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APICS Operations Management Body of Knowledge Framework, Third Edition

3.8 International regulations

International regulations greatly impact decision making in the distribution system and include: customs regulations on what is restricted from entering a country; trade tariffs and duties on imported goods; security regulations, such as those contained in the SAFE Port Act; and trade agreements, such as NAFTA in the United States, or those of the European Union. International regulations may enhance or hinder the competitiveness of a country or protect a country's distribution and manufacturing systems.

3.8.1 Free trade zones (FTZs)

An FTZ is the international term for what is known in the United States as a foreign trade zone. An FTZ is an area considered outside of the host country's territory but supervised by its customs department. Material may be brought in to the FTZ without paying import duty taxes and assembled or manufactured into a finished product. Duties and taxes are then paid when the finished good is moved outside the FTZ for retail sale.

3.8.2 Tariffs, currencies, and trade blocs

Import and export taxes, relative currency valuation and volatility, and special agreements between cooperating countries often are significant considerations in the design and operation of a supply chain.