With companies not taking advantage of the federal Foreign Trade Zone (FTZ) that has been established in Washington County several years ago, County Commissioners are taking steps to revitalize these zones to attract business. As reported by the Hagerstown Herald-Mail,
FTZs are a class of special economic zones in which companies can import goods that might need to be manufactured or manipulated, then either sold on the U.S. market or re-exported to another country. Duty fees and tariffs are not charged on goods until a finished product goes to domestic sale, basically allowing companies to operate as if they are on “foreign soil” although they are geographically within the United States.
Operating in FTZs provides benefits, but it is also very expensive, potentially affecting a business’s interest in seeking the designation.
With federal and local fees, costs can add up to as much as $200,000 in some cases for larger operations, according to Bob Mandley, business development specialist in the county’s Department of Business Development.
Currently, a business would pay a one-time $5,000 application fee to the county, plus annual costs based on square footage of the building that it would be using for the operation, Mandley said, noting that additional application fees ranging from $15,000 to $50,000 are charged by the U.S. FTZ Board as well.
With businesses not being able to make the Washington County FTZ model work, county commissioners recently approved changes to the program.
The commissioners voted Sept. 23 to rescind its previous resolution and enact a new one that designates active controls over the zones, making the Washington County Economic Development Commission the governing advisory board to the program.
It also removes wording that calls for a zone administrator, a job that will now fall under the positions of Mandley and the business support specialist serving as administrator and co-administrator, respectively.
Commissioners Ruth Anne Callaham, Jeffrey A. Cline and John F. Barr hope these steps will improve economic development opportunities.
“We need every tool in the toolbox that we can get,” she said. “It does have value. … We just need to match the effort to the return.”
Other commissioners used the same phrase, calling FTZs another “tool in the toolbox” of economic development.
“We want to explore every avenue that’s possible for economic development,” Commissioner Jeffrey A. Cline said.
Barr said he would be in favor of seeing fees and regulations reduced on businesses that apply for FTZ designation, saying it might “be a magnet to draw international business” to the county.