Foreign Trade Zone - FTZ Program

Background

Congress created Foreign Trade Zones (FTZ) to promote American competitiveness in the global marketplace and encourage companies to maintain and expand their operations in the United States

FTZs are federally designated areas where domestic and foreign commercial merchandise of every description can be held without being subject to Customs duties and other taxes. In essence, the merchandise receives the same Customs treatment it would if it were outside the commerce of the United States. The program’s tariff and tax relief is designed to lower the costs of U.S.-based operations engaged in international trade, and thereby create and retain the employment and capital investment opportunities that result from those operations.

There are two types of zones: 1) General Purpose Zones have multiple businesses in one location, such as in an industrial park; and 2) Sub Zones, which typically house one business that occupies more than one city block.

Benefits of an FTZ

The Port of Cleveland is the Grantee of Foreign Trade Zone (FTZ) 40. Congress created the Foreign Trade Zone program to promote American competitiveness in the global marketplace and encourage companies to maintain and expand their operations in the United States. As part of our mission to help local companies compete in the global market, the Port of Cleveland has partnered with Logistec USA, our general cargo terminal operator on Cleveland’s lakefront to manage our active FTZ. 

The Port of Cleveland’s FTZ program improves cash flow, increases logistics efficiency, reduces unnecessary logistics costs and provides greater flexibility for our customers. With the benefit of duty deferral, the payment of all duties is delayed until the cargo leaves the zone and, ultimately, improves our customers’ bottom line. 

Benefits include:

  • Duty Deferral: Companies can delay payments on duties until the inventory leaves the Zone.
  • Duty Reduction: Companies can pay lower duty rate on assembled or manufactured finished products.
  • Duty Elimination: Companies don’t pay duty on products that are rejected, scrapped, destroyed or exported after arriving in the country as an import.
  • Direct Delivery: Companies can seek authority to receive product and clear customs within the Zone and as a result bypass congested ports.
  • Weekly Entry: Companies can reduce merchandise processing fees by combining shipments on one entry filed weekly.
  • No Import Quotas: Inventory that companies store in a Zone is not subject to import quotas.