What is a foreign trade zone (FTZ)? In a short essay, explain how FTZs are utilized by firms
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A foreign trade zone is an area within countries that receives imported goods for assembly or other processing and re-export. Products brought into an FTZ are not subject to duties, taxes, or quotas until they, or the products made from them, enter into the non-FTZ commercial territory of the country where the FTZ is located. Firms use FTZs to assemble foreign dutiable materials and components into finished products, which are then re-exported. Alternatively, firms may use FTZs to manage inventory of parts, components, or finished products that the firm will need eventually at some other location. Some firms obtain FTZ status within their own physical facilities. In the United States, for example, Japanese carmakers store vehicles at the Port of Jacksonville, Florida. The cars remain in the Jacksonville FTZ without having to pay duties until they are shipped to U.S. dealerships.
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