What is required for activation of a FTZ by customs?

Activation is Customs official authorization for a designated zone operator to operate the zone. Activation allows the zone user, under the supervision of a zone operator to bring merchandise into the foreign trade zone (FTZ) without the payment of duty, store it and if authorized, manufacture it, and then transfer it either into the commerce of the U.S., to another FTZ or to export it. For a zone site to become activated, the following requirements must be met:

  • An operator’s agreement is negotiated between the potential operator and Orange County as grantee. In a subzone situation, the company requesting subzone status generally acts as the zone operator as well as the zone user. Orange County has a zone operating schedule that details the fees payable by zone operators to Orange County as grantee.
  • The area to be activated within a designated zone site is identified on a map of the area and on a blueprint of the actual facility.
  • The operational procedures that will be used to receive, store, process and remove merchandise from the zone must be documented in an FTZ Procedures Manual for submission to Customs for review.
  • An inventory system must be implemented that meets the requirements of the Bureau of Customs and Border Protection. It must sufficiently track the merchandise located in the zone so as to protect the revenue of the U.S. (the unpaid duty) and provide for the timely preparation of all required Customs documentation.
  • Orange County, as grantee, must concur that the inventory control and recordkeeping system is in compliance with the Customs regulations and that they concur with the request for activation.
  • A check of the physical security protecting the merchandise must be conducted by Customs.
  • A background of key individuals involved in the control of the merchandise and the inventory control system must be conducted by Customs.
  • A FTZ Operator’s Bond must be established with the bond amount determined by Customs.
  • A letter requesting activation and any other special FTZ procedures must be submitted to Customs.
  • Once Customs receives the request for activation, the actual written approval may take one to four months, depending on how much Customs has been involved in the activation preparation work.

Show All Answers

1. What is a Foreign-Trade Zone?
2. What is the Foreign-Trade Zone program?
3. What are the types of Foreign-Trade Zones?
4. What companies might benefit from using FTZ procedures?
5. What is required for activation of a FTZ by customs?