CALDWELL — A Foreign Trade Zone was approved in Caldwell this month. What does this mean for the general public?
Are “foreign” companies going to be moving in and taking jobs away from locals?
The point of a Foreign Trade Zone (FTZ) is actually just the opposite.
The reason Congress created the FTZ program in the 1930s was to create U.S. jobs and help U.S. businesses compete in the global market by reducing or eliminating import tax for companies within the zone.
“This program actually helps a U.S. manufacturer compete with countries like China by making it more competitive to make a product in the U.S. and export it …” Scott Taylor, a partner at Miller & Company P.C., a law firm based in Missouri that specializes in imports, exports and FTZs, said.
But the name creates confusion, he said.
“It's a U.S. zone. … We're the only country that calls it a Foreign Trade Zone.”
All the local, state and federal laws still apply. The difference, along with banning retail and residential use within the zone, is that the area is considered to be outside the U.S. Customs territory. That means companies can import material and not pay import tax on it unless they sell it in the U.S. If they export it back out, they never have to pay.
“If companies (are) able to save some money and create some jobs and become more competitive in the world market, that's what we care about,” said Steve Fultz, director of Caldwell Economic Development Council, which is the “grantee,” or overseer, of Caldwell's FTZ.
A large portion of businesses in the valley show some import activity, he said. If they import enough material, the $5,000 annual licensing fee to be a part of the zone may be worth it to them.
Plus, he said, when manufacturers look to expand to the western United States, Caldwell's FTZ may be an influencing factor that brings them to Canyon County.
Foreign Trade Zones at a glance
What is a Foreign Trade Zone?
An FTZ is an area within the United States that’s considered outside the U.S. Customs territory. Companies within the zone can eliminate, reduce or postpone paying import tax on foreign materials. If the finished product is exported back out of the U.S., no import tax on the original material has to be paid. If the finished product stays in the U.S., companies will pay the import tax when the product leaves the zone.
Why get one?
The point of FTZs is to save manufacturers and suppliers money on imported material and help them compete in the global market. It also can be used by economic councils to attract businesses to the area. The hope is that those companies would hire from the local labor force.
Who uses them?
Industries include oil refining, motor vehicle and consumer good manufacturing, electronics/information technology manufacturing and pharmaceutical/medical equipment production.
Where are FTZs located?
The U.S. has about 960 zones — compared to 13 in 1970 — located in all 50 states and Puerto Rico. There are now two zones in Idaho — Caldwell’s and Boundary County’s up north.
Caldwell’s magnet sites are:
• Caldwell Airport/Industrial Park, 4814 East Linden St. — 524 acres
• Sky Ranch Business Center, 4190 Highway 20/26 — 241 acres
Satellite sites extend throughout Canyon and Ada counties, so companies outside the magnet sites can still be considered a part of the zone. No homes or retail stores can be located within in the magnet sites.
Who is in charge?
Foreign Trades Zones are approved by the Foreign-Trade Zones Board, comprised of the Secretary of Commerce and Secretary of the Treasury. The Commissioner of U.S. Customs and Border Protection is also a key player.
Each zone has a local grantee to oversee it. Caldwell’s grantee is the Caldwell Economic Development Council (CEDC), a non-profit directed by Steve Fultz.
CEDC applied to establish an FTZ in October, and the Foreign-Trade Zones Board approved the request on May 11.
It didn’t cost CEDC anything to actually apply for the zone. But, to assist with the application process and put together data and information, CEDC hired Miller & Company P.C., an import, export, and foreign-trade zone law firm based in Missouri.
The funds to pay for the consulting services came from an urban renewal grant, which is funded through tax dollars.
How can a company be a part of the zone?
Companies can apply to be in the FTZ program through the Caldwell Economic Development Council. The process takes about 30 days and initially costs $3,000. Starting a year after that, there’s an annual $5,000 licensing fee, a cost that’s lower than most zones around the country, Fultz said. This money, he said, will be used for marketing, staff and operating costs.
Companies in the zone must also hire or designate a current employee as the FTZ administrator.