North Bay Business Journal

Friday, October 19, 2012, 8:30 am

Foreign trade designation could help manufacturers

Exporters can get breaks on duties, tariffs, taxes


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    With a steady increase in import-export activities by a growing number of companies and manufacturers in North Bay, the Port of San Francisco has approved eligibility for the expansion of the boundaries of its existing Foreign Trade Zone No. 3 to encompass much of Sonoma County, part of Napa County and all of Marin, Solano and Contra Costa counties.

    Port of San Francisco Foreign Trade Zone 3“It’s all about keeping jobs here and having a great incentive to bring new businesses and even more jobs to our area,” said Shirlee Zane, chairwoman of the Sonoma County Board of Supervisors. The north end of the expanded trade zone includes Healdsburg.

    “We are entering a world of global trade,” said Efren Carrillo, fifth district Sonoma County supervisor. The incentives that come along with being in such a zone will help local companies better compete globally, he said.

    Would the proposed expansion of the foreign-trade zone benefit North Bay companies that export?

    • Yes (59%, 10 votes)
    • No (29%, 5 votes)
    • Don't know (12%, 3 votes)

    Total voters: 17
    Polling period: October 31, 2012 @ 12:05 am – November 6, 2012 @ 11:59 pm

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    This NBBJ Pulse Poll ends Nov. 6. View all polls.

    Share your thoughts in the Comments section below.

    Pam Chanter, chairwoman of the county’s Economic Development Board and vice president of Vantreo Insurance Brokerage in Santa Rosa, said the zone will encourage companies to grow locally.

    “Federal approval of this expansion should have a major positive impact for Sonoma County manufacturers by reducing their costs, making them more competitive, and giving them a reason to keep their operations here,” she said.

    In the works since 1995

    The Economic Development Board has been working to have the zone expanded since 1995 and sponsored the most recent application.

    “Back then, the program was not a good fit for Sonoma County, but recently, we conducted research on international trade in the county and found we had sufficient evidence to support our application,” said Ben Stone, board executive director. “Being designated as a foreign trade zone gives us federal incentives and an array of tools we can use to create new jobs, stimulate the local economy and attract new businesses to the region.”

    The Port of San Francisco, with concurrence from the U.S. Customs and Border Protection Agency, the zone program (ia.ita.doc.gov/ftzpage) overseer, approved the county of Sonoma to include an area up to 60 miles, or within a 90-minute drive time, north of Customs offices in San Francisco.

    Jim Maloney, maritime marketing manager with the Port of San Francisco, who worked with the Sonoma County Economic Development Board of the county’s application for a foreign trade zone.

    Jim Maloney, the port’s maritime marketing manager, said more than 95 percent of eligible businesses in Sonoma County will be within this new zone. Once established, it will be an opt-in program, so only those firms wishing to participate need apply.

    “The next step is for the San Francisco Port Commission to file a formal application with the Foreign-Trade Zones Board,” he said. “We have already received tentative concurrence from U.S. Customs to serve the region up through Healdsburg.”

    Future opportunities north of the zone could be available as Customs adds the necessary staff to cover it, according to the agency.

    Opportunities exist for individual companies outside of the proposed zone boundary. Single firms are eligible to apply under the FTZ Sub Zone program (ia.ita.doc.gov/ftzpage/sz-application.html).

    Zone rules, fees

    Once the Foreign-Trade Zones Board gives final approval, which is expected within six months, each firm within the zone must apply to this board and agree to comply with its regulations, security-clearance procedures and demonstrate proper inventory controls and access systems are in place.

    “In the past, it could take from eight to 10 months for firms applying to obtain approval,” Mr. Maloney said. “Now the process can be completed in 30 to 45 days.”

    Customs will conduct an inspection of each applicant’s site as a precondition of approval, and followup audits must be allowed once or twice a year.

    Application format information and instructions for a company to use to establish its eligibility under the new Alternative Site Framework policy are available online (ia.ita.doc.gov/ftzpage/forms/nz_asf.doc).

    As the grantee of firms wishing to be part of the proposed new trade zone, the Port of San Francisco assesses a one-time $5,000 application fee. The port charges a separate $2,000 activation fee per company applying plus a $14,000 annual fee for each approved applicant to cover administrative costs.

    “This new designation will be key to Sonoma County’s economic recovery and it will prove to be long term benefit for our local manufacturing industry. Having so much of the County covered, including the Sonoma County Airport, will allow North Bay businesses to compete and thrive across the globe,” Sonoma County Supervisor Mike McGuire said.

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