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The Foreign Trade Zone is an area inside United States territory which, for customs purposes, is considered outside of United States Customs territory. Various monetary and administrative benefits accrue to those who are allowed to operate within a foreign trade zone. Foreign Trade Zones were created in 1934 by the Foreign Trade Zones Act' to improve the domestic economy and stimulate foreign commerce. The Foreign Trade Zones Act also created the Foreign Trade Zones Board. The Board is charged with the responsibility of setting up regulations surrounding Foreign Trade Zone creation and use. The relevance and prevalence of Foreign Trade Zones has grown dramatically in the last twenty years. This comment addresses criticisms that the Foreign Trade Zones Board has inadequately adhered to the legislative intent of the Foreign Trade Zones Act of 1934.

Purpose
The paper aims to investigate the effects of several determinants of firm import intensity in US foreign trade zones (FTZs). Even though the major objective for the establishment of US FTZs is to encourage exports by facilitating the duty-free entry of imports, US firms have used it as a gateway to import goods into the US market. Currently, over 90 per cent of US FTZ output is consumed in the USA. The author examines the major determinants for such import intensity in US FTZs.


Design/methodology/approach
The study is based on a survey that was conducted to explore the factors that influence import intensity of firms operating in US FTZs.


Findings
The findings reveal that besides export orientation of firms, the most promising predictors of import intensity of firms operating in USA FTZs are the policy environment in the form of inverted tariff benefits and firm business strategy.


Practical implications
The findings are important for managers presently operating in US FTZs or intend to do so in future.


Originality/value
Even though there are numerous studies on free trade zones and exports, this is the first study to examine the import intensity of US FTZs and their determinants.

Members of Congress have demonstrated their interest in the U.S. Foreign-Trade Zone (FTZ) system through hearings and legislation over the past seven decades. The program may enhance the competitiveness of U.S. businesses, support employment opportunities, and impact U.S. tariff revenues. Balancing these potential gains, others argue that the program may also be trade distorting, and may play a role in misallocating resources in the economy as a whole. This report provides a general perspective on the U.S. FTZ system. It is divided into three parts. As background, the first section discusses free trade zones worldwide. The second section focuses on the U.S. FTZ program—its history, administrative mechanism, structure, growth and industry concentration, and benefits and costs. The third section focuses on current issues for Congress relating to the U.S. FTZ program.