What is the primary purpose of a foreign-trade zone (FTZ)?

Show Answers

An area designated where international trade is permitted without restrictionsAn agreement that facilitates free trade between multiple countriesA system intended to restrict manufactured exports by imposing taxes on products made inside the zoneA mechanism to encourage exports by postponing import duties on intermediate goods and eliminating those duties if the finished product is exported instead of sold locally

Explanation

A foreign-trade zone (FTZ) is established to boost exports by allowing import duties on intermediate materials to be deferred, and if the final product is exported rather than sold domestically, those duties are waived. This encourages manufacturing and trade within the zone. The other options either misrepresent the FTZ's function or describe unrelated trade concepts.