Benefits of FTZ slow to materialize
By Jon Hawley
Saturday, February 23, 2019
Northeastern North Carolina joined the Port of Virginia's Foreign Trade Zone more than two years ago, but no business in the region has used the zone's benefits yet, a port official reported this week.
“Currently there are only interested parties,” port spokesman Joe Harris said in an email this week.
FTZs are parts of the United States that aren't subject to the normal procedures and costs that the Customs and Border Protection requires of imports and exports. The goal is to boost international business and trade by deferring or reducing duties on companies’ exports and imports.
Pasquotank and six other counties joined the Port of Virginia’s trade zone in November 2016, thanks in part to then state Rep. Bob Steinburg, R-Chowan, and other North Carolina lawmakers passing legislation enabling the port to add the counties.
At the time, local economic developers said being included in the Foreign Trade Zone could potentially save regional companies who do business internationally thousands of dollars a year in duties, reporting and other costs.
At this week’s meeting of the Elizabeth City-Pasquotank County Economic Development Commission, Director Christian Lockamy reported on the benefits of being in an FTZ, and how to market them to prospective industries.
It appears, however, those benefits are slow to materialize. Harris reported that none of the Port of Virginia’s 52 participating businesses are located in northeastern North Carolina. He noted, however, that there are businesses in the region that use the port.
“We believe it will take some time for the FTZ's benefits to mature and be realized in northeastern N.C. — it is a little more than two years old,” Harris' email states.
He goes on to note that the Port of Virginia's trade zone remains very advantageous for businesses, as the port is a primary gateway to and from the U.S. East Coast.
Lockamy, who started as EDC director late last year, said he's met with port officials and continues economic research that will help him work with them to recruit businesses to Pasquotank County.
Lockamy also said he knows of two businesses in Pasquotank who use the port, and he's reaching out to them and others to make sure “they don't leave any money on the table.”
Like Harris, Lockamy said getting FTZ benefits takes time. Applying to become an FTZ user is a four-step process that can take eight to nine months, including applying for its benefits and getting approval from port officials.
Lockamy also said inclusion in the FTZ gives the county a marketing tool, and shows Pasquotank isn't at a disadvantage compared to nearby communities in Virginia. To the contrary, he told EDC board members Wednesday that Pasquotank continues offering a lower corporate tax rate and cheaper land and business costs than does nearby Virginia.
According to Harris, the types of businesses that typically benefit from the FTZ include warehousing and distribution, motor vehicle assembly, general manufacturing, pharmaceuticals, machinery and equipment, electronics, and food processing.
Harris also reported the port is investing $700 million to expand, and it will have grown its capacity by 1 million containers, or 40 percent, by 2020. It's also adding the capacity to handle more refrigerated cargo.
The port also has a North Carolina-based sales representative “actively seeking opportunities across the state,” Harris said.