Foreign Trade Zone

Benefits of a Foreign-Trade Zone

Duty Exemption: no duties or quota charges on re-exports (exception applies for exports to Canada and Mexico under NAFTA). By using a Foreign-Trade Zone, the company avoids the lengthy Customs duty drawback process. No duty is paid on goods destroyed in the zone, which can benefit a company with fragile imports or with manufacturing processes that result in large amounts of scrap.

Duty Deferral: Customs duties and federal excise tax deferred on imports until they leave the zone and enter the U.S. Customs territory. (Zone merchandise may move in-bond, Zone-to-Zone transfers without payment of duty.) Unlike bonded warehouses or temporary importing under bond programs, there is no limit on the length of time that merchandise may remain within the Zone, whether or not duty is owed.

Duty Reduction (Inverted Tariff): Where zone manufacturing results in a finished product that has a lower US Harmonized Tariff rate than the rates on foreign inputs, the finished product may be entered into the U.S. Customs territory at the duty rate that applies to its finished condition. Moreover, duty is not owed on labor, overhead or profit attributable to zone production operations.

Merchandise Processing Fee (MPF) Reduction: MPF is only paid on goods entering the U.S. Customs territory. Zone users are able to file a single entry for all goods shipped from a zone in a consecutive seven-day period instead of one entry file for each shipment (excluding merchandise subject to live entry). MPF fees are charged at 0.3464% of the Total Estimated Value (TEV) of the shipment, with a minimum fee of $27.23 and a maximum fee of $528.33 per entry. Fewer entry filings can also reduce Brokerage fees.

Streamlined Logistics: Upon approval from Customs, imports may be directly delivered to the zone. Users may also request permission to break and affix Customs seals. A single entry may be filed for seven consecutive days’ worth of entries and exports.

Quota Avoidance: In most instances, imports subject to quota may be retained within a Foreign-Trade Zone once a quota has been reached allowing zone users access to potentially discounted inputs and the ability to admit merchandise as soon as a new quota year starts. Additionally, except for certain textiles, inputs subject to quota may be manipulated or manufactured while in the zone into a product not subject to a quota.

Definitions from the National Association of Foreign Trade Zone (NAFTZ.org)

The costs of getting established with FTZ can vary by site, depending on your business's size, scope, and operation. However, there is a standard set of application, activation, and annual fees that all FTZ #93 sites pay summarized in the chart below. Click this link for our full zone schedule.

Additionally, many FTZ Sites work with consultants. Click this link to learn about our region's various consultants offering services.

A - Up to 250 Acres                                                                                                                                        D – Without Production Authority

B - Greater than 250 Acres                                                                                                                          E – With Production Authority

C - Application for New Operator within Magnet Site

* Grantee Annual Fee applies to Property Owner or Zone Participant at non-Activated Magnet Site

^ Fee for 1-2 sites, with an additional charge of $1,000 for each additional site

^# Fee for 1^st activated user/client with an additional charge of $1,000 for each additional client activation.

To learn more about establishing your FTZ site contact Alex Halloway | Economic Development Planner | (919) 558-9402 | ahalloway@tjcog.org

Rates, Tariff, and Legal Review Board

The FTZ #93 Rates, Tariff, and Legal Review Board serves as an advisory committee to help oversee the operation, administration, and public utility nature of FTZ #93 and make appropriate recommendations to the TJCOG Board of Delegates. Below is information about our current Board Officers:

OFFICERS

Chairman: Thomas J. White – Director, Economic Development Partnership, in the office of Research, Innovation and Economic Development, NCSU. His current appointment to the FTZ Board is through December 2023 and as Chairman through December 2021. 

Vice Chairman: Bill Haiges – Town of Siler City Commissioner and delegate to Triangle J Council of Governments. His current appointment is through December 2024 and as Vice-Chairman through December 2024.

MEMBERS

Steve Brantley – Orange County Economic Development Director. His current appointment is through December 2023.  

Lori Bush – Town of Cary Council Member and alternate delegate to Triangle J Council of Governments. Her current appointment is through December 2024. 

