Free Trade Zone vs Bonded Warehouse
Compare Free Trade Zones (FTZ) and Bonded Warehouses: benefits, restrictions, and when to use each for cross-border trade.
Zone Overview
Free Trade Zone (FTZ)
Designated area where goods can be imported, stored, processed, and re-exported without paying customs duties until goods enter domestic market.
Pros
- ✓Duty deferral until entry to market
- ✓Manufacturing/processing allowed
- ✓Re-export without duty
- ✓Streamlined procedures
Cons
- ✗Limited geographic locations
- ✗Regulatory complexity
- ✗Setup costs
- ✗Restricted domestic sales without duty payment
Best for: Re-export hub, manufacturing for export, duty optimization
Cost: Varies by zone; leasing + service fees
Setup: 1-3 months
Bonded Warehouse
Secured warehouse where imported goods are stored without paying duties. Goods can be repackaged, sorted, and labeled before entering domestic market.
Pros
- ✓Duty deferral
- ✓Goods storage without duty
- ✓Repackaging/sorting allowed
- ✓More locations than FTZ
Cons
- ✗No manufacturing allowed
- ✗Time limits (usually 5 years)
- ✗Security requirements
- ✗Must pay duty before domestic sale
Best for: Import storage, consolidation, delayed customs clearance
Cost: Warehousing fees + customs supervision
Setup: 2-6 weeks
FAQ
Can I sell goods from a bonded warehouse domestically?+
Yes, but you must pay import duty and VAT before the goods can enter domestic circulation. The advantage is you can store goods duty-free while waiting for buyers, then pay duties only when selling.