Annual Report

How to Report Figures for Movement of Merchandise Tables

This information relates to figures you provide in the "Movement of Merchandise" tables of the annual report on your zone and subzone activity, which are designed to report the flow of merchandise/materials from a customs status perspective. One of the purposes of this page is to clarify how FTZ merchandise handled by a zone should be reported. Another is to provide suggestions on deriving the figures from existing company information on merchandise controlled for customs (foreign-status merchandise) and other standard company receipt and shipment data.


Domestic Status (Domestic Origin/Duty Paid)

Generally, one should report domestic merchandise that is received into an activated zone area. An exception is that domestic merchandise that is completely unrelated to zone activity should not be reported.

A separate domestic merchandise tracking system is not required for the purpose of the FTZ Board's annual report. You may derive a value figure for domestic origin/duty paid merchandise from existing relevant information. For example, one formula to derive domestic value in a manufacturing operation could be: Total Final Product Invoice Value Minus Foreign Status Merchandise Value Minus Approximate Plant Expenses (such as Labor and Overhead, including profit) Equals Approximate Value of Domestic Origin/ Duty Paid Merchandise.

Foreign Status

Merchandise reported under this heading (formerly: "From Foreign Countries") includes all foreign status merchandise admitted to the zone (except shipments from other zones, which would be entered in the "From Other FTZ's" category below). Foreign status merchandise involves foreign origin merchandise for which formal Customs entry for consumption has not yet been made. The figures should be based on the data you provide Customs (reflected in your inventory control system).

This heading should include zone restricted merchandise.

From Other FTZ's

Merchandise received from other zones under zone procedures (incoming zone-to-zone transfers) should be reported by the receiving zone under this heading.

If merchandise received from another zone is of wholly foreign status (no domestic merchandise or domestic value added (i.e., labor, overhead) in originating zone), report the customs value under the "foreign status" subheading. If, in the originating zone, foreign merchandise was combined with domestic materials, break out the foreign value and report it under the "foreign status" subheading, and report the domestic value under the "domestic" subheading. The domestic figure may be derived from existing information. If the domestic figure includes value added in the originating zone, please footnote. (Otherwise, provide estimates of such value added separately under the value added heading.)

Normally, merchandise that is wholly domestic is not shipped from one zone to another under zone procedures because such merchandise does not need to be controlled in this manner. The "domestic" category under the "From Other FTZ's" heading is usually for the domestic portion of mixed status merchandise.


To the U.S. Market

This heading includes the value of foreign status and domestic origin/duty paid merchandise (including mixed domestic/foreign status merchandise) that is shipped to the U.S. market (usually to a destination in the U.S.) with the intent to be used within U.S. Commerce.

Value added (i.e., labor, profit and overhead) should not be reported under the FORWARDED headings, but rather under the "Total Value" section towards the end of the report.

To Foreign Countries (Exports)

This is the “Export” category. Merchandise under this heading includes the value of foreign status and domestic (including mixed status) merchandise that is shipped to foreign countries (including Canada and Mexico). In addition to direct export shipments (shipments from the zone to a foreign country without entry for consumption in the U.S.), this category should also include products shipped from a zone that are routinely transferred/entered into Customs territory prior to their departure from the United States as part of their normal shipping procedures. For example, certain zone operators elect to enter all duty-free products for consumption even though some will be exported. Thus, when the zone/subzone operator knows that a shipment’s destination is to a foreign country, the shipment should be reported under the “To Foreign Countries” (Export) category.

Zone/subzone operators may derive the “Forwarded, To the US Market” and the “Forwarded, To Foreign Countries” from existing company/plant data and ratios (e.g., overall plant shipments figures, plant export ratios, zone merchandise to overall product value ratios).

Value added (i.e., labor, profit and overhead) should not be reported under the FORWARDED headings, but rather under the "Total Value" section towards the end of the report.

To Other FTZ's

Shipments of zone merchandise to another zone (outgoing zone-to-zone transfers) should be reported by the originating zone under this heading. The value should include the combined value of foreign status and domestic origin/duty paid merchandise involved in the shipped product. Note, however, that a breakout of foreign and domestic is not required here, as it is under the "RECEIVED", "From U.S. FTZ's" heading. (Value added should not be included here, but rather under the "Total Value" section towards the end of the report)

Explanation of Discrepancies

The "Explanation of Discrepancies" section is designed to provide you an opportunity to conduct a check for internal consistency of the figures in the Movement of Merchandise tables, and to explain any inconsistencies. The change in inventory levels should be accounted for by the difference between receipts and shipments. Beginning Inventory + Total Merchandise Received - Total Merchandise Forwarded - Merchandise Destroyed = Ending Inventory. Possible reasons for discrepancies include adjustments, corrections, etc. Also, this year's Beginning Inventory should be equal to last year's Ending Inventory. Finally, please check last year's report and explain any large differences in the movement of merchandise. We use this difference as a check for possible errors.