A group of Fairfax County business officials is generating renewed interest in establishing a duty-free foreign trade zone near Dulles Airport - an erea where duties on imported goods could be deferred, reduced or, in some cases, eliminated.
Along with stimulating new business and employment and expanding nearby air freight facilities, the move would help to boost Washington as an international trade area, these business officials contend.
"Washington has always been recognized more as a political than a trade center." Nelson T. Joyner Jr., president of the international Trade Association of Northern Virginia, told a meeting of the association last week. "But that's changed now. The problem is getting people to realize that."
These so-called "free" secured trade areas, located near customs ports of entry, industrial parks or in terminal warehouse facilities, were established in 1934 to attract and promote international trade.
The Foreign Trade Zone Board, an agency of the Commerce Department, regulates the administration of these areas, approves applications and monitors rates charged in the areas.
The zones are sponsored as public utilities by states, political subdivisions or corporations with Customs brokers managing day-to-day operations.
While in the area, goods can be manufactured assembled, stored, exhibited, or sold before the company has to pay Customs duties - or internal revenue taxes on products when they leave the area for consumption.
John DaPonte Jr., executive secretary for the board, told the gathering of 30 business officials that firms need to determine the "investment climate," local need and support of public officials before applying to the board for approval.
After cost factors such as land, the facility, utilities, labor, services and taxes have been evaluated, firms must prove a need for the zone and produce a viable plan of implementation showing location, financial backing and individuals that will manage and operate the zone.
The zones provide a secure environment for companies while offering cash-flow advantages by deferring duty payment and lower duty rates for firms which opt to pay either on parts or the finished product, DaPonte said.
One staunch supporter of zones in the county is Robert J. Schott, a customs broker at the airport. "This would have a vitalizing effect on the community," he asserted.
"Most companies now are under bonded storage" - they make a Customs entry when products are needed. "The zone would help cut the Customs red tape, Schoot said.
"We have enough interest now to justify doing it," said Dave Edwards, executive director of the county's Economic Development Authority. About a dozen firms have expressed interest in the concept, Edwards said.
"We just need to find the initiative. The difficulty is that some firms only need to use the facility part time," he said.
Although some small firms have shown interest in the project, developers are searching for a sizable concern to act as a catalyst because most companies so far don't have the volume capacity that warrants full-time use of a zone.
Bob Colbert, one of the land developers in Fairfax and Loudoun counties who have tracts available, has been promoting 300 acres that adjoin the airport as a zone site. Zoning and sewer hookups have been approved. "All we need is a big enterprise to come in and take it over," Colbert said.
According to DaPonte, customs duties last year on imports of $180 billion were $7 billion. About 60 percent of products imported into the U.S. are "dutiable." And those fees, which average 8 to 10 percent, can range from 3 to 35 percent.
"Companies today are looking closer at the cost of doing business," DaPonte said. "We can't ignore imports for trade in the U.S. Today, international business is a part of the businessman's thinking, planning and preparation."
Roland Westerdalh, president of Bilsom International Inc., a Swedish manufacturer of hearing protection devices, said his company is interested in the zone and would use it to hold imported inventory before shipping to other countries.
Not everyone is jumping on the bandwagon, however, Frederick Bley, president of Optical and Electronic Research in Reston said, "The savings cannot offset the expense of renting in the zone.
"It takes the right amount of volume to justify it. But it might be conceivable down the pike," he said.
If a zone were approved, Fairfax County would join 45 major U.S. cities that already have such areas and 10 cities that have applications pending.