Procedure to enter into FTZ | FOUR TYPES OF STATUS | FTZ Transfers | Other rules that apply to FTZ

Foreign Trade Zone (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 FTZ literally forever;
2. To bring goods in FTZ used CF 214. if you need to manipulate it use CF 216 "Activity Report".
3. Take goods out of FTZ used 7512 or 7501

FTZ 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.

• You CANNOT bring in FTZ prohibited goods;
• You CANNOT have any RETAIL trade in FTZ.

Procedure to enter into FTZ:

Use form 214 to bring goods into FTZ. It is given LOT# (Inventory Control #). The FTZ Operator assigns 214 first.

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

4 (FOUR) TYPES OF STATUS IN FTZ:

1. Privileged - duty rate is FROZEN on the date of entry into the FTZ. No matter if it will higher on a date of withdraw. "PARTS-AS-PARTS" means if you assemble a machine (cars) then duty rates on withdraw will be as on 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 FTZ 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 parts;
   - Labor is duty free.
   
3. Duty Paid or Domestic Status - You can keep duty paid or US 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 FTZ 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 FTZ need to be bring to a disaster area).
   5. TIB - Transportation 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 goods require BEFORE you destroy or manipulate it.

Transfers with FTZ:

1. If within the same port and SAME 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 FTZ for IE or TE, then 7512 ;
5. If export for consumption, then 3461 + 7501 with duty attached.

Other rules that apply to FTZ:

1. TEXTILE
- You CANNOT change category of textile after entry into FTZ if it is going to be consumption entry.
- You CAN change category of textile after entry into FTZ 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.

2. TIME LIMIT
For consumption entry use 3461 + 7501.
After consumption entry is approved YOU HAVE 5 (FIVE) WORKING DAYS TO TAKE GOODS OUT OF FTZ.

3. RECOVERABLE WAIST IS ALWAYS NON-PRIVILEGED. No exceptions!

4. Goods MOVE FROM FTZ 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 Zone duty rate is frozen, but in bonded warehouses duty is on the date of withdraw.

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

5. TIME LIMIT IF MOVE FROM FTZ TO BONDED WAREHOUSE:
If you have a warehouse entry and the product had been in FTZ for 3 YEARS, then you MUST CALCULATE TIME IN FTZ 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 regulations. Just one exception: THERE IS NO 300 REPORT. Only RECONSOLIDATION report.

7. SUSPECTED and PROHIBITED merchandises will be held outside of FTZ until it will be determine whether it prohibited or not.

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