Free Trade Zone (FTZ) Sometimes called “customs free zones” or “duty free zones”. It is a generic term referring to special commercial and industrial areas. At which by special customs procedures it allows the importation of non-prohibited foreign goods (including raw materials, components, and finished goods) without the requirement that duties be paid immediately. If the merchandise is later exported, duty free treatment is given to re-exports.
The zones are usually located in or near ports of entry. Merchandise brought into these zones may be stored, assembled, processed or used in manufacture prior to re-export or entry into the national customs territory.
When manufacturing activity occurs in free trade zones, it usually involves a combination of foreign and domestic merchandise, and usually requires special governmental authority.