Importing into the United States - Indo-American Chamber Of ...

FOREIGN TRADE ZONES
42. FOREIGN TRADE ZONES
Foreign or “free” trade zones are secured
areas legally outside a nation’s customs territory.
Their purpose is to attract and promote
international trade and commerce. The Foreign
Trade Zones Board authorizes operations
within these zones based upon showing that
the intended operations are not detrimental to
the public interest. Subzones are special-purpose
facilities for companies unable to operate
effectively at public zone sites. Foreign trade
zones are usually located in or near Customs
ports of entry, at industrial parks or terminal
warehouse facilities. Foreign trade zones must
be within 60 miles or 90 minutes’ driving time
from the port of entry limits, while subzones
have no limit and are located in the zone user’s
private facility. A Foreign Trade Zones Board,
created by the Foreign Trade Zones Act of 1934,
reviews and approves applications to establish,
operate, and maintain foreign trade zones. It is
important to note that although foreign trade
zones are treated as being outside the customs
territory of the United States for tariff and customs
entry purposes, all other federal laws,
such as the Federal Food, Drug, and Cosmetic
Act, are applicable to products and establishments
within such zones.
Foreign exporters planning to expand or
open up new American outlets may forward
their goods to a foreign trade zone in the
United States to be held for an unlimited
period while awaiting a favorable market in the
United States or nearby countries without
being subject to customs entry, payment of
duty or tax, or bond.
TREATMENT OF GOODS
Merchandise lawfully brought into these
zones may be stored, sold, exhibited, broken
up, repacked, assembled, distributed, sorted,
graded, cleaned, mixed with foreign or
domestic merchandise, or otherwise manipulated
or manufactured. However, merchandise
imported for use in the zone, such as construction
material and production equipment, must
be entered for consumption before it is taken
into a zone. The Foreign Trade Zones Board
may determine, however, that an operation is
not in the public interest. The resulting merchandise
may thereafter be either exported or
transferred into the customs territory. When
foreign goods, in their condition at the time of
entry into the zone or after processing there,
are transferred into the customs territory of the
United States, the goods must be entered at the
customhouse. If entered for consumption,
duties and taxes will be assessed on the entered
articles according to the condition of the foreign
merchandise at the time of entry from the
zone, if the merchandise has been placed in
nonprivileged foreign status prior to manipulation
or manufacture.
The owner of foreign merchandise that has
not been manipulated or manufactured in any
way that would effect a change in its U.S. tariff
classification had it been taken into customs
territory when first imported, may, upon
request to the port director of Customs, have its
dutiable status fixed and liquidated. This
dutiable status will apply regardless of when
the merchandise is entered into customs territory
and even though its condition or form
may have been changed by processing in the
zone, as indicated above. Merchandise may be
considered exported, for customs or other purposes,
upon its admission to a zone in
zone-restricted status; however, the merchandise
taken into a zone under zone-restricted
status may be for the sole purpose of exportation,
destruction (except destruction of distilled
spirits, wines, and fermented malt liquors) or
storage.
An important feature of foreign trade
zones for foreign merchants entering the American
market is that the goods may be brought
to the threshold of the market, making immediate
delivery certain and avoiding possible
94 U.S. CUSTOMS SERVICE