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Foreign Trade Zones

The U.S. Foreign-Trade Zones (FTZ) program was created by the Foreign-Trade Zones Act of 1934 to encourage foreign commerce in the United States, and to make U.S operations more competitive in international markets. These zones are defined as geographic areas adjacent to a U.S. port of entry, where foreign and domestic commercial merchandise receives the same Customs treatment as it would outside the United States.

There are a number of benefits associated with FTZs, including inverted tariffs (the ability to pay the lower of two possible duties), duty-free services of product inspection, testing and re-packaging, a cap on merchandise processing fees and the reduction or elimination of some additional fees paid to U.S. Customs. FTZs also help companies, in the cases of products  that will be assembled or have value added in the FTZ and then re-exported, avoid the payment of duties and fees altogether.

There are around 250 Foreign Trade Zones and over 500 subzones currently located in the United States.