The Department of Commerce Foreign Trade Zones Board has published a Proposed Rule in the Federal Register that would change its regulations governing Foreign Trade Zones (FTZs). Comments on the proposed amendments to the regulations are due no later than April 8, 2011.

FTZs are designated locations within the United States where foreign and domestic merchandise may be entered for storage, exhibition, assembly, manufacture, or other processing prior to formal “entry” into the U.S. customs territory. As a result, payment of duties is not required until the merchandise leaves the FTZ and enters the U.S. customs territory for domestic consumption. In many instances, U.S. duties can be reduced or avoided on foreign merchandise released from a FTZ if the merchandise is incorporated into a downstream product that is subject to a reduced or zero duty rate. The Department of Commerce Foreign Trade Zones Board approves applications for FTZ status, and it maintains regulations governing the operation of FTZs. U.S. Customs and Border Protection (CBP) separately approves “activation” of the FTZ, and zone activity remains under the supervision of CBP.