Businesses involved in international trade need to constantly be looking for strategies and tools that help them navigate the ever-changing global regulations, agreements, trends, and fluctuating tariffs while staying compliant, competitive, and reducing costs.
Let’s look into what an FTZ is and how using Foreign-Trade Zones benefits your global operations.
What is a Foreign-Trade Zone?
A Foreign-Trade Zone (FTZ) is a designated secure area inside the United States, usually at a port of entry, that is considered outside the U.S. customs territory for tariff laws.
These areas were established under the Foreign-Trade Zones Act of 1934 and are supervised by the U.S. Customs and Border Protection (CBP). Their operations are regulated by the Foreign-Trade Zones Board, formed by the federal government.
FTZs, in a nutshell, are areas in the U.S. where imported goods can be stored, handled, or processed without your business having to pay customs duties right away.

Types of Foreign-Trade Zones
To better understand the Foreign-Trade Zones benefits, first we need to learn about the different types of FTZs that exist and how each one suits various types of needs.
Each type supports a specific set of operations, and choosing the right type of zone can make a big difference in costs, savings, and benefits involved.
General-Purpose Zones
As its name suggests, a general-purpose FTZ can serve different uses and users. They are typically located at industrial parks or warehouse complexes, which makes them ideal for businesses engaged in warehousing or distribution as well as light manufacturing.
Special Purpose Zones (Subzones)
These zones serve a single user instead; they’re often used by companies with more unique requirements that general-purpose zones can’t handle, for example, for manufacturers with specific production needs.
The Alternative Site Framework (ASF)
Introduced relatively not too long ago (2008), these areas were established to allow more flexibility when it comes to accessing FTZ benefits.
Designating an FTZ the traditional way requires creating a fixed zone within strict boundaries and a long process to add the location.
ASF allows for faster designations because it considers a larger service area that allows all companies within it to activate the Foreign-Trade Zones benefits without having to build a new zone and making the application process more efficient and quicker.
Key benefits of Foreign-Trade Zones
FTZ zones help reduce costs, improve cash flow, and simplify customs processing, facilitate inventory management, and avoid quota limits. Every business importing and exporting goods can enjoy the many Foreign-Trade Zones benefits, both operational and financial:
Duty deferral
One of the main benefits of using an FTZ is the deferral of duties, meaning you don’t have to pay for them until the items are ready to leave the FTZ and enter the U.S. market.
This duty deferral gives you control over your cash flow and allows you to better manage your budget and resources until you decide it’s appropriate.

Duty exemption
The duty exemption applies whenever your goods are re-exported directly from the Foreign-Trade Zones, which means they do not enter the U.S. market and go elsewhere instead. These benefits help you reduce costs and maximize your profits.
Duty reduction (inverted tariff)
The inverted tariff structure compares the duty rate on a finished product with the duty rate on its components, and allows you to pay the lower rate on the final product, which can lead to potential savings.
Merchandise Processing Fee (MPF) reduction
Using Foreign-Trade Zones helps you consolidate (group) your shipments into a single weekly entry processing, leading to fewer Merchandise Processing Fees, therefore saving you some resources.
Streamlined logistics
FTZs make merchandise manipulation easier, whether it is assembly, repackaging, or labeling, allowing you to better utilize your resources and improving your supply chain operations.
They also enhance inventory management and control, reduce processing times for faster clearance, and allow for smoother cross-border trade operations overall.
Cash flow benefits
As mentioned before, one of the main benefits is that not having to immediately pay for duties lets you make better decisions according to the current market or tariffs, helping you manage the impact of fluctuations on your business.
Strategic supply chain integration with FTZs
In short, taking advantage of Foreign-Trade Zones benefits contributes to your cross-border trade and overall supply chain optimization. You can maximize these benefits by pairing Foreign-Trade Zones with advanced technologies like real-time tracking, inventory management systems, and other inventory control mechanisms to boost your efficiency while taking care of your resources.
Foreign-Trade Zones also:
- Facilitate your operations
- Avoid delays
- Reduces wasted resources.
With over 20 years of experience in international trade, at EP Logistics, we help you optimize your cross-border warehousing and trade with customizable solutions and services already integrated with advanced technologies helping you maximize the benefits of using an FTZ.

