It is a designated site in the United States, in or near U.S. Customs port of entry, where merchandise is generally considered to be outside U.S. customs territory. Under procedures, foreign and domestic merchandise may be admitted into zones for operations such as storage, exhibition, assembly, manufacture, and processing, without being subject to formal Customs entry procedures, the payment of Customs duties or federal excise taxes. When merchandise is removed from a Foreign-Trade Zone, Customs duties may be eliminated if the goods are exported from the United States. If the merchandise formally enters into U.S. commerce, Customs duties and excise taxes are due at the time of transfer from the Foreign-Trade Zone.
Types of Foreign-Trade Zones
General-Purpose Zone: State or local governments and port authorities typically operate general-purpose zones. They involve public facilities that can be used by more than one firm, and are most commonly ports or industrial parks used by small to medium sized businesses for warehousing/distribution, inspection, exhibition, and some processing/assembly.
Sub zone: Sub zones, on the other hand, are sponsored by general-purpose zones, but typically involve a single firm's site which is used for more extensive manufacturing/processing or warehousing/distribution that cannot easily be accomplished in a general-purpose zone. Sub-zones must be located at or near a port of entry. Subzones require the approval of the Grantee.