” activity where there is activity involving the substantial transformation of a foreign article resulting in a new and different article having a different name, character, use, and HTS classification. This includes “kitting” operations. The Foreign-Trade Zones Board uses this term to cover both manufacturing and processing activity.

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Q: What if my company wants to manufacture or change the Customs duty rate?

A: A Production Notification Application must be prepared. The Grantee organization must be asked to provide a Letter of Transmittal for the Application and U.S. Customs must provide a Concurrence Letter. Once filed the approval will require approximately four (4) months from the day it is filed. An interim approval can be secured faster if Customs will provide a letter stating that the facility can be activated in an expedited manner.

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Q: What is a Zone-to-Zone Transfer?

A: A Zone operated by any company in any State can transfer zone material in a zone-to-zone transfer to any other company in any State within the United States under the Foreign-Trade Zones program. The zone material is required to be shipped in-bond by a Customs bonded carrier between zone sites.

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