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This is a very nicely designed map and associated list of foreign trade zones (FTZ’s) located within the 48 contiguous United States, Alaska, Hawaii and outlying territories, List of Foreign-Trade Zones by State. There are multiple FTZ’s in each state.

U.S FTZ Map

FTZ map via enforcement.trade.gov formerly Import Administration

What are FTZs?

We have a FTZ right here in Phoenix, Arizona, Foreign-Trade Zone No. 75. This is in addition to other international trade and business development programs.

Foreign-Trade Zones are secure areas under supervision of the U.S. Customs and Border Protection that are considered outside the customs territory of the United States… Foreign and domestic merchandise may be moved into zones for storage, exhibition, assembly, manufacturing, and processing without payment of duties, quota and other import restrictions until the decision is made to enter the goods into the U.S. market.

Emphasis mine. Authority for establishing foreign-trade zones is granted by the Foreign-Trade Zones Board. As Grantee, the City of Phoenix is responsible for establishing, administering and marketing the FTZ program for the greater Phoenix area. Port of Entry is Phoenix Sky Harbor International Airport.

What are the benefits?

  • Duty deferral until merchandise enters U.S. territory;
  • Duty elimination on exports, scrap and defective merchandise;
  • Duty reduction on foreign components which carry a higher duty rate than the finished article;
  • No time constraints on storage;
  • Shorter transit time;
  • 75% less in real and personal property taxes

Taxes

Note very closely the last bullet point. Any facility located within a FTZ is operating nearly duty-free. Being granted this favored status, i.e. taxed 75% less, is incredibly desirable!

The meaning of “real and property taxes” is unclear to me. What are “real taxes”? That may just be an odd choice of words by the Commerce Department. I do know the meaning of “personal property taxes”! That is puzzling as well.  What sort of manufacturing entity would be subject to personal property taxes?  This is especially peculiar given the location of the FTZ’s. They are in industrial areas. I use the word “industrial” descriptively, and in terms of zoning.

FTZ grantees

I was curious to learn which companies were benefiting from this highly favorable trade status. I had a glance at the current occupants of FTZ No. 75. Oddly, they are all American companies. I expected companies that were registered or had corporate headquarters in foreign countries. FTZ’s are Foreign Trade Zones!

Why are they occupied by U.S. domestic business entities instead?

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