What is a Foreign-Trade Zone?
A foreign-trade zone is a designated site licensed by the Foreign-Trade Zones (FTZ) Board at which special customs procedures may be used. These procedures allow domestic activity involving foreign items to take place prior to formal customs entry. Duty-free treatment is accorded items that are re-exported and duty payment is deferred on items sold in the U.S. market, thus offsetting customs advantages available to overseas producers who compete with producers located in the United States. Subzones are special-purpose zones, usually at manufacturing plants. A site which has been granted zone status may not be used for zone activity until the site has been separately approved for FTZ activation by local U.S. Customs and Border Protection (CBP) officials, and the zone activity remains under the supervision of CBP. FTZ sites and facilities remain within the jurisdiction of local, state or federal governments or agencies.
What are the types of zones?
- General-purpose zones are usually located at ports or industrial parks. They must be opened to multiple zone users. Although manufacturing is permitted within general-purpose zones, the most common activity use is for warehouse and distribution activity.
- Subzones are special-purpose zones, usually at manufacturing plants. A subzone of a general- purpose zone can be approved if the company is unable to relocate existing facilities into a general-purpose zone site. Subzones are approved for use by one company for a specific activity. Applications for subzone status must demonstrate a significant public benefit for approval.
The Application Process:
Companies that want to operate a general purpose zone or be granted status as a subzone should start by contacting the Holyoke Economic Development and Industrial Corporation (HEDIC) at (413) 322-5655.
If a company decides to apply for a FTZ operation, the following information must be submitted to HEDIC:
- A letter describing the company, its ownership and other related information.
- A business plan showing how the site will be used and service you will provide.
- An annual report or financial statement for the two years immediately before your application.
- A site description of the facility or land, with photographs, floor plans and dimensions.
- Any additional information showing the potential for new investment, job creation and other benefits to the community.
After receiving this information, the HEDIC staff will prepare a report to its Board of Directors for consideration. In reviewing the application, the HEDIC Board will determine the economic impact of the project including job creation and investment.
After an application gains approval from the HEDIC Board, it is sent on to the National Foreign Trade Zone Board offices in Washington, D.C. The national board reviews the application and receives comments on the application before a final decision is made.
For more information on the Holyoke Foreign Trade Zone program please contact HEDIC at (413) 322-5655.