Foreign Trade Zones

Free trade zones are international bases with tax incentives for business operations
By Geraldine McGowan U.S. trade zones are enclosed areas that are operated as public utilities under the control of U.S. Customs. International free trade zones exist in industrialized countries throughout the world and allow businesses to operate without paying duty or custom taxes. U.S. trade zones are located near ports of entry in each state. All trade zones are subject to international laws and trade agreements. Trade zones and subzones are authorized by the U.S. government.

Public and private corporations can apply to use or create export processing zones. The Foreign Trade Board handles and rules upon all applications. Rates and charges apply to companies using these areas. The incentive for using free trade zones is that custom taxes are not applied to goods brought into a country. Regulations apply to how goods are used, stored, and where they are shipped.

1. The Foreign Trade Board is located in the U.S. Department of Commerce in Washington, D.C. It is the arbitrator for applications to establish or use U.S. free trade zones.

2. A U.S. company applying to use a free trade zone in other countries begins the application process at that country's embassy in the United States.

3. Multinational corporations are frequent users of the free trade zones both in and out of the U.S. But small and medium-sized businesses are using this, too.

Get the information you need on free trade zones from government sources

Foreign Trade Zones benefit companies that import or export goods from different countries. The benefits are too numerous to list but essentially this program allows companies not to pay custom taxes. Requirements and applications must be filed in order take advantage of this. Multinational corporations obviously are members of this program but small- and medium-sized manufacturers should check out what is available for their concerns.
Try:  Use the U.S. Foreign-Trade Zones Board site to find the benefits and the rules and regulations for foreign trade zones. You can also get forms and applications from this site, too. The ABCs for FTZs is a great starting place for smaller businesses.

Use profit and non-profit companies that specialize in foreign trade zone issues

Foreign trade zone matters are complicated, especially for someone applying for the first time. There are profit and non-profit consulting organizations that can provide solutions for your business.
Try:  The National Association of Foreign Trade Zones is a non-profit that fosters commerce between global companies and local communities. Foreign Trade Zone Corporation is a for-profit consulting firm for companies that wish to do business in foreign trade zones.

Search for the right trade zones information for your importing and exporting businesses

Importing and exporting businesses are the most obvious businesses to use exporting free zones. If this is the first time you've considered using zones for free trade you should make the most use of resources that can answer questions give you the right information. Issues include the safety of products that are in free trade zones.
Try:  Cargo security and cargo control are issues attached to foreign trade zone use. CBP is the U.S. government branch that secures borders and enforces customs laws. There is a lot of information here but also tips for new importers and exporters. The Corporation for International Business focuses on the processing the applications for "Carnets," for a fee. Carnets are "merchandise" passports needed in 70 countries for cargo to be accepted in trade free zones.

• Globalization is making Foreign Trade Zones more important than ever. U.S. and international laws apply and change frequently. Make sure you are working with a reputable organization if wish to secure free trade benefits.