Columbia is not ready for a foreign trade zone.
Regional Economic Development Inc. has terminated a plan to build a foreign trade zone in the northern part of the city. The plan was expected to be completed by mid-2005. But a consultant’s report issued in February found that “no single business in Boone County currently produces the product volume necessary to justify a foreign trade zone,” according to a REDI memo.
Foreign trade zones are designated areas treated as being outside the customs territory of the United States. Goods transported to the zone enjoy reduction or elimination of U.S. customs duties. Experts say the trade zones save companies money, reduce prices and add manufacturing and transportation jobs.
“One or two companies outside Boone County may have the need in the future” said Bernie Andrews, president of REDI. But at this point, there are not enough businesses willing to fund such a program in Columbia and pay the annual fees, which range from $4,000 to $6,000 for each company, he said.
There are two types of foreign trade zones. General-purpose zones are usually set up by specific companies and are located in major warehouses and subzones. A subzone must be within 90 minutes’ driving time of the established trade zone.
Across the nation there are more than 230 general-purpose foreign trade zone projects with nearly 400 subzones, according to the Foreign Trade Zone Resource Center. Missouri has three general-purpose zones in Kansas City, St. Louis and Springfield, which were authorized in 1974, 1984 and 1996, respectively.
The foreign trade zone in Kansas City is the 17th-oldest in the United States and contains more zone space than any metro area in the nation. Goods processed in the area and its subzones totaled more than $600 million in fiscal 2004, according to the Greater Kansas City Foreign Trade Zone annual financial report. Giant international companies using the service include Sony, General Motors, Ford Motor and Bayer.
“It’s not only an important tool to attract business, but also a global trade strategy,” said Al Figuly, president of Greater Kansas City Foreign Trade Zone.
To maximize the zone advantage, the city established a Mexican Customs Office, the first one in the U.S. authorized by the Mexican government, where merchandise can be cleared locally. The shortened process will alleviate the cost and delay of shipping goods from West Coast ports.
The St. Louis foreign trade zone has been inactive since 2000, when its operator went bankrupt. St. Louis County did little marketing of the project, and the service provided in the zone was cumbersome, said Steve Anderson, vice president of business development for the St. Louis County Economic Council.
Anderson said there are plans to revitalize the St. Louis zone by the end of this summer. About 4,000 companies, or 10 percent of the total 44,000 companies in the St. Louis County area, can benefit from trading in a foreign trade zone.
“It could be almost immediately profitable,” Anderson said.
Springfield’s foreign trade zone has been dormant, too. Since its authorization, the grantee and operator, Springfield Branson Regional Airport, hasn’t received any application from companies to build a subzone. It had one user of the main zone in the past but no current user, said Mark Roy, finance director. The city spent $28,000 to set up the zone.