THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, March 27, 1996 TAG: 9603270445
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Long : 120 lines
The Virginia Port Authority has applied to expand its foreign-trade zone, a move that should enhance economic development throughout the region and state and boost imports through the port.
The application was announced Tuesday at the port authority's board meeting.
The VPA also reported that cargo shipments through the port rebounded in February after sliding in January due to the winter weather and the weakening economy.
``An expanded foreign trade zone will bring significant economic benefits to the citizens of the commonwealth of Virginia. . . '' said Robert A. Martinez, the state secretary of transportation. ``The availability of foreign-trade zone status encourages businesses to conduct operations in the United States rather than overseas.''
The application must be approved by the Foreign-Trades Zones Board, which is associated with the U.S. Department of Commerce. The process could take up to 10 months, a port official said.
A foreign-trade zone allows companies to save money by lowering or delaying tariffs on imported goods.
The port authority wants to expand its existing 22.5-acre foreign-trade zone to more than 3,000 acres.
The application to expand the trade zone calls the existing zone ``wholly inadequate to handle the manufacturing, technology and research firms that are needed to convert Hampton Roads from a defense-based economy to an internationally competitive center for high value-added industry.''
The new zone would include the authority's three port terminals and several other sites around the region and the Virginia Inland Port in Front Royal.
Several properties adjacent to the inland port in the northern Shenandoah Valley would also become foreign-trade zones, including a 90-acre site where Toray Plastics (America) Inc. is building a $50 million plant that will employ 120 people.
Foreign-trade zones are legally outside U.S. customs territory, which allows firms to import merchandise into the zone without paying tariffs. Imported merchandise can be stored, repackaged, mixed or used to make another product within the zone. Import duties are paid only on goods leaving the zones for domestic consumption.
Companies save money by delaying payment of duties or by assembling goods that have a lower duty payment than the sum of their parts.
``It will be a real tool for local, regional and state economic developers,'' said Robert R. Merhige III, the authority's general counsel.
``Reinforcing local manufacturing and international trade bases through utilization of an expanded foreign-trade zone will greatly assist Hampton Roads' campaign to diversify and privatize its work force,'' wrote Douglas McConnell, chairman of the Suffolk Industrial Development Authority, in one of several letters from local economic development officials supporting the application.
The port authority's original zone, established in 1975, was in Suffolk at a warehouse complex. It has been modified twice in the past two years, part of it being moved to another Suffolk site where the F.A.G. Bearings distribution warehouse is being developed and another part to a Chesapeake warehouse complex owned by Givens Inc.
Besides the port's three cargo terminals in Norfolk, Portsmouth and Newport News, the expanded foreign-trade zone would include the following sites around the region:
Bridgeway Commerce Park in Suffolk, a largely undeveloped 393-acre site owned by a subsidiary of Richmond-based Dominion Resources Inc.
Cavalier Industrial Park in Chesapeake, a 688-acre park housing such firms as Indgersoll-Dresser Pump Co., Sumitomo Machinery Corp., Utz Quality Foods, and Precision Machine and Fabrication.
D.D. Jones Transfer & Warehouse Inc., a Chesapeake import-distribution firm.
New Boone Farm, a 177-acre vacant site in Chesapeake planned for industrial development.
PortCentre Commerce Park, the 60 acres of vacant land between downtown Portsmouth and the Norfolk Naval Shipyard.
Suffolk Industrial Park, the largely undeveloped 150-acre park within which the port authority's original foreign trade zone is located.
The expanded foreign-trade zone should also boost the volume of cargo moving through the port.
So far this year, the port's public and privately owned terminals have handled 1.46 million tons of general cargo, up 0.4 percent from January and February last year.
Cargo shipments through the port slipped 6 percent in January compared with last year, largely due to the winter weather that briefly paralyzed the nation's transportation system, but rebounded to grow 7.1 percent in February.
The slowing economy and low freight rates between Asia and the U.S. Pacific coast are also dampening the port's growth this year, said John D. Covaney, the port authority's senior managing director of marketing services.
The port authority board on Tuesday also recognized Officer Gerald S. Hoggard of its police department with a ``Life Saving Award.'' While off duty Feb. 16, Hoggard provided CPR to a man who had suffered a heart attack, restoring the victim's breathing. The man, who was taken to the hospital by paramedics, survived. ILLUSTRATION: What is a foreign-trade zone?
Foreign-trade zones are legally outside U.S. customs territory,
which allows firms to import merchandise into the zone without
paying tariffs.
What is done within the zone?
Imported merchandise can be stored, repackaged, mixed or used to
make another product. Import duties are paid only on goods leaving
the zones for domestic consumption.
What is the benefit for companies?
Companies save money by delaying payment of duties or by
assembling goods that have a lower duty payment than the sum of
their parts.
How does an expanded zone help Hampton Roads?
``The availability of foreign-trade zone status encourages
businesses to conduct operations in the United States rather than
overseas,'' said Robert A. Martinez, the state secretary of
transportation.
What's next?
The application must be approved by the Foreign-Trades Zones
Board, which is associated with the U.S. Department of Commerce. The
process could take up to 10 months, a port official said.
by CNB