Permitted activities in Foreign-Trade Zones
This is how an FTZ can be used according to the regulations and the type of activities allowed:
- For item storage without having to immediately pay duties.
- In the assembly and manufacturing of finished products.
- As a location for quality checks, testing, processing, or modifying products.
- For repackaging and relabeling items to meet market requirements or customs regulations.
- As a point for repairing or reworking goods without having to export/re-import them.
- To destroy defective, expired, or damaged goods without paying duty.
FTZ status classifications
Besides learning about the specifics of the activities permitted or forbidden inside an FTZ, it is crucial also to understand that inside an FTZ goods are assigned to and classified as specific zone status merchandise:
Privileged foreign status
This means the items get to retain their original classification and duty rate, even after processing.
Non-privileged foreign status
In this case, the items’ duty depends on their condition at the time they enter the U.S. market. This is a good thing since it can lead to potential duty savings through lower rates.
Domestic status
This status is given only to U.S.-made goods or those for which duties have already been paid, and allows for these goods to be stored and manipulated in the FTZ without owing additional duties.
Zone-restricted status
Generally, for goods that will be exported outside the U.S., for those that will be destroyed, and for those that are not compliant or eligible for entry into the U.S.
Establishing and operating an FTZ
To set up an FTZ and take advantage of all Foreign-Trade Zones benefits, several steps are to be followed:
- Application submission. Your business needs to apply to the Foreign-Trade Zones Board and describe in detail the operations and benefits intended to take place inside the FTZ.
- Activation. Once the application has been approved, the zone goes through activation under the authorization and supervision of the U.S. Customs and Border Protection.
- Compliance and reporting. To maintain the FTZ active, your business is required to comply with customs regulations at all times, including keeping records accurately and properly reporting. Failing to do so can result in penalties, suspension of FTZ privileges, or revocation of the permission.
At EP Logistics, we make the process easier by providing your business with existing FTZ facilities and expert support to reduce the setup time and ensure your operations stay compliant.
Is an FTZ right for your business?
If you are wondering whether using an FTZ and quota avoidance is right for your business, determining can be based on the following factors:
- Consider the volume of your imports and exports. If you’re working with high volumes, you will want to take advantage of Foreign-Trade Zones’ benefits.
- Determine your product value and the corresponding duty rates. Products with high duty rates or a high value usually mean greater savings when managed through an FTZ.
- Analyze your current supply chain complexity. Foreign trade zones offer streamlined processes that help complex operations run smoothly.
- Get familiar with customs regulations, requirements, and changing norms. Understanding why you need a customs broker and partnering with experienced brokers like EP Logistics’ team can greatly help you with this process and avoid headaches.

EP Logistics’ FTZ solutions
As a trusted 3PL provider, with proven experience in cross-border trade within Mexico and the U.S, at EP Logistics, we offer you strategically located Foreign-Trade Zones across the borders like the one at El Paso (FTZ 68).
If you’re involved in cross-border trade between the U.S. and Mexico, EP Logistics can help you manage your imports and exports with ease, reducing your expenses and helping you enhance your operations and supply chain.
We offer customizable services for your specific business needs, such as:
- Integrated cross-border logistics for reliable and faster cross-border trade operations.
- Customs bonded warehouses are strategically located near the most important ports of entry.
- Expert customs brokerage services to ensure you stay compliant with customs regulations and to guide you on the best path for duty payments and savings.
- Inventory Management systems within the FTZ for better and more accurate inventory control, as well as advanced technologies such as real-time tracking, AI forecasting, and more.
- Supply chain optimization to increase the efficiency of your operations, reducing costs and avoiding having to outsource different logistic services in multiple places. We offer everything you need, under one roof.
At EP Logistics, we help you move your imports and exports within the U.S. and Mexico faster while saving you money.
From document preparation, submitting paperwork, to inventory tracking, our services are designed to help you reduce your costs, avoid penalties, delays, and common errors in international trade.
With our expertise in customs brokerage, cross-border logistics, and inventory control, we handle everything for you so you can have peace of mind knowing that your global logistics are being handled by professionals.
Ready to optimize your cross-border logistics and take advantage of Foreign-Trade Zones benefits? Give us a call today at EP Logistics and discover how easy it is to achieve greater global competitiveness by partnering with a top 3PL like us.