Virginia Expands Free Trade Zone

Last week the US Department of Commerce approved Virginia’s application to expand the port area’s FTZ from 90 miles outside the port within the state of Virginia to 90 miles outside of the port’s boundaries into North Carolina,  the Virginia port authority announced.

The FTZ surrounding the Virginia port is the most active zone in the state, 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 was ranked No. 13 in the production of exports, No. 19 in warehouse and distribution exports, and No. 20 in merchandise received for production sites.

The Port of Virginia hopes the expansion of a nearby foreign trade zone will make the port more attractive to shippers since they have a larger footprint to avoid, or, at least, lower import duty costs.

FTZs are geographically inside the United States but are legally considered outside its customs territory. Companies that locate in FTZs can benefit from using special exemptions to encourage US economic activity by reducing, eliminating, or delaying duties imported products, on products exported outside of the US. 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.

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