Bo Carson –Triangle North Executive Airport, Director. His current appointment is through December 2023. 

Chris Johnson – Johnston County Economic Development Director. His current appointment is through December 2024. 

Ivan T. Kandilov – Associate Professor in the fields of International Trade, Development and Labor Economics, Department of Agricultural and Resource Economics, North Carolina State University. His current appointment is through December 2022.

Harry Mills – Granville County Economic Development Director. His current appointment is through December 2024. 

Rebecca Wyhof Salmon – City of Sanford Councilor and delegate to Triangle J Council of Governments. Her current appointment is through December 2021. 

Angie Stewart – Harnett County Economic Developer. Her current appointment is through December 2024. 

Michael L. Weisel – Managing Member of Capital Law Group. His current appointment to the FTZ Board is through December 2022. 

Terms to know

Activation - Once a zone or subzone site is approved by the FTZ Board, an application must be made to the local U.S. Customs and Border Protection (CBP) office, with the concurrence of the FTZ grantee, to operate the zone/subzone site (or portion thereof) under FTZ procedures. This CBP process is known as activation generally includes steps such as background checks, a written procedures manual, posting a bond with CBP, as well as a review of the security of the site(s) and the inventory control methods.

Activation Limit - The size of the physical area of a particular zone or subzone authorized by the Board to be simultaneously in activated status with CBP pursuant to 19 CFR 146.6. The activation limit for a particular zone/subzone is a figure explicitly specified by the Board in authorizing the zone (commonly 2,000 acres) or subzone or, in the absence of a specified figure, the total of the sizes of the approved sites of the zone/subzone. 

Admit, Admission - The CBP terms describing the shipment of merchandise into U.S. foreign-trade zones under CBP supervision (19 CFR 146.1).

Alternative site framework (ASF)  - An optional approach to designation and management of zone sites allowing greater flexibility and responsiveness to serve single-operator/user locations. The ASF was adopted by the Board as a matter of practice in December 2008 (74 FR 1170, January 12, 2009; correction 74 FR 3987, January 22, 2009) and modified by the Board in November 2010 (75 FR 71069, November 22, 2010). 

Articles Consumed - Interpretation of the FTZ Act holds that all materials to be consumed in manufacturing or processing operations within a zone must first be entered for consumption with duties paid.

Board - See Foreign-Trade Zones Board

CBP - U.S. Customs and Border Protection of the Department of Homeland Security

Deactivation - A previously activated general purpose zone or subzone site which no longer has local CBP authorization for activity under FTZ procedures.

Domestic status - Describes merchandise that is mainly of domestic origin but also includes foreign-origin merchandise on which customs entry and duty payments have been made prior to admission to the zone site.

Entry for Consumption - The term that describes the general customs process of filing the appropriate CBP documents (including duty evaluation) that allows merchandise to be brought into the commerce of the U.S. (19 CFR 141). With respect to foreign-trade zones, this process occurs when merchandise is shipped from the zone into U.S. commerce.

Exports - The category of merchandise that is forwarded from zone sites to destinations in foreign countries.

Foreign-Trade Zone - (FTZ or zone) includes one or more restricted-access sites, including subzones, in or adjacent (as defined by Sec. 400.11(b)(2)) to a CBP port of entry, operated as a public utility (within the meaning of Sec. 400.42) under the sponsorship of a zone grantee authorized by the Board, with zone operations under the supervision of CBP.

Foreign-Trade Zones Board - Consists of the Secretary of Commerce (chairman) and the Secretary of Treasury, or their designated alternates.

Foreign Status - Describes zone merchandise admitted to a zone site under CBP supervision that is normally of foreign origin. Such merchandise is admitted to zone sites without being subject to formal customs entry procedures and payment of duties, unless and until the foreign merchandise enters customs territory for domestic consumption. Foreign status merchandise is further categorized by CBP as either Non-Privileged Foreign or Privileged Foreign

Forwarded - The category of merchandise that is shipped from or forwarded from zone sites after release by CBP. This category includes merchandise that is forwarded to destinations in the U.S. market as well as merchandise that is exported—that is, forwarded to markets in foreign countries.

