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Practice Areas

FTZ Operational Procedures to be Liberalized Under CBP Test

Friday, June 07, 2013
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection plans to conduct a voluntary test under which foreign-trade zone operators will be permitted liberalized procedures for certain zone activities under prescribed conditions. CBP states that this test is intended to increase efficiencies and reduce administrative burdens for both CBP and the trade without compromising CBP’s obligation to supervise and exercise control over FTZs and enforce applicable laws.

According to CBP, zone operators approved for participation in the test:

- will not be required to submit a CBP Form 216 (Application for Foreign-Trade Zone Activity Permit) for the manipulation, manufacture or, under certain conditions, exhibition of merchandise within an FTZ where such activity has been previously approved in that zone’s grant of authority by the FTZ Board (submission of this form would remain a requirement for test operators with respect to the destruction of goods, sampling, temporary removal of goods, or manipulation or manufacture (including processing and production) of goods when the subject activity is not within the scope of the grant of authority for the FTZ operation); and

- will have the option of allowing duty-paid merchandise that has been entered for consumption to remain in an activated zone area for up to 90 calendar days after CBP releases the merchandise (up from five working days currently) so long as it remains segregated, does not undergo further manufacturing and is accurately recorded in the Inventory Control and Recordkeeping system within five business days of release.

Zone operators interested in participating in this test must submit an email to CBP no later than July 8 establishing that they meet the eligibility criteria specified in this notice. The initial phase of the test will commence no earlier than July 17 and will run for approximately two years. CBP will begin an evaluation of the test approximately 90 days after it begins and will consider factors such as workload impact, policy and procedure accommodations, cost savings, trade compliance impact, system efficiency and operational efficiency.

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