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City groups assess foreign-trade zone

If passed, companies would owe no customs duties for products shipped in the zone.
Wednesday, June 2, 2004 | 12:00 a.m. CDT; updated 4:45 p.m. CDT, Monday, June 2, 2008

If everything falls into place, Columbia might have it’s own foreign-trade zone by mid-2005.

“We’re in exploratory stages at this time,” said Bernie Andrews, president of Regional Economic Development, Inc. “If survey and evaluation results come back positive we could file an application as early as this fall.”

A foreign-trade zone is an area within the country but considered outside Bureau of Customs jurisdiction. Foreign-trade zones are granted to qualified public or not-for-profit entities who hire third-party operators to oversee the zones.

Companies exporting goods to another country from a foreign-trade zone never pay U.S. taxes, customs fees, or federal taxes. Companies selling goods domestically pay less in taxes and fees than if they had not brought their merchandise in through the zone.

Missouri has three foreign-trade zones: one each in Kansas City, St. Louis and Springfield.

“If we can make a case for a foreign-trade zone we could see an increase in rail traffic, an increase in revenue and a reduction in truck traffic,” Andrews said.

A foreign-trade zone would also be an incentive for businesses that import foreign goods to move to Columbia.

“We occasionally get calls from manufacturing companies who want to know if we have foreign-trade zones,” Andrews said. “It could be used as a recruitment tool.”

Businesses that use foreign-trade zones can benefit from deferring or eliminating U.S. customs duties for goods shipped into the zone, said Alfred Figuly, president of Greater Kansas City Foreign-Trade Zone, Inc.

But if customs duties don’t apply to some imported goods, neither do local taxes.

“There are imports that come into customs territory that could be subject to local taxes, but that is not true in the zones,” said Willard Berry, executive director of the National Association of Foreign-Trade Zones, an organization that represents foreign- trade zone grantees and operators in the United States.

The foreign-trade zone in Columbia would include facilities at the airport, the COLT railroad terminal and 1.3 million square feet of underground storage space, all of which are assets that make Columbia an ideal location for a zone, Andrews said.

Space included in the zone need not be contiguous. The Kansas City foreign trade zone is a regional program that incorporates individual sites in both Missouri and Kansas.

A foreign trade zone in Columbia would make extensive use of the city’s railroad system. REDI and the Water and Light Department, which oversees COLT Railroad, began to discuss applying for a foreign trade zone before building the Columbia Transload terminal.

“COLT and REDI were talking about the benefits of a rail terminal, and we thought once it was up and operating it would be great if it could handle overseas containers,” Andrews said, referring to imported goods.

COLT Railroad, Norfolk Southern and Columbia Transload Inc. would all have to work in partnership to make the foreign trade zone a reality, said Connie Kacprowicz, communications specialist with Columbia Water and Light. Participating companies would utilize railroads from coastal ports to move goods to Centralia and then on to the foreign trade zone in Columbia.

“The biggest benefit is that it gives marketing power to existing companies and new companies,” said Chad Hager, president of Columbia Transload Inc., a transfer and warehouse facility.

If the zone is approved, CTI will be responsible for storing and transporting goods from the zone to local business sites.

Foreign trade zone supporters say zones keep jobs in the United States. American-produced goods account for 65 percent of the products that enter zones. Companies see benefits when American and foreign-produced components are assembled into a finished product within a zone and exported for sale in other countries.

“Companies won’t pay any duties on the products brought in from other countries,” Berry said.

Supporters say if companies can avoid customs fees by utilizing zones, they are less likely to move outside of the United States to assemble their products and eliminate American jobs.

Applications to establish foreign trade zones are sent to the Foreign-Trade Zone Board, which is co-chaired by the Secretary of Commerce and the Secretary of the Treasury.

“The city could spend anywhere between $75,000 to $100,000. This would cover a feasibility study, the application fee and putting together the application,” Andrews said.

REDI recently sent out surveys to the 30 top manufacturers in Columbia and Boone County and commissioners in Randolph, Callaway, Audrain, Cole, Howard and Cooper counties to determine if a foreign trade zone is needed and wanted by local businesses. The survey includes questions about the amount and value of companies’ imported merchandise, if they manufacture goods with imported parts and if they export merchandise.

Once the application is filed it takes about 10 months for the board to make a decision.

“These things don’t come cheap, but there are no public subsidies. Foreign trade zones are meant to be self-supporting,” Figuly said.

Participating companies pay the independent operators of foreign trade zones. Any value added to a product by work done in a zone is then built into the price of the product.

It’s difficult to determine overall savings for companies taking advantage of foreign trade zones.

“It depends what companies are bringing in. Zones have many different functions,” Berry said.


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