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U.S. Foreign-Trade Zones
Encouraging activity and investment in the U.S.

FTZ Production Center

FTZ Production Center

What is production activity (how do I know if I need to apply for authorization)?

In an FTZ, all “production” activity requires advance approval from the FTZ Board. This means that if your activity results in a change in the HTSUS classification at the 6-digit level for any foreign-status item – or otherwise results in “substantial transformation” or a change in eligibility for entry – then you will need production authority from the FTZ Board to conduct the activity under zone procedures.

Production could include traditional manufacturing activities as well as kitting or assembly operations. When looking at your activity, be sure to consider any imported (foreign status) items, even packaging or other similar materials. If any materials would be used in the zone before a customs entry has been made, then they are considered to be foreign status components.

What is “scope of authority”?

When a company receives authority from the FTZ Board to conduct production activity, the authority is limited to the approved “scope of authority” for that production operation – which is the list of specific finished products and foreign-status components in the company’s request(s) approved by the FTZ Board.

  • The company’s scope of authority is based on the written descriptions provided in the company’s request for production authority that was approved by the FTZ Board.
  • Scope of authority generally is not based on HTSUS numbers. HTSUS numbers are provided only as a supplement to the written descriptions of components and finished products. Therefore, changes in the HTSUS number applicable to a component or product have no impact on an approved scope of authority if the physical component or product is the same (that is, consistent with the written description in the scope approved by the FTZ Board).
  • Additional production authority from the FTZ Board to expand a company’s scope of authority is required before the company can make new finished products or use new foreign-status components within an active FTZ operation.

How to Request Production Authority:

  • The first step is to submit a “Production Notification”.
  • The production notification includes a list of your foreign status components and finished products.
  • A 40-day public comment period will be opened.
  • The standard timeframe for the FTZ Board to make a decision on a production notification is 120 days from submission.
  • If the FTZ Board determines not to authorize certain activity at the end of the notification process, the applicant may choose to use the more extensive “application” process for production authority.

Is there a fee to apply?

There is no fee to apply for production authority.

If your local zone has reorganized under the FTZ Board’s alternative site framework, there would be no fee to request a subzone within that zone’s service area. For other zones, or if the subzone is outside of the service area, there is a one-time application fee (either $4,000 or $6,500, depending on the number of products).

What if I need authority sooner than 120 days?

The FTZ Board’s regulations allow the Board’s staff to authorize production activity on an interim basis during the 120-day period while the Board is reviewing a request for production authority. “Interim authority” can only be considered if the local U.S. Customs and Border Protection (CBP) office has confirmed that the activity could begin sooner than the 120-day standard production review period and if CBP has no objections to the proposal.

How do I request interim authority?

Interim authority can be requested by letter, either as part of the production notification or separately. In requesting interim authority, a company should explain why authority is needed quickly and should also attach comments from CBP stating the company could be activated sooner than 120 days and that CBP has no objections to the request.

FTZ Production: Scope of Authority and Monitoring Visits
The link below contains additional information on FTZ scope of authority and FTZ staff monitoring visits.
Evaluate Your Potential FTZ Duty Savings
This worksheet can help you easily gauge potential FTZ duty savings. You can use additional copies of the worksheet for additional inputs or finished product-input combinations.
Production Notification Process Summary
This link provides a graphic summary of the production notification process.