"I doubt that we'd be able to operate without the zone," says Richardo Cantu, managing director of Sandyvest Inc., a wholesaler of imported watches and small electronics equipment operating out of the McAllen Trade Zone in McAllen Tex. "Duties on the merchandise we import can run as high as 30% of the purchase price. If we had to invest that much money all at once, and before we had a guaranteed sale, I don't think we could afford to stay in business."

The McAllen Trade Zone is one of 68 areas in the United States designated by the government as a free trade zone. In a zone, foreign goods can be received, stored, or assembled into finished products for shipment to another country without incurring the full brunt of U.S. customs duties.

For companies such as Sandyvest that distribute foreign products within the U.S., operation within a zone enables them to delay payment of tariffs until goods are ready to be moved out for delivery to a purchaser. In other cases -- such as shipment of goods through the U.S. to third countries, assembly of foreign materials, or the transferral of domestic goods into a zone to achieve export status -- there can be actual savings on and federal excise taxes.

For further information, contact John Da Ponte, Jr., Executive Secretary, Foreign Trade Zones Board, U.S. Department of Commerce, (202) 377-2862.