THE PORT OF VIRGINIA

Reduction of Duties   In a FTZ, with the permission of the Foreign-Trade Zones Board, users are allowed to elect a zone status on merchandise admitted to the zone. This zone status determines the duty rate that will be applied to foreign merchandise if it is eventually entered into U.S. commerce from the FTZ. This process allows users to elect the lower duty rate of that applicable to either the foreign inputs or the finished product manufactured in the zone. If the rate on the foreign inputs admitted to the zone is higher that the rate applied to the finished product, the FTZ user may choose the finished product rate, thereby reducing the amount of duty owed.

Elimination of Duties    No duties are paid on merchandise exported from a FTZ. Therefore, duty is eliminated on foreign merchandise admitted to the zone but eventually exported from the FTZ. Generally, duties are also eliminated for merchandise that is scrapped, wasted, destroyed or consumed in a 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. Bureau of Customs and Border Protection. The word "admission" is used instead of "entry" to avoid confusion with CBP entry processes under Parts 141-144 of the CBP Regulations.

Alteration
A. A change in the boundaries of an activated zone or subzone
B. Activation of a separate site of an already activated zone or subzone with the same operator at the same port.
C. The relocation of an already activated site with the same operator

Customs and Border Protection Territory (CBP Territory)   The territory of the U.S. in which the general tariff laws of the U.S. apply. The U.S. Bureau of Customs and Border Protection territory includes the states, the District of Columbia and Puerto Rico, minus any areas within the boundaries of foreign-trade zones.

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 CBP 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 Status (D)   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 CBP of the arrival of imported goods in the CBP 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.

General-purpose Zone (GPZ)   A general-purpose zone is established for multiple activities by multiple users. Storage, distribution, testing, repackaging and repair are some of the possible activities in a GPZ. Processing or manufacturing in a GPZ requires the permission of the Foreign-Trade Zones Board.

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 or private corporations organized for the purpose of establishing a zone project. Examples of public entities that might receive an FTZ grant include: a political subdivision (including a municipality), a public agency, or a corporate municipal instrumentality of one or more states. Qualified private corporations must be chartered for this purpose under a law of the state in which the zone is located.

Inverted Tariff Structure   Where imported parts are dutiable at higher rates than the finished product into which they are incorporated.

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 case law.  

Manufacturing   U.S. Bureau of Customs and Border Protection determines what constitutes manufacturing on a case-by-case basis, distinguishing it from other operations such as manipulation, processing, production and blending. The FTZ Board has defined it as any process that results in a change in CBP 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.