Free Trade Zone
Category: other
A designated area where goods can be imported, stored and processed without customs duties.
A Free Trade Zone (FTZ) or Foreign Trade Zone is a designated area within a country where goods can be imported, stored, processed, and re-exported without being subject to customs duties until they enter the domestic market. FTZs provide benefits including duty deferral, inverted tariff advantages (using the lower duty rate of finished goods vs. components), and streamlined customs procedures.
Examples
- • Amazon operates Foreign Trade Zone facilities in the US where sellers can store imported goods without paying customs duties until goods are sold to US customers.
- • A seller importing components into an FTZ, assembling them into finished goods, and then selling domestically can pay the lower finished goods duty rate.
- • China's Free Trade Zones (e.g., Shanghai FTZ, Shenzhen Qianhai) allow cross-border e-commerce sellers to store goods for duty-free export.