• Secure areas located in or adjacent to a Customs Port of Entry

• Legally outside the US Customs territory – Goods in zones are considered to be part of

international commerce, not domestic

– It is only once goods leave the zone to enter the commerce of the US, that normal tariff and Customs regulations apply to those goods

What is a Foreign Trade Zone?

FTZ Regulations

• U.S. Foreign Trade Zones Act of 1934

(19 USC 81a-u)

• Foreign Trade Zones Board Regulations

(15 CFR Part 400)

• U.S. Customs Service Regulations

(19 CFR Part 146)

Purpose of the FTZ Program

• Expedite and encourage foreign commerce

• Create jobs and investment in the US that would otherwise take place overseas

What can be done in an FTZ?

Merchandise entering a zone can be:

Assembled Sampled Manufactured

Displayed Relabeled Cleaned

Stored Sampled Tested

Destroyed Processed Repaired

Manipulated Repackaged

What are the benefits of an FTZ?

• Duty deferral • Duty reduction (inverted tariff) • Duty reduction or elimination on

scrap/waste • Streamlined entry procedures

– Direct delivery – Weekly entries

• Reduction in merchandise processing and brokerage fees

• Exemption from ad valorem taxes

Additional benefits

• Improved Customs compliance

• Lower security and insurance costs

• Shorter transit time using direct delivery

• No time constraints on storage

• Improved inventory control

• Customs interaction

Regulatory agencies

• There are two primary agencies that regulate FTZs:

FTZ Board – Establish how FTZs are designated and authorized to activate

US Customs – Regulate the operation of FTZ once activated

Zone Terminology

• General Purpose Zone

– A site or facility that provides multiple users

– Public warehouse

– Industrial park

– Port complex

• Subzone (Special purpose zone)

– Single-purpose, single company site

– Typically manufacturing or large distribution operation

Zone Terminology

• Grantee – Frequently port authorities, state/local

economic development agencies

– Serves as public representative of the zone project

– Submit applications for zone modifications, site approvals and manufacturing authority

– Responsible for monitoring the operations and status of zone use

Zone Terminology

• Operator

– Provide day-to-day oversight of zone site activities which include receipt, storage and shipping of merchandise, recordkeeping, and periodic reporting

– Deals directly with Customs on day-to-day matters

– Responsible for Customs compliance within the zone site

FTZ Participants

FTZ #122

• Grantee – Port of Corpus Christi

• Applied in April 1984

• Approved in September 1985

• First continental zone with refinery subzones

• 19 approved sites

• All Port Corpus Christi property and facilities are included in the boundaries of the general purpose area

FTZ #122 Operators

• Valero Refining

• Citgo Refining • Flint Hills Resources • BTB Refining • Sherwin Alumina • TOR Minerals • International

Resistive Company (IRC)

• Kiewit Offshore Services

• Gulf Marine Fabricators

• Baker Hughes Drilling Fluids

• Halliburton Energy Services

• Excalibar Minerals • Gavilon Fertilizer • Port Corpus Christi

FTZ #122

Alternative Site Framework (ASF)

• Adopted by FTZ Board in 2009

• Provides greater flexibility in providing zone status

• Streamlines the process for getting FTZ status

• Port Corpus Christi reorganized under the ASF in 2013

FTZ #122 Service Area