Activation: Approval by the grantee and U.S. Customs
and Border Protection's Port Director for operations to begin,
which allow the admission and handling of merchandise in zone
Admission: The physical arrival of goods into a zone
in a specified zone status with the appropriate approvals
of the zone grantee and the U.S. Customs and Border Protection.
The word "admission" is used instead of "entry"
to avoid confusion with Customs entry processes under Parts
141-144 of the Customs Regulations.
Customs Territory: The territory of the U.S. in which
the general tariff laws of the U.S. apply. The U.S. Customs
territory includes the States, the District of Columbia and
Puerto Rico minus any areas within the boundaries of foreign-trade
Deactivation: Voluntary discontinuation of the activation
of an entire zone or subzone by the grantee or operator. (Discontinuance
of the activated status of only part of a zone is an alteration).
Direct Delivery: A procedure for delivery of merchandise
to a zone without prior application and approval on Customs
Form 214; designed for low-risk, repetitive shipments whose
ordering and timing are under the control of the operator.
Approval to utilize direct delivery must be obtained from
the Port Director.
Domestic (D) Status: Status of zone merchandise grown,
produced or manufactured in the U.S. on which all internal
revenue taxes have been paid, or the status of zone merchandise
previously imported on which all applicable duties and internal
revenue taxes have been paid.
Drawback: Import duties or taxes repaid by the government,
in whole or in part, when the imported goods are exported
or used in the manufacture of exported goods.
Entry: Notification to Customs of the arrival of imported
goods in the Customs territory of the U.S. Merchandise withdrawn
from a zone for consumption in the U.S. is entered when it
is removed from the zone. Goods brought into a zone are admitted.
Foreign-First (FOFI): An accounting method based on
the assumption that foreign-status merchandise is disposed
of first. Permission to use FOFI must be obtained from Customs
and is granted on a case-by-case basis.
Grantee: A corporation to which the privilege of establishing,
operating and maintaining a foreign-trade zone has been granted
by the Foreign-Trade Zones Board. Grantee corporations must
be either public corporations including a state, political
subdivision (including a municipality), public agency, corporate
municipal instrumentality of one or more states or private
corporations organized for the purpose of establishing a zone
project. Qualified private corporations must be charted for
this purpose under a law of the state in which the zone is
Harmonized Tariff Schedule of the United States (HTSUS):
Published by the U.S. International Trade Commission, the
HTSUS is used in the classification of imported merchandise
for rates of duty and statistical purposes.
Inverted Tariff Structure: Where imported parts are
dutiable at higher rates than the finished product into which
they are incorporated.
Magnet Site(s): A magnet site is established for multiple activities by multiple users.
Storage, distribution, testing, repackaging and repair are
some of the possible activities in a magnet zone. Processing or manufacturing
in a magnet zone requires the permission of the Foreign-Trade Zones
Manipulation: As defined in Section 562 of the Tariff
Act, processing wherein merchandise is packed, unpacked, repacked,
cleaned, sorted, graded or otherwise changed in condition.
The precise distinction between manipulation and manufacturing
is subject to interpretation and enjoys a long history of
Manufacturing: The FTZ Board has defined manufacturing
as any process that results in a change in Customs classification
of the merchandise, and therefore, requires prior clearance
from the Board pursuant to the manufacturing conditions in
specific foreign-trade zone grants.
Merchandise: FTZ merchandise includes goods, wares,
and chattels of every description. Not included is prohibited
merchandise, building materials and supplies for use in the
operation of a zone.
Nonprivileged Foreign Status (NPF): Status of zone
merchandise not previously cleared by Customs, which is appraised
in the condition of the merchandise, at the time it enters
the Customs territory upon exiting the zone. NPF status may
be changed upon approval from Customs, provided the merchandise
is still in the same condition as when admitted to the zone.
While in the zone, NPF status merchandise can be manipulated
or manufactured into another commercial item with a different
tariff classification. NPF status allows zone users to pay
duty at the rate of the finished product produced in the zone.
Operator: A corporation, partnership or person that
operates a zone or subzone under the terms of an agreement
with the grantee. A grantee may act as its own operator.
Operator's Bond: A bond submitted to Customs, on Customs
Form 301, to assure compliance with the Customs Regulations
as set forth in 19 CFR 113.73.
Port of Entry: A place designated by the U.S. Government at
which a Customs officer is assigned with authority to accept
entries of merchandise, collect duties, and enforce the various
provisions of the Customs laws.
Privileged Foreign Status (PF): Zone status whereby
merchandise is classified and appraised, with duties and taxes
determined, at the time the status is elected. Privileged
foreign status cannot be changed once chosen.
Usage-Driven Site(s): A special-purpose zone established as part
of a zone project for a limited purpose that cannot be accommodated
within an existing magnet site. Usage-driven sites must be
sponsored by the grantee of a magnet site.
User: A person or company using a zone for storage, handling
or processing of merchandise. Note: An operator may authorize
a user to maintain its own inventory system and procedures
manual. However, the operator remains responsible to Customs
for inventory control unless the user posts its own operator's
Weekly Entry Procedures: A Customs procedure that
permits zones and subzones to file a weekly entry on Customs
Form 3461 for the estimated removals of merchandise destined
for domestic consumption during the following business week.
Once the Port Director has approved the entry, the operator
may ship the products all week up to the quantity estimated.
Zone Lot: A collection of merchandise maintained under
an inventory control method based on specific identification
of merchandise admitted into a zone by lot and lot number
Zone Restricted Status: Status of zone merchandise
transferred to a zone for the sole purpose of exportation
or destruction. Zone restricted merchandise cannot be changed
or brought into the Customs Territory without the specific
permission of the Foreign-Trade Zones Board on a case-by-case
Zone Status: The status of merchandise admitted to
a zone, i.e. domestic (D), non-privileged foreign (NDF), privileged
foreign (PF), or zone restricted (ZR).