Opinion: Foreign-trade zones promote economic growth
Free Press Opinion Columnist
In May 2014, the Grand Junction City Council adopted an Economic Development Plan designed to promote economic growth in Grand Junction. There are a number of tools that can be used toward this effort and one such tool the City Council is exploring is the establishment of a foreign-trade zone. This could serve not only to benefit existing businesses, but to attract new businesses as well. It is a concept that is new to many of us, but one we are intent on looking at very seriously.
Foreign-trade zones, or FTZs, are specially designated areas within the United States considered to be outside of U.S. Customs territory for tariff purposes. FTZs allow manufacturers to defer duty on imported components and then give them the choice of paying duty on the component or the finished product when it leaves the FTZ bound for a location within the U.S. Experts say the duty on the final product is often lower than the duty on raw input materials. The duty is exempt on final products shipped from the FTZ outside the U.S. or if the imported material is scrapped.
The benefits of FTZs for local governments and economies include increased exports, the attraction of foreign investment, job creation and a decreased incentive for manufacturers to locate facilities in other countries. In addition, American producers of goods that are used with foreign-sourced products can experience benefits when businesses in foreign-trade zones use their products.
By allowing special customs treatment in these specific geographic areas, not only does the individual business benefit, but the resulting overall economic growth can benefit the entire area. The reduction in duty payments to the federal government is more than offset by increased wages and consumer spending; this is why many factors must be considered when determining the value of an FTZ.
Foreign-trade zones must be approved by the federal departments of Commerce and Treasury and activated by the U.S. Customs and Border Protection. The application process is a significant investment, both in time and money, and the city is working to determine the feasibility of proceeding. We are assessing this potential opportunity with our eyes open, but we believe it may possibly be the right time and circumstance for Grand Junction to move in this direction.
In a recent meeting I attended in Washington, D.C., with Daniel Griswold, president of the National Association of Foreign-Trade Zones (NAFTZ), we discussed the benefits and opportunities a foreign-trade zone might provide the Western Slope. City Council is sponsoring Mr. Griswold as the keynote speaker for the 2015 Annual Western Colorado Manufacturing Summit to be held April 15 at Two Rivers Convention Center from 8:30 a.m. to 6 p.m. Griswold was a nationally known expert on U.S. trade policy at the respected Cato Institute in Washington, D.C. and author of the 2009 Cato book, Mad about Trade: Why Main Street America Should Embrace Globalization. His presentation will bring thought-provoking insight on this complex but important topic to our community. I invite you to consider attending to learn more about what this could mean for western Colorado.
Grand Junction City Councilmember Barbara Traylor Smith represents District B, but she is glad to hear from all Grand Junction residents. Your comments are welcome at email@example.com.
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