The Port of Vancouver already is a zone of foreign trade. But officials want to capitalize on that commerce by creating a county-wide Foreign-Trade Zone.
The port is in the early stages of applying for the federal Foreign-Trade Zone designation, or FTZ, which would encompass all of Clark County. The designation would allow firms here to streamline international business. It also could delay, and possibly reduce, certain duties and tariffs, among other benefits.
“It’s fairly common and very beneficial for communities, especially those with strong ports,” said port spokeswoman Abbi Russell. The ports of Longview and Tacoma each have an FTZ designation, she added.
Like most things involving international trade, there’s nothing simple about the FTZ. Like “free-trade zones” in other countries, the zone allows goods to enter the U.S. without normal tariffs. It’s as if imported goods never enter the country — until they leave the zone.
A possible benefit to the Port of Vancouver could be seen in its import of Subarus. To save weight in shipping, the vehicles often arrive at the port without radios or other accessories. Both the car and radios face different tariffs. But if the radio was imported and installed in a Foreign-Trade Zone, when it moves to market, it would come with a single tariff — one on just the car.
“Typically the duties are lower on the finished product,” Russell said. “Even though you still have to pay duties, there’s a cost savings to the manufacturer. That helps reduce the cost of the finished product as well.”
It is optional for businesses to take advantage of the zone, which would be under the supervision of the U.S. Customs and Border Protection office in Portland.
The port would be the authority operating the zone, however. Russell said that likely wouldn’t require any additional employees at the port or great ongoing cost. Applying for the zone costs the port $3,200, according to the U.S. Department of Commerce.
Attractive option
The FTZ is an umbrella that encompasses physical subzones where tariff-free business can take place, like an industrial park or a stretch of warehouses. That is similar to what the port already does with what is called bonded storage, though Russell said changing regulations make the FTZ a more attractive option.
The American Enterprise Institute wrote that of the thousands of free-trade zones around the world, some are harbors for illicit goods and illicit activities. But those “do not have the oversight of American FTZs,” the institute’s Roger Bate wrote in 2013. The zones in the U.S. don’t open up a free-for-all, since they actually add another layer of regulations.
“Highly industrialized countries manage to maintain civil institutions and the rule of law in FTZs without undermining their attraction to investors,” Bate wrote.
There are about 250 Foreign-Trade Zones, including the Port of Portland, and 500 subzones in the U.S., according to the federal Foreign-Trade Zones Board. The board administers the program and will oversee the Port of Vancouver’s application.
The application is “just a draft at this point,” Russell said. The port already has support from the county council and is looking for support from the ports of Ridgefield and Camas-Washougal, as well as the city of Vancouver. The FTZ eventually will come before the port’s Board of Commissioner for a vote; the commission originally gave the go-ahead on the concept in 2009.
Russell said the other ports could see a benefit from the designation by getting their own subzones they oversee that could attract new industries.
“It’s fascinating, what it could bring to different communities,” she said.
Editor’s note: This story was changed to reflect that the port’s Board of Commissioners will vote on whether to approve the FTZ application.