Grant of Authority - A document issued by the Board that authorizes a zone grantee to establish, operate and maintain a zone, subject to limitations and conditions specified in this part and in 19 CFR part 146. The authority to establish a zone includes the responsibility to manage it. 

Grantee - See Zone Grantee

Inactive - A site or subzone site that has been approved by the FTZ Board, but is not “activated” with CBP. No activity under FTZ procedures is occurring at an inactive site.

Lapse Provision - A grant of authority for a zone or a subzone shall lapse unless the zone, or subzone facility, is activated, pursuant to 19 CFR Part 146, and in operation not later than five years from the date of the Board order.

Magnet site  - A site intended to serve or attract multiple operators or users under the ASF. 

Merchandise Received - Involves merchandise received into activated FTZ space under FTZ procedures by foreign-trade zones and subzones. It includes foreign status merchandise and domestic status merchandise.

Non-Privileged Foreign (NPF) Status - One of the customs categories of foreign status merchandise (See 19 CFR 146.42). Such merchandise is evaluated based on its condition at the time it is shipped from the zone to the U.S. market and entered for consumption by CBP.

Operator - See Zone Operator

Person - Includes any individual, corporation, or entity. 

Port of Entry - A port of entry in the United States, as defined by part 101 of the regulations of CBP (19 CFR part 101), or a user fee airport authorized under 19 U.S.C. 58b and listed in part 122 of the regulations of CBP (19 CFR part 122).

Privileged Foreign (PF) Status - One of the customs categories of foreign status merchandise (See 19 CFR 146.41). Such merchandise maintains its status based on its condition when it was admitted to the zone. Thus, when the merchandise is shipped from the zone to the U.S. market and entered for consumption by CBP, it is evaluated based on the time-of-admission condition even though it may have undergone a transformation in the zone.

Production - Activity involving the substantial transformation of a foreign article resulting in a new and different article having a different name, character, and use, or activity involving a change in the condition of the article which results in a change in the customs classification of the article or in its eligibility for entry for consumption.

Service Area - The jurisdiction(s) within which a grantee proposes to be able to designate sites via minor boundary modifications under the ASF. 

Subzone - A site (or group of sites) established for a specific use.

Terminated - If a site or subzone is no longer needed, the grantee can request that the FTZ Board remove the site/subzone designation. Upon such action by the FTZ Board, the site or subzone is then considered terminated.

Usage-Driven Site - A site tied to a single operator or user under the ASF. 

User - See Zone User

Zone - A foreign-trade zone (see above) established under the provisions of the FTZ Act and regulations. The term also includes subzones, unless the context indicates otherwise.

Zone Grantee - The corporate recipient of a grant of authority for a zone. The term “grantee” means “zone grantee” unless otherwise indicated.

Zone Operator - A corporation, partnership, or person that operates within a site or subzone under the terms of an agreement with the zone grantee (or third party on behalf of the grantee) with the concurrence of the Port Director of CBP.

Zone Restricted Status - Merchandise in this status is to be exported or destroyed. Zone-restricted status merchandise can be entered into U.S. customs territory only if the FTZ Board finds that entry would be in the public interest.

Zone Schedule - To be kept by the zone grantee, the zone schedule includes the internal rules and regulations of the zone, as well as a statement of the rates and fees charged to zone users.

Zone Site (Site) - A physical location of a zone or subzone. A site is composed of one or more generally contiguous parcels of land organized and functioning as an integrated unit, such as all or part of an industrial park or airport facility. 

Zone Status - Merchandise can enter the zone in either domestic or foreign status. Domestic status can include foreign status goods where the duty has been paid and the goods entered for consumption. Foreign status includes privileged foreign, non-privileged foreign and zone-restricted status.

 Zone User - A party using a zone under agreement with a zone operator

Definitions from International Trade Organization (trade.gov)