Benefits of using the Orange County Foreign Trade Zone touted at conference

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Stewart Manager Ed Harrison

STEWART AIRPORT – Local elected officials and members of the business community, held a forum, Thursday, outlining the significance of Foreign Trade Zone (FTZ) #37, where Orange County is the grantee, and explaining the benefits of becoming an operator, or user, within the 2,000 acres of FTZ service area.

An FTZ is a zone where foreign manufacturing and assembly of imports and re-exports can be done duty-free. It is considered international ground and is supervised by the U.S. Customs and Border Protection under the FTZ Act of 1934.

When FTZ #37 was created, it was first based at the SAGE building at New York Stewart International Airport (See history of the mysterious building that is still standing.)

New York, compared with other states, has more elastic and streamlined procedure for becoming an FTZ operator, such as requiring no inventory tax. FTZ 37 specifically, has Alternative Site Framework (ASF), which allows for FTZ operating sites to be set up outside of county borders and theoretically, anywhere in the state. However, FTZ 37 is also unique, in that, if the zone is set up in Orange, Dutchess, or Rockland counties, there is a large discount in application fees. In those counties, application for a sub-zone costs $2,000; but, if a sub-zone outside of those counties is requested, it could cost up to $6,500 dollars with federal fees.

Senior Analyst for the U.S. FTZ Board Elizabeth Whiteman said the benefits extend beyond those who apply to be operators. Users, who can make deals with the operators owning, or leasing, the sub-zone property, can take advantage of the duty-free applications, with the operator being merely the provider of the operation space.  “They’re an operator. They don’t own the merchandise that’s moving through that zone. They’re offering that zone as a service. A 3PL (Third Party Logistics provider) basically. They could have multiple clients using that zone,” said Whiteman. “So, different structures here, different roles that you can play,” she said.

According to the Orange County Economic Development Office, over $2 billion in imported goods and raw materials had been brought into FTZ 37 last year.

Director of Economic Development Bill Fioravanti said the current trade climate is exactly the reason the special circumstances of FTZ 37 need to be brought out now.  “There’s no more important time, or vital time, than right now because of the current global trade war going on right now,” said Fioravanti. “Obviously, duties and tariffs are impediments right now to businesses coming in,” he said.

Beyond having local companies manufacturing with imported components benefitting, along with real estate operators, inviting foreign trade to manufacture within the region would create a sizable number of jobs.

Currently, the county is receiving $50,000 a year in revenue from the FTZ. It costs $10,000 per year to operate a sub-zone. That and the initial $2,000 for application are all revenue to Orange County, as long as the zones fall within the three-county area.

Anyone interested, or who has questions about the FTZ 37, is encouraged to reach out to Bill Fioravanti at Orange County Economic Development.