Community Development

Maps for Foreign Trade Zone No. 197

• FTZ #197 sites 1 & 3 – (PDF - 1276k)
  
• FTZ #197 site 2 – (PDF - 897k)
  

Foreign Trade Zone - FAQ

• What are the types of zones?
• What Activity is Permitted in Zones?
• What are the benefits to a zone user?
• How is CBP Involved?
• How do I know if a zone is right for my community/company?
• What Kind of Merchandise Can be Placed in a Zone?
• What are the public benefits?
• What can I apply for – what type of authority is available?

• General-purpose zones are usually located at ports or industrial parks. They must be opened to multiple zone users. Although manufacturing is permitted within general-purpose zones, the most common activity use is for warehouse and distribution activity.


• Subzones are special-purpose zones, usually at manufacturing plants. A subzone of a general- purpose zone can be approved if the company is unable to relocate existing facilities into a general-purpose zone site. Subzones are approved for use by one company for a specific activity. Applications for subzone status must demonstrate a significant public benefit for approval.

• Merchandise in a zone may be assembled, exhibited, cleaned, manipulated, manufactured, mixed, processed, relabeled, repackaged, repaired, salvaged, sampled, stored, tested, displayed and destroyed.


• Manufacturing, processing and any activity that results in a change of the tariff classification must be specifically approved by the FTZ Board.


• Retail trade is prohibited in zones.

• Duty Exemption. No duties on or quota charges on re-exports.


• Duty Deferral. Customs duties and federal excise tax deferred on imports.


• Inverted Tariff. In situations where zone manufacturing results in a finished product that has a lower duty rate than the rates on foreign inputs (inverted tariff), the finished products may be entered at the duty rate that applies to its condition as it leaves the zone -- subject to public interest considerations.


• Logistical Benefits. Companies using FTZ procedures may have access to streamlined customs procedures (e.g. "weekly entry" or "direct delivery").


• Other Benefits.Foreign goods and domestic goods held for export are exempt from state/local inventory taxes. FTZ status may also make a site eligible for state/local benefits which are unrelated to the FTZ Act.

• CBP (U.S. Customs and Border Protection) handles the day-to-day monitoring of zone activity. Merchandise is brought into a zone (admitted) on CBP form 214 and is removed from the zone through CBP entry or transportation under bond procedures. CBP is consulted on every application for a zone or zone activity. Merchandise in a zone is under customs control and merchandise and zone records are subject to spot check and other verifications at any time.


• After a zone or subzone has been approved by the FTZ Board, the zone operator must activate with CBP.

• General-purpose zonesThe first thing that should be done is to assess the level of international trade in the area and if there is a need for zone services for local companies. The application process is lengthy (app. 10-12 months) and if the zone is approved there are security and operating requirements that may be cost prohibitive if there is not a strong need for zone services.


• If there is a local company that needs access to zone procedures for their facility, they can still access the program through a subzone.


• Subzone A company interested in a subzone should also perform a cost-benefit analysis. The application process for a subzone can also be lengthy (10-12 months) and there are costs associated with operating a subzone. Although it will vary by company and industry, existing subzones have indicated that the estimated duty savings must be at least $100,000 per year for the subzone to be worth the company’s efforts.

• Merchandise in a zone may be assembled, exhibited, cleaned, manipulated, manufactured, mixed, processed, relabeled, repackaged, repaired, salvaged, sampled, stored, tested, displayed and destroyed.


• Manufacturing, processing and any activity that results in a change of the tariff classification must be specifically approved by the FTZ Board.


• Retail trade is prohibited in zones.

• Help facilitate and expedite international trade.


• Provide special customs procedures as a public service to help firms conduct international trade related operations in competition with foreign plants.


• Encourage and facilitate exports.


• Help attract offshore activity and encourage retention of domestic activity.


• Assist state/local economic development efforts.


• Help create employment opportunities.

• General-Purpose Zone: Generally for warehouse and distribution activities, usually located at industrial parks, seaports or airports. General-purpose zone sites must be open to multiple users.


• Subzones: Generally for warehouse and distribution activities, usually located at industrial parks, seaports or airports. General-purpose zone sites must be open to multiple users.


• Manufacturing: Application can also be made for manufacturing within a general-purpose zone if your company is located within an existing zone or is able to re-locate.


• Expansions: Application can either be made to expand the boundaries of a zone or subzone or to expand the scope of approved manufacturing authority.


• Temporary/Interim Manufacturing Authority (T/IM): Temporary/Interim Manufacturing Authority (T/IM): If you are located within an existing zone and meet the eligibility criteria, you can apply for T/IM authority for a period of up to two years. A decision on T/IM cases is usually made within 75 days, and application for permanent authority can be made during the two-year period.