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Foreign Trade Zones. "Free Zones" in International Shipping

Foreign Trade Zone in international shipping (FTZ) is a yard guarded by U.S. Customs.
It is similar to a Bonded Warehouse, but differences are:

  1. You can leave goods in Foreign Trade Zone literally forever;
  2. To bring internationally shipping goods used CF 214. If you need to manipulate it use CF 216 "Activity Report".
  3. Take internationally shipping goods out of Foreign Trade Zone used 7512 or 7501

Foreign Trade Zone established by Border Director with Customs approval. It requires record keeping (similar to bonded warehouses, just no 300 report). All regulated by CFR 15 part 400.

Procedure to enter into Foreign Trade Zone:

Use form 214 to bring international shipping goods into Foreign Trade Zone. It is given LOT# (Inventory Control #). The Foreign Trade Zone Operator assigns 214 first.

  1. Written approval from the Foreign Trade Zone Operator requires BEFORE you enter in the Foreign Trade Zone;
  2. Then you must DECLARE THE STATUS. Duty depends on the status. You must declare the status BEFORE internationally shipping goods enter into the Foreign Trade Zone;
  3. Port Director approves admit ion and international shipping goods go to the Foreign Trade Zone;
  4. Take goods out of Foreign Trade Zone use CF 216

4 (FOUR) TYPES OF STATUS IN Foreign Trade Zone:

  1. Privileged - international shipping duty rate is FROZEN on the date of entry into the Foreign Trade Zone. No matter if it will higher on a date of withdraw. "PARTS-AS-PARTS" means if you assemble an international shipping machine (cars) then duty rates on withdraw will be as on international shipping parts. The benefits are:
    - You pay lover duty on parts, versus assembled machines;
    - Labor is duty free
    (Example: Toyota pays duty on Camry assembled in Foreign Trade Zone as on parts 3.2% instead as on cars 15%. PLUS labor is duty free)
  2. Non-Privileged - Duty rate on the date of withdraw. "PARTS-AS-CARS". Benefits are:
    - When duty on assembled machine is LOWER the on international shipping parts;
    - Labor is duty free.
  3. Duty Paid or Domestic Status - You can keep duty paid or US international shipping goods in such zones under certain circumstances. However rent rate is very high. Then such situation is very seldom.
  4. Zone Restricted - you can only place into such type of Foreign Trade Zone for:
    1. Destruction;
    2. Export
    3. To satisfy requirements;
    4. Just one exception you can make entry if it is PUBLIC INTEREST (I.e. emergency products from the Foreign Trade Zone need to be bring to a disaster area).
    5. TIB - Transportation (international shipping) in Bond (to #2 for Export);
    6. For Drawback - i.e. wait to get duty paid back;
    7. Form 216 to take, destroy or manipulate international shipping goods require BEFORE you destroy or manipulate it.

Transfers with Foreign Trade Zone:

  1. If within the same port and SAME Foreign Trade Zone Operator, then use CF 6043;
  2. If within the same port but DIFFERENT Zone Operator, then use CF 7512 and 214 at different location;
  3. If different ports then CF 7512 and new 214;
  4. If export out of Foreign Trade Zone for IE or TE, then 7512 ;
  5. If export for consumption, then 3461 + 7501 with duty attached.

Other rules that apply to Foreign Trade Zone:

- You CANNOT change category of international shipping textile after entry into Foreign Trade Zone if it is going to be consumption entry.
- You CAN change category of international shipping textile after entry into Foreign Trade Zone if it is going to be export.
It is done in purpose to avoid quota system. Then you CANNOT made entry under another category and avoid a quota.

For consumption entry use 3461 + 7501.
After consumption entry is approved YOU HAVE 5 (FIVE) WORKING DAYS TO TAKE INTERNATIONALLY SHIPPED GOODS OUT OF Foreign Trade Zone.


4. Goods MOVE FROM Foreign Trade Zone TO BONDED WAREHOUSE:

- Non-Privileged CAN go to bonded warehouse. OK.
a. Same port = 6043 - 7501 (in warehouse)
b. Different port = 7512 - 7501

- Privileged CANNOT go to bonded warehouse! Because there is conflict: In Privileged Foreign Trade Zone international shipping duty rate is frozen, but in bonded warehouses duty is on the date of withdraw.

- Foreign Trade Zone Restricted CAN, but for export or destruction only.

If you have an international shipping warehouse entry and the product had been in Foreign Trade Zone for 3 YEARS, then you MUST CALCULATE TIME IN Foreign Trade Zone FOR THE TIME PERIOD IN THE BONDED WAREHOUSE. I.e. now it can stay in the bonded warehouse for ONLY 2 (TWO) YEARS before it will be declared unclaimed.

6. RECORDS KEEPING system etc is THE SAME AS IN BONDED WAREHOUSES. Same rules and same international shipping regulations. Just one exception: THERE IS NO 300 REPORT. Only RECONSOLIDATION report.

7. SUSPECTED and PROHIBITED internationally shipping merchandises will be held outside of Foreign Trade Zone until it will be determine whether it prohibited or not.

8. OVERAGES in FTZ reported in 214 and require new 7501

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