BANGOR, Maine — Bangor officials are hoping expanded access to duty-free imports for certain businesses will help boost manufacturing and save money for local companies that source products from abroad.
Federal officials recently approved the expansion of Bangor’s foreign trade zone, a 33-acre duty-free site in and near the Bangor International Airport, allowing individual companies to get similar privileges on their own property across all of Penobscot, Hancock, Piscataquis, Waldo and Washington counties.
The U.S. Department of Commerce’s Foreign Trade Zones Board on Friday approved similar designation for the city of Waterville’s foreign trade zone, opening businesses in the counties of Lincoln, Cumberland, Sagadahoc, Androscoggin, Kennebec, Waldo, Knox and part of Somerset to apply for on-site duty-free import privileges.
“We’re hoping that this opens the door for some smaller businesses who didn’t think it was worth their while before,” said Steve Bolduc, the economic development officer for the city of Bangor who oversees the city’s foreign trade zone.
The Bangor trade zone, which BanAir Corp. operates for the city, has seen little traffic in recent years. Bolduc said trade traffic there declined quickly after the North American Free Trade Agreement, which in 1994 removed tariffs for imports from Canada, where most imports to the trade zone originated.
The other challenge has been geography. Until 2009, federal rules required those foreign trade zones to be limited to a specific geographic area, where manufacturers could share space. To play by those new rules, the city’s foreign trade zone, opened more than 30 years ago, had to apply to reorganize. The City Council approved such an application in 2013.
The new “alternative site framework” rules allow a foreign trade zone to include “usage-driven sites” at individual companies, in collaboration with the Bangor trade zone.
“A company could operate on its site in Calais and still receive the benefits of a foreign trade zone,” Bolduc said.
The benefits include having no tariffs on imported source materials or components, which Bolduc said can also cut down on the cash a business would have to tie up in dealing with damaged or broken imported materials.
“You’re not paying [tariffs] on what the invoice says, but on whatever you’re using and whatever comes out of the factory,” Bolduc said. “You can look at items and inspect them and return them without having to pay those duties.”
And companies in the foreign trade zone also can file paperwork with customs officials on a weekly basis, rather than with every shipment, which Bolduc said could save money.
Bolduc said he doesn’t have a sense of how many businesses might be interested in applying to become what the federal rules call a “usage-driven” foreign trade zone site, but the city’s application envisioned the expansion under the alternative site framework could generate hundreds of jobs.
“Zone status under the alternative site framework will be a tool for attracting additional expanding or new companies to the area,” the application stated. “This will result in new jobs, new tax base for local, state and federal governments and greater activity in this region.”
Bolduc said there’s no fee for businesses to file an application and the new designation shortens the time for warehouses, distributors and manufacturers to become qualified under the program. He said businesses interested in the program should check with their customs broker to find out how much they might be able to save.
“They need to know what the duties and tariffs are on the products that they are importing and what that amounts to on a weekly or monthly or yearly basis,” Bolduc said.