Free Trade Zone (FTZ)
A Free Trade Zone (FTZ) — also called Free Zone, Foreign Trade Zone (US), or Special Economic Zone (SEZ) — is a designated geographic area within a country where goods may be imported, stored, processed, assembled, repackaged, or re-exported without being subject to the usual customs duties, taxes, and import controls.
FTZs are used to facilitate transhipment hubs, attract foreign direct investment, support export-oriented manufacturing, and enable inventory hubs near key markets without paying duty until goods enter the local economy. Major examples include Jebel Ali Free Zone (JAFZA, Dubai), Singapore Free Trade Zones, Shanghai Pilot FTZ, Colón Free Zone (Panama), and the US FTZ system covering 270+ zones.
For freight forwarders, FTZ operations require specialised customs workflows: goods enter under bond, internal movements are tracked, and duty becomes payable only on the portion that crosses into the domestic customs territory.
An FTZ lets goods be imported, stored, processed and re-exported without paying the usual duty — the tax only bites when goods cross into the domestic economy. That is what makes zones like JAFZA, Singapore and Colón powerful transhipment and re-export hubs, and inventory bases close to market.
no duty — store, process, re-export
duty becomes payable
What is the difference between an FTZ and a bonded warehouse?
Both defer duty, but an FTZ is a designated area treated as outside the customs territory with broad freedoms to store, process and manufacture; a bonded warehouse is a specific licensed facility mainly for duty-suspended storage.
Do you pay duty in a free trade zone?
Not while goods remain in the zone or are re-exported. Duty becomes payable only on the portion that crosses into the domestic customs territory.