Benefits of the Foreign Trade Zone Program
It is the intent of the U.S. FTZ program to stimulate economic growth and development in the United States. In an expanding global marketplace, there is increased competition among nations for jobs, industry and capital. The FTZ program was designed to promote American competitiveness by encouraging companies to maintain and expand their operations in the United States.
The FTZ program encourages U.S.-based operations by removing certain disincentives associated with manufacturing in the United States. The duty on a product manufactured abroad and imported in the U.S. is paid at the rate of the finished product rather than that of the individual parts, materials or components of the product. The U.S.-based company find itself at a disadvantage from its foreign competitor when it must pay the higher rate on parts, materials, or components imported for use in the manufacturing process. To correct this imbalance the program treats a product made in a U.S. foreign trade zone for purposes of tariff assessment as if it were produced abroad.