Jefferson County companies that import materials and export products now have a new tool for saving on tariffs, including the high-profile ones currently imposed on China. On Feb. 20, the Jefferson …
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Jefferson County companies that import materials and export products now have a new tool for saving on tariffs, including the high-profile ones currently imposed on China.
On Feb. 20, the Jefferson County Economic Development Corporation was notified that its application to establish a Foreign Trade Zone encompassing Jeffco and three neighboring counties was successful.
A Foreign Trade Zone is a geographic area located adjacent to a U.S. port of entry where commercial merchandise receives the same customs treatment it would if it were outside the commerce of the United States.
According to Kristi Pollard, the president and CEO of the nonprofit Jefferson County Economic Development Corporation, a foreign trade zone allows companies to save on tariff costs in two key ways.
First, companies only need to pay the cost of an imported material when it “is taken out of the box and actually put into a product” rather than as soon as it is brought into the U.S.
“It helps companies because they are not just going to buy a handful of things at a time, they are going to buy things when they go on sale but it doesn’t necessarily mean they are going to use each of those pieces immediately,” Pollard said. “So it allows them to manage their costs a little bit more effectively.”
The other thing an FTZ allows companies to do is not pay taxes on imported materials if those materials are ultimately going to go into products which will be exported. In that instance, a foreign trade zone operates similarly to a free trade zone.
The point of entry for the new foreign trade zone, which is called foreign trade zone 298, is the Rocky Mountain Metropolitan Airport in Broomfield. A foreign trade zone can extend to areas located within either 60 miles or a 90-minute drive of the corresponding port of entry, which allows FTZ 298 to include Boulder, Gilpin and Clear Creek counties as well as Jeffco.
Pollard said the county had been interested in establishing a foreign trade zone to increase the competitiveness of its business environment, particularly since Denver is also a foreign trade zone.
“It definitely does help us from a competitive standpoint,” Pollard said. “While we try to work collaboratively with other counties in the state rather than competing with them, not having this tool did restrict us from those companies that had to have this tool. So it does open up new doors for us that we have not had in the past so we are excited we do think it will give us a competitive edge as we move forward.”
Unlike many foreign trade zones, including Denver’s, Foreign Trade Zone 298 operates under an alternative site framework to apply for their facilities to be made part of the zone. Most foreign trade zones are operated under a traditional site framework that means only centralized facilities or warehouses are put of the zone, which means imported items must be stored there rather than at a company’s own facilities.
Pollard said one of the biggest supporters of the effort to establish the trade zone, a process that took more than a year, was Jefferson County Commissioner Libby Szabo.
“We believe that the FTZ is going to give Jefferson County businesses a competitive edge as well as open doors to new businesses looking to relocate to Colorado,” Szabo said. “In this global economy, having this tool puts Jeffco on the map.”
Businesses looking to apply to be part of the zone can visit either jeffcoedc.com or commerce.gov to fill out and submit the required forms.
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