A U.S. Foreign Trade Zone is a designated area that is, for Customs purposes, considered to be outside of the United States. Nearly any imported merchandise can be brought into a Foreign Trade Zone duty-free. Benefits:
- Re-exports: Merchandise imported and later re-exported is never assessed any Customs duties.
- Reject, Scrap, and “Consumed” Merchandise: Imported merchandise that is admitted into a Zone and then rejected, scrapped or consumed is not assessed any Customs duties.
- Zone-to-Zone Transfers: Merchandise imported into a Zone and then shipped into another Zone can be shipped duty-free to the receiving Zone.
- Duty Deferral: When imported merchandise is shipped to U.S. locations from a Zone, the duties are deferred while the merchandise remains in the Zone. The cost-of-money savings on duty deferral can be significant for large volume distributors, or operations with long inventory turnover periods.
- Inverted Tariffs: When components are imported and manufactured into a new product for re-export or sold in the U.S., the importer may elect to apply the finished product duty rate, or the component duty rate, whichever is lower.
- Merchandise Processing Fee: Importers into U.S. Foreign Trade Zones are only required to submit one Merchandise Processing Fee (MPF) per week for all shipments from the Zone, thus reducing MPF costs to importers who otherwise would file multiple entries.