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P.O. Box 1575 Mail Code 640
30 S Nevada Avenue, Suite 604
Colorado Springs, CO 80903
Phone: 719-385-5955
Fax: 719-385-5475
Email: EconDevMain@spring. . .

City of Colorado Springs / Economic Vitality / International Trade / Foreign Trade Zone

Foreign Trade Zone

Foreign Trade Zones (FTZs) were created in the United States to provide special customs procedures to U.S. plants engaged in international trade-related activities. Duty-free treatment is accorded items that are processed in FTZs and then re-exported, and duty payment is deferred on items until they are brought out of the FTZ for sale in the U.S. market. This helps to offset customs advantages available to overseas producers who compete with domestic industry. 


User Benefits

  • Duty Exemption. No duties or quota charges on re-exports.
  • Duty Deferral. Customs duties and federal excise tax deferred on imports.
  • Inverted Tariff. In situations where zone manufacturing results in a finished product that has a lower duty rate than the rates on foreign inputs (inverted tariff), the finished products may be entered at the duty rate that applies to its condition as it leaves the zone -- subject to public interest considerations.
  • Logistical Benefits. Companies using FTZ procedures may have access to streamlined customs procedures (e.g. "weekly entry" or "direct delivery").
  • Weekly Entry Savings.  Under Weekly Entry procedures, the zone user files only one Customs Entry per week, rather than filing one Customs Entry per shipment. Customs no longer has to process an entry for each and every shipment being imported into the zone, and the Foreign-Trade Zone community no longer has to pay for the processing of each and every entry.
  • Other Benefits. Foreign goods and domestic goods held for export are exempt from state/local inventory taxes. FTZ status may also make a site eligible for state/local benefits which are unrelated to the FTZ Act.

 Public Benefits

  • Help facilitate and expedite international trade.
  • Provide special Customs procedures as a public service to help firms conduct international trade related operations in competition with foreign plants.
  • Encourage and facilitate exports.
  • Help attract offshore activity and encourage retention of domestic activity.
  • Assist state/local economic development efforts.
  • Help create employment opportunities.

 Permitted activity

  • Merchandise in a zone may be assembled, exhibited, cleaned, manipulated, manufactured, mixed, processed, relabeled, repackaged, repaired, salvaged, sampled, stored, tested, displayed and destroyed.
  • Manufacturing, processing and any activity that results in a change of the tariff classification must be specifically approved by the FTZ Board.
  • Retail trade is prohibited in zones.

Permitted merchandise

  • Any merchandise that is not prohibited from being imported into the territory of the U.S. may be brought into a zone.
  • Merchandise that is conditionally admissible may be brought into a zone and re-exported or brought into compliance with U.S. laws so that it may be imported for consumption

Types of FTZs

  • General-purpose zones involve public facilities that can be used by more than one firm, and are most commonly ports or industrial parks used by small to medium sized businesses for warehousing/distribution and some processing/assembly.
  • Subzones are sponsored by general-purpose zones, but typically involve a single firm's site which is used for more extensive manufacturing/processing or warehousing/distribution that cannot easily be accomplished in a general-purpose zone.

 City's role

  • The City of Colorado Springs Business Development Division works with companies and their consultants in preparing submissions to the US Customs office to establish an operational zone.
  • For companies not located in an FTZ, but would like to have FTZ benefits, the City may be able to assist with establishing a sub-zone through the FTZ Board in Washington, D.C.