Boise, ID – More than half a trillion dollars worth of goods flowed into U.S. Foreign Trade Zones during fiscal year 2010. Companies use these zones because it saves them money when they bring products into the country. Idaho has one in Eastport near the Canadian border. Another will open in Caldwell in a few weeks.
A foreign trade zone sounds glamorous, but the reality is a bit mundane. The one opening in Caldwell is really an industrial park with new office buildings that quickly give way to farm fields:
Steve Fultz: “So if you look to your right as we’re on, moving on Linden. And as we’re heading Southwest to the right is foreign trade zone number two. To your left, where the airport is, is number one.”
This is Steve Fultz. He leads Caldwell’s Economic Development Council. He’s pushed for this zone which also includes the city’s Airport since he moved to the Treasure Valley nine years ago:
Steve Fultz: “At that point I thought, ‘This has got to be one of the largest metropolitan areas without a foreign trade zone in the U.S.”
It takes Fultz about ten minutes to drive around what will soon become Idaho’s second foreign trade zone. Fultz is confident that Treasure Valley companies will benefit from this designation. They save money by delaying or cutting their taxes on imported products.
Lex Luthor: “It’s kryptonite Superman; a little souvenir from the old home town.”
Take Superman’s villain Lex Luthor who makes a kryptonite necklace for the Man of Steel. Luthor pays a tax to bring kryptonite into the U.S.
Lex Luthor: “I’ve spared no expense to make you feel right at home.”
Okay, we’re not really talking about importing kryptonite into the new foreign trade zone in Caldwell. But a company will get to bring products in from overseas without paying import taxes. Let’s say it uses that kryptonite to build another product. If the new product has a lower tax rate, that’s the tariff the company pays when it enters the U.S. market. That’s why businesses arrange distribution or assembly operations under foreign trade zone rules.
Steve Fultz: “As we continue south here, there’s a couple of other businesses that we’re working with. One is a distribution center that would look at a significant building, potentially on a 20 acre parcel.”
Fultz says two other businesses have expressed interest in Caldwell’s new designation. And, according to the rules, they don’t have to be physically located in the zone to benefit. Some paperwork, an annual fee, and any company in the Treasure Valley could win approval to have its own facility designated a “subzone.” Take Portland, Oregon’s foreign trade zone. One company makes inkjet cartridges as a subsidiary of Epson. It’s part of the zone but it’s miles away in neighboring Hillsboro. Teresa Carr is project manager at the Port of Portland.
Teresa Carr: “They are in our subzone and they are a manufacturer and they have been actually been active for over five years.”
But it hasn’t been smooth sailing for foreign trade zones in Idaho and other neighboring states. Meridian established one in 1993, but it lapsed due to lack of interest. Eastport’s zone in north Idaho’s Boundary County is still on the books, but not a single company uses it now. The same can be said of Salt Lake City’s and Casper, Wyoming’s. Glenn Januska manages the foreign trade zone in Casper. He says these zones lack business because they need a person dedicated to marketing the site to attract companies.
Glenn Januska: “Somebody who really understands the benefits and can go out to businesses and say, ‘Hey, we think this is something that we can think can be beneficial to you as part of an economic development.’”
Fultz gets that. He’s taken on the role of dedicated marketing person for the zone in Caldwell. Fultz has a targeted list of dozens of businesses he hopes will join the new foreign trade zone. He says if they join that will mean more economic activity in the Treasure Valley which will mean more jobs.
Copyright 2012 Boise State Public Radio