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Norfolk – Expansion of Virginia’s Foreign-Trade Zone (FTZ 20) into northeast North Carolina was approved by the US Department of Commerce and the decision provides another means of attracting cargo to The Port of Virginia, the port’s CEO says.
“This is an incentive that can be used to attract business to the port and investment and jobs to locations within the FTZ,” said John F. Reinhart, CEO an executive director of the Virginia Port Authority (VPA). “The benefits of the FTZ can be significant and this decision opens the door in northeast North Carolina to those benefits. This gives companies that are considering an investment or expansion another reason to implement their decision.”
Companies operating in Foreign-Trade Zones can defer, reduce or eliminate US Customs duties on imported products. Once in a zone, imported components can be stored, distributed, assembled, manufactured, repackaged, tested, etc., and Customs duties are not paid on products exported outside of the US, rather duty is only paid on products entering US Customs territory. Manufacturing operations receive the most benefit from the FTZ when the duty-rate on the raw materials is higher than the duty-rate on the finished product and when the volume of imported shipments is high.
In May, the port, which is the grantee of FTZ 20, applied to the Commerce Department’s Foreign-Trade Zones Board to reorganize the zone under the Alternative Site Framework (ASF) option. The ASF designation streamlines the process for companies applying for FTZ status.
The approval, which was made on Nov. 29, clears the path for inclusion of Elizabeth City, NC, and Camden, Chowan, Currituck, Gates, Hertford, Pasquotank and Perquimans counties. Previously, these locations were not included in any FTZ service area. Because no FTZ in North Carolina was close enough to sponsor these counties, they approached the VPA seeking expansion of FTZ 20 into northeast North Carolina.
“For many years, The Port of Virginia has been the global gateway for international trade for this area of North Carolina,” Reinhart said. “Infrastructure improvements paired with the expansion of the Panama Canal will provide these communities additional opportunities to promote the connections to the port and benefits of the FTZ.”
Prior to the approval, the FTZ 20 service area consisted of Chesapeake, Franklin, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach and Williamsburg and Accomack (partial), Gloucester, Isle of Wight, James City, Mathews, Northampton, Southampton, Sussex, Surry and York counties.
Foreign Trade Zone 20 is the most active zone within the Commonwealth, hosting 17 warehouse/distribution and production locations with 71 firms utilizing the general purpose sites. In the 2015, FTZ Board Annual Report to Congress, Virginia is ranked no. 13 in production exports, no. 19 in warehouse/ distribution exports and no. 20 in merchandise received for production sites.\
“This development will encourage companies – current and potential port users – to choose to do business and create jobs within the Foreign Trade Zone that is primarily served by our port,” Gov. Terry McAuliffe said. “The Port of Virginia is one of the Commonwealth’s strongest economic assets, and this expansion of the FTZ improves our ability to bring more business to the port and create more jobs along the way.”
The Virginia Port Authority (VPA) is a political subdivision of the Commonwealth of Virginia. The VPA owns and through its private operating subsidiary, Virginia International Terminals, LLC (VIT), operates four general cargo facilities Norfolk International Terminals, Portsmouth Marine Terminal, Newport News Marine Terminal and the Virginia Inland Port in Warren County. The VPA leases Virginia International Gateway and the Port of Richmond. In fiscal 2013, The Port of Virginia provided more than 374,000 jobs and generated $60.3 billion in total economic impact throughout the Commonwealth.