Origins of FTZ

Around the world there are specially designated areas within countries’ borders that are established and controlled by national legislation and through which the receiving, handling, manufacturing, repurposing, and exporting of goods can occur free from import duties and taxes. These areas are usually known as free trade zones (FTZ).

The Foreign-Trade Zone Act of 1934 created the possibility for this type of area within the United States of America. They would be known here as foreign trade zones (also abbreviated FTZ). According to the Regulations of the U.S. Foreign-Trade Zone Board (19 CFR Part 400):

“[A] Foreign Trade Zone (FTZ or zone) includes one or more restricted-access sites, including subzones, in or adjacent to a [Customs and Border Protection or CBP] port of entry, operated as a public utility under the sponsorship of a Zone Grantee authorized by the Board, with Zone operations under the supervision of CBP.”

According to the U.S. Foreign-Trade Zone Board Annual Report to Congress:

“[A] Foreign Trade Zone is created when a local organization, such as a city, county or port authority, applies to the FTZ Board for a grant to establish and operate a zone to serve a specifically defined geographic area. Upon approval of the zone by the FTZ Board, the organization becomes known as the FTZ ‘grantee’. Grantees are then able to submit applications to the FTZ Board to establish FTZ sites or subzones for use by companies in that area.”

The Foreign Trade Zone covering Central Indiana is known as FTZ #72, because it was the seventy-second application for a grant. Through the Foreign-Trade Zone program, as administered by FTZ #72, companies in Central Indiana can designate these sites or subzones and use special procedures, under the supervision of CBP, that help encourage commercial activity by delaying, reducing, or eliminating customs duty payments and fees on imports, along with numerous other benefits.

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