Frequently Asked
Questions About
Foreign-Trade Zones
The federal Foreign-Trade Zone program is a valuable opportunity to save time and money on your import-export activities. But it can be difficult to know where to begin. Start here with our FAQ on foreign-trade zones and learn how to access FTZ privileges for your business.
Foreign-trade zones (FTZs) are designated locations in the United States where companies can use special Customs procedures to reduce duties and processing fees. FTZs are legally considered outside of U.S. Customs territory, which means you can admit merchandise to an FTZ without technically entering the U.S. market.
This allows companies to defer duty payments, manufacture goods before filing entry, and even eliminate duties on re-exported products. Learn more about FTZs here.
Merchandise admitted into an FTZ can be manufactured, mixed, manipulated, packaged, assembled, processed, labeled, displayed, tested, sampled, repaired, cleaned, salvaged, destroyed, or stored indefinitely.
However, manufacturing and production activities that would change the tariff classification of your goods must receive prior authorization by the federal FTZ Board. Retail trade is also prohibited in foreign-trade zones.
Operating in an FTZ gives you access to a variety of benefits that can streamline import-export logistics while improving your bottom line. This includes:
- Deferring duties until your goods leave an FTZ to enter the U.S. market.
- Filing one Customs entry per week instead of per shipment, which reduces brokerage and processing fees.
- Allowing domestic manufacturers to pay the duty rate on a finished product, rather than its component parts.
- Offering indefinite storage to improve inventory control and time-to-market for quota-restricted goods.
Explore the full list of FTZ benefits to learn how foreign-trade zones could help your business.
The Foreign-Trade Zone program was established by Congress in 1934 to incentivize international investment and employment in the United States.
FTZs make U.S.-based companies more competitive by offsetting the advantages of operating overseas—with inverted tariffs, duty deferral, and other benefits. This encourages more companies to do business in the United States, supporting local economic development and creating more jobs for Americans.
While FTZs offer unique privileges that can simplify Customs procedures, all activities within an FTZ remain under the supervision of U.S. Customs & Border Protection (CBP) and must comply with their regulations. Merchandise can only be admitted and removed from a zone with U.S. Customs approval.
Once you have received FTZ approval, you will still need to activate your site through CBP before you can begin zone activity. Learn what to expect during the activation phase.
The federal FTZ Board grants local corporations the authority to establish, operate, and administer foreign-trade zones across the country. Grantees are responsible for promoting the FTZ program to companies in their service area, as well as sponsoring applications to become a designated FTZ site.
The Indianapolis Airport Authority is the Grantee for Central Indiana (FTZ #72).
A Zone User is any company or individual who uses an FTZ for storing, handling, or manufacturing merchandise. Zone Operators sign an agreement with their Grantee, assuming responsibility for managing their FTZ site and remaining in compliance with Customs.
For designated sites and subzones, the User and Operator are often the same entity.
Foreign-trade zones are typically located near a U.S. Customs port of entry, such as an international airport or waterport. But the Alternative Site Framework (ASF) allows Grantees to manage an approved “service area” around each port.
Under the ASF, any eligible company within a service area can apply for FTZ designation and access zone benefits at their site. Indiana is one of the few states that’s entirely ASF-approved, which means you can establish an FTZ anywhere across our 92 counties.
The Grantee in charge of your service area must sponsor your application for FTZ designation. INzone and the Indianapolis Airport Authority are responsible for the Central Indiana FTZ (#72), which includes the 41 counties surrounding the Indianapolis International Airport. Learn more about the application process here.
Becoming an FTZ can be a smart investment, but it does come with considerations, such as installing FTZ inventory software and meeting Customs’ strict security standards. We highly recommend partnering with a professional FTZ consultant to conduct a thorough cost-benefit analysis to determine if the Foreign-Trade Zone program is right for you.
If you’re in Central Indiana, INzone will cover the cost of your Feasibility Study, paying up to $2,500 for distribution and $5,000 for manufacturing operations to estimate the potential return on investment.
INzone is the 501(c)6 non-profit responsible for administering the Central Indiana FTZ (#72) on behalf of the Indianapolis Airport Authority. We are a one-stop shop for help navigating the federal Foreign-Trade Zone program, assisting companies through the application process to become a designated FTZ site. Learn more here.
INzone offers a variety of unique services to companies in Central Indiana, including free feasibility studies, compliance audits, confidential assistance, and more. Contact our team to learn more and start your business on the path to savings.
The federal Foreign-Trade Zone program is not a loophole or a gimmick. It was established by Congressional Act to keep U.S.-based industry competitive in the global marketplace. As the non-profit administrator of FTZ #72, INzone has a responsibility to promote the program and help local companies navigate regulations to access FTZ benefits for their business.
Every company is different. If you’re interested in doing business at an FTZ, we recommend working with a professional FTZ consultant to conduct a thorough cost-benefit analysis. If you’re in Central Indiana, INzone will even cover the cost of your feasibility study to help assess the potential return on your investment.