Special and Preferential Duty Programs, Free Trade Agreements, and Foreign Trade Zones (19 CFR Parts 10, 146)
Preferential programs reduce or eliminate duties when goods satisfy an origin rule and procedural requirements. Candidates must understand USMCA, other free trade agreements, and unilateral programs such as AGOA and CBI. Origin is usually established by a tariff shift, regional value content, or both, plus direct-shipment and documentation rules. A certificate or origin declaration is not itself the legal basis for the claim; the goods must actually qualify.
Foreign trade zones (FTZs) are secured areas legally outside CBP territory for duty purposes. Goods may be admitted, stored, manipulated, and exported without duty. On withdrawal into U.S. commerce, duty is generally based on the condition and value at withdrawal. Key statuses: privileged foreign (PF) status locks classification, value, and duty rate at admission; non-privileged foreign (NP) status uses the status at withdrawal; domestic status applies to domestic goods; zone-restricted status applies to certain articles. FTZs can produce inverted tariff savings and weekly entry MPF savings.
Traps: assuming goods from an FTA country automatically qualify; confusing origin with country of export; treating an FTZ as a duty-free permanent exemption; and forgetting that the PF election is generally made at admission.
Worked example/rule of thumb: A component dutiable at 8% is admitted to an FTZ; the finished product is dutiable at 2%. If the finished product qualifies, entering it from the zone may produce an inverted-tariff benefit. Rule of thumb: FTA = origin rules; FTZ = timing/status rules.