By using a Foreign-Trade Zone, a company can gain a competitive edge over foreign-based competitors. This is done through the reduction of certain operational costs that are incurred when conducting international business.
There are currently 12 sites on Oahu, Maui, and Hawaii that have received FTZ designation. Of the 12 sites, three general-purpose zone sites and three special-purpose subzone sites are active. Link to Map
FTZ No. 9 is headquartered at Pier 2 on 7 paved acres including 300,452 square feet of covered space in Honolulu Harbor. The pier and terminal facilities can accommodate four ships simultaneously.
The Zone is in the heart of Downtown Honolulu, just five miles from Honolulu International Airport, making international shipment of goods convenient and economical. (Cargo unloaded at the airport-or anywhere within the port of Honolulu-maintains its foreign identity and duty-free status when it is transferred to Zone No. 9 by bonded carrier).
FTZ No. 9’s expansion sites on Oahu include: 1,051 acres in Campbell Industrial Park in Ewa, 109 acres in Mililani Technology Park in central Oahu, the Hawaii Convention Center, aircraft fueling facilities at Honolulu International Airport, and Unicold’s cold storage complex.
FTZ No. 9’s expansion sites on the neighbor islands include 59 acres in Maui Research and Technology Park, Kihei, Maui; 31 acres on the island of Hawaii adjacent to Hilo International Airport, and the Natural Energy Labs of Hawaii Authority (NELHA) area adjacent to the Kona airport.
Three active special-purpose subzones are situated throughout the State of Hawaii where petroleum refining and synthetic natural gas production create products for the domestic and export markets.
Simply, it is a secured place authorized by the federal government, considered to be outside the Customs territory of the United States although they are still under U.S. Customs supervision and control.
Normally, when foreign cargo lands on U.S. soil, it is subject to clearance through US Customs and the payment of U.S. Customs duty. Many firms use Foreign-Trade Zones to postpone and, in the case of reexport cargo, avoid the imposition of duties, taxes, bonds, quotas and certain other requirements.
Domestic and foreign merchandise may be stored within a Foreign-Trade Zone. It may be manufactured, displayed, sold or altered in almost any way that isn’t prohibited by U.S. law.
As long as the merchandise remains in the Zone, it is not subject to U.S. Customs laws governing the entry of goods into Customs territory or payment of duty on those goods. In addition, Zone users can legally minimize the payment of U.S. Customs duties by either paying duty based on the classification of the merchandise at time of admission to the Zone or by paying duty based on the classification of the merchandise when it subsequently enters U.S. Customs territory. Merchandise subject to quotas may be admitted to a Zone without regard to those quotas. And no duty is assessed on domestic merchandise that enters Customs territory from a Zone.
Even though Hawaii’s FTZ is considered to be outside the Customs territory of the United States, it is on U.S. soil. For that reason, goods and activities in the Zone are subject to federal, state and local laws and regulations. Articles prohibited by law are not allowed admission, nor are articles that violate copyright, trademark or patent laws. Animal quarantine restrictions apply as well.
There are two types of FTZs in Hawaii: general purpose zones and special purpose subzones. General purpose zones operate as public utilities providing a variety of services to many users. Special purpose subzones are single-use facilities which cannot be accommodated within the general purpose zone.