Posted April 28, 2008

CHATTANOOGA, Tennessee -- A 5,000-acre expansion of Hamilton County’s Foreign-Trade Zone (FTZ) that reaches into three neighboring counties promises to act as a major stimulus to regional economic development.

Chattanooga Area Chamber of Commerce officials announced today that the FTZ expansion approved recently by the FTZ board in Washington, DC includes properties in Bradley, Marion and Warren Counties as well as Enterprise South Industrial Park and other prime industrial sites in Hamilton County.

Companies located in an FTZ may reduce, defer or eliminate customs duties on imported materials and products. In some cases the companies pay duties only on finished products and if the products are shipped outside the U.S., they pay no duties at all.

The FTZ expansion in Hamilton County includes all of Enterprise South, several properties in the Bonny Oaks Industrial and Office Park, the JIT Terminal on Manufacturers Road and a Kenco facility on Polymer Drive.

In addition, industrial sites in Bradley and Warren counties and the Nickajack Port in Marion County also received the FTZ designation, enabling businesses in the  region to become more competitive in international trade activity, according to Trevor Hamilton, vice president of economic development for the Chamber.

“This zone expansion supports the Chamber’s goal of regional economic development,” Hamilton said. “It will encourage more business and commerce in the southeast Tennessee region and serve as an excellent business recruiting tool.”

“Job creation in one county ripples through the regional economy creating job growth for the whole area. As the regional economy grows, employers will see an increase in the number and skill level of job applicants. A growing regional economy helps to stabilize taxes and supports upgraded infrastructure-- not only in terms of roads, bridges and utilities, but schools, parks and recreational facilities as well.”

“The expansion will make FTZ benefits available across the metro region of Chattanooga as well as to the east, west, and north,” said Chattanooga Mayor Ron Littlefield. “It will support the advantage of Chattanooga's proximity to major U.S. population centers, allowing it to remain competitive in regional and U.S. markets.”

“This is extremely good news as we work to promote a vibrant regional economy,” said Hamilton County Mayor Claude Ramsey. “We expect this expansion will create new jobs in Chattanooga, as well as job growth in nearby counties – whose residents come to Chattanooga to shop and recreate.”

Before the expansion, the FTZ in Hamilton County was limited to 230 acres in the Centre South Industrial Riverport. The Chattanooga Chamber Foundation is grantee of the FTZ and contracts with Foreign Trade Zone Corporation in Mobile to administer the zone.

Craig Pool, president of the Foreign-Trade Zone Corporation, said his agency worked diligently with the Chattanooga Area Chamber of Commerce to make sure the expansion included appropriate sites to best meet the needs of the current and future businesses.  He said the U.S. Foreign-Trade Zones Board in Washington DC put the application through an intense level of detailed scrutiny.

“We are pleased with the end result,” Pool said.  “We worked hard to ensure that as many sites as possible were approved.”

“The expansion will enable us to add another tool to our economic development tool box as we work to help our existing manufacturers remain competitive in the global market place,” said Gary Farlow, vice president of economic development for the Cleveland/Bradley Chamber. “It will also enhance our industrial recruitment efforts by giving potential new companies another reason to choose southeast Tennessee for their manufacturing and distribution facilities. This is another example of regional cooperation that makes our region a great place in which to do business. “

Marion County Mayor Howell Moss said he anticipates new trading opportunities, job development and more industries for his county. “We are honored to be a catalyst for economic development in this region,” Moss said.

Foreign-Trade Zone Benefits

• DUTY EXEMPTION ON RE-EXPORTS: If merchandise is re-exported after being placed in a FTZ or shipped to another FTZ and then re-exported, then no duty is ever paid.
• RELIEF FROM INVERTED TARIFFS: Generally, if foreign merchandise is brought into a Foreign-Trade Zone or Subzone and manufactured into a product that carries a lower duty rate, then the lower rate applies. For example, a Foreign-Trade Zone user imports a motor (which carries a 5.3% duty rate) and uses it in the manufacture of a vacuum cleaner (which has a 1.4% duty rate). When the vacuum cleaner leaves the FTZ and enters the commerce of the U.S., the duty owed on the motor drops from the 5.3% motor rate to the 1.4% vacuum cleaner rate.
• DUTY ELIMINATION ON WASTE AND SCRAP: No duty is charged on most waste and scrap from production in Foreign-Trade Zones.
• NO DUTY ON REJECTED OR DEFECTIVE PARTS: Merchandise found to be defective or faulty, may be returned to the country of origin for repair or simply destroyed. Whichever choice is taken, no duty is paid. Many companies suffer from the "double duty crunch." That is, they pay duty on imported merchandise, find it to be faulty and return it to the country of origin for repair, and then pay duty again when the merchandise reenters the United States. If you are a Foreign-Trade Zone user or Subzone, the "double duty crunch" is never a problem, because your merchandise never enters the commerce of the United States.
• DUTY DEFERRAL: No duty is ever charged on merchandise while it is in a Foreign Trade Zone, and there is no limit on the length of time merchandise may be kept in a Foreign-Trade Zone. By deferring the duty, capital is freed for more important needs.
• NO DUTY ON DOMESTIC CONTENT OR VALUE ADDED: The "value added" to a product in a FTZ (including manufacture using domestic parts, cost of labor, overhead, and profit) is not included in its dutiable value when the final product leaves the Zone. Final duties are assessed on foreign content only.
• NO DUTY ON SALES TO THE U.S. MILITARY OR NASA: No duty is charged on merchandise sold from a Foreign-Trade Zone to the U.S. Military or NASA, returned to the country of origin for repair or simply destroyed. Whichever choice is taken, no duty is paid.