Baltimore-Washington International officials soon will apply to the federal government for permission to create a foreign trade zone, an airport official said yesterday.
The airport already has at least seven electronics-related companies that are "fairly solid as initial users" of a trade zone to be located initially in the airport's cargo-handling area, according to T. James Truby, deputy airport administrator.
The trade zone would likely increase business at BWI, whose aggressive drive for more commercial and consumer flight activity already is taking business from Dulles International Airport, Virginia state officials said. BWI has maintained intense promotion and facility-construction programs recently, both of which are financed by the state.
BWI now handles about 50 percent of cargo coming in and out of the area's three airports.
The BWI plan is part of a foreign trade zone trend around the country intended to boost employment, tax revenues and serve as a status-symbol to neighboring jurisdictions, said Gene Strausbaugh, an international trade specialist at the Commerce Department. Today about 35 foreign trade zones are located around the country, compared to a handful about 10 years ago, Strausbaugh said.
The zone is an area where imported goods needing some manufacturing can be assembled or packaged using American labor. They then can be reexported to another country with no duties levied against them.
A jurisdiction can benefit from a trade zone through the increased tax revenues from the zone's warehousing facilities or factories and from jobs created by the firms that assemble and package products there.
Firms can profit from the trade zone because they can assemble products there using imported goods -- often at a cost lower than in other countries. They can store their goods in the zone's warehouse facilities without paying duties until the goods leave the zone for U.S. markets, and they can benefit because duties levied on individual components often are more than leived on the finished product.
Truby said that a private firm studied numerous Maryland companies that might be interested in such a zone. About seven of the 25 companies identified "appear to be quite firm," he said.
"They will clearly benefit, and they're interested," Truby added. He wouldn't say, however, what companies are interested.
The trade zones around the country have met with mixed results. For example Volkswagen of America's plant in Westmoreland County, Pa., is part of a foreign trade zone near Greater Pittsburgh International Airport.
Volkswagen assembles cars there from imported parts. It pays only a 3 percent import tax for completed cars rather than up to 20 percent duty on some car parts.
On the other hand, the City of Portsmouth, Va., listed by the Commerce Department as a city with approval for a zone, decided it could make more money by allowing the leasing of the land intended for the trade zone rather than creating the zone itself, said John H. Hunter, director of research for the Virginia Port Authority.
Fiat-Allis Inc. had told port officials it wanted to be part of a trade zone. But the firm's officials changed their minds and decided to lease the land from the site's owners instead, Hunter said.
Virginia benefited from the deal because it didn't have to make any investments on the property for a zone, and it gained a tax revenue source. As a foreign trade zone, some taxes would be exempt, Hunter said.