Privileged Foreign Status

Summary of Privileged Foreign Status

A condition that may be accorded to foreign merchandise entering a foreign trade ZONE (read this and related legal terms for further details). Foreign merchandise entering a zone remains exempt from duty until withdrawn, by means of a consumption entry, for use. Customarily, duties and taxes are assessed and levied upon removal of the foreign merchandise from the zone. With foreign privileged status, however, duties and taxes are assessed (but not collected) at the rates applicable to the merchandise at time of application; actual payment occurs only upon withdrawal of the goods from the zone. This procedure permits the importer to fix his duties and taxes against anticipated future increases. Privileged foreign status may be granted to imported merchandise upon application to the district director of customs. This status cannot be accorded to goods that have been manipulated so as to change their tariff classification prior to application.

(Main Author: William J. Miller)