Foreign Trade Zone

An FTZ is a secure and enclosed area, operated as a public venture located in or adjacent to a port of entry. It is considered outside of the United States for purposes of Customs' Duty payments. The Hudson Valley Research Park located in East Fishkill was designated an FTZ in 1997. Following is a summary of FTZ benefits:

Manufacturers May:

• Conduct complete processing or assembly operations and defer the payment of duties until the product enters U.S. territory
• Combine foreign and domestic components or manipulate, repackage or reassemble products in order to qualify for lower duties
• Avoid payment of duties on materials lost in manufacturing
• Avoid payment of duties on materials used in manufacturing and on materials exported
• Place goods intended for export in the FTZ in order to qualify for tax rebates, yet retain the ability to further process, assemble and repackage

Distributors and Wholesalers May:

• Store goods indefinitely and free of duty or quota restrictions until they enter U.S. territory — if exported, no duty is levied
• Inspect merchandise for quality, breakage and loss before duty is paid — substandard goods may be discarded, destroyed or returned without duty
• Remark, repackage, etc. in order to qualify for lower duties
• Insure only the value of the merchandise, plus freight charges, thereby avoiding insurance on value, plus freight, plus duty, plus taxes
• Borrow on goods stored in the FTZ through the issuance of warehouse receipts
• Store goods while awaiting favorable exchange rate
• Avoid penalties and fines for improperly marked items or lost documents. Merchandise may be stored until documents are found or identification is corrected
• Sample merchandise in order to determine duty rates before actual payment is required
• Exhibit or market goods before payment of duty