Idaho Gets Big Boost With Trade Designation ‘Foreign Trade Zone’ Allows Tariff-Free Shipping Of Products

Six years of extensive paperwork has paid off for a Boundary County shipping company.

Eastport Industries Inc. recently learned that its 55-acre site has been designated as a “Foreign Trade Zone.”

The designation, given by the U.S. Department of Commerce, comes after a five-year application process and a year of waiting for a decision.

The trade zone designation will allow Eastport Industries to ship Canadian products to Mexico without paying U.S. tariffs. It could become a powerful economic development tool for Boundary County. It could also benefit Boise’s growing electronics industry.

Idaho was among a handful of states that didn’t have a foreign trade zone, according to state officials.

“We’re not quite sure what will happen with it yet, but we’re wishing (the company) well,” said Boundary County commissioner Kevin Lederhos.

The free trade zone is a natural for the Eastport Industries, said company president Ken Nail.

The 20-year-old company operates a “reload” service at the Canadian border. Truckloads of Canadian softwood lumber and other commodities are put onto railcars for distribution in the United States, Nail said. The company also ships U.S. products into Canada.

In addition to eliminating U.S. tariffs on Canadian products that Eastport Industries ships straight through to Mexico, the trade zone also creates opportunities for manufacturers, Nail said.

Companies within the zone can import product components without paying a tariff up front. They pay the tariff after the finished product is assembled in the U.S., or no tariff at all if the final product is shipped to another country.

“The sole purpose of the zones is to create jobs in the U.S.,” said Bob Knapp, general manager of Eastport Industries.

The company would like to lease space to small manufacturers in the trade zone, Knapp said. The zone can also be expanded to industrial land that Boundary County owns around the airport, he said.

In other areas, trade zones have been widely used by electronics, textile and pharmaceutical companies, Knapp said.

The zone could also benefit Boise’s growing electronics industry, or manufacturers in Sandpoint or Coeur d’Alene. Once the trade zone is operational, “sub-zones” can be created in other areas of the state, Knapp said.

That would allow companies like Micron Technologies to reduce or eliminate tariffs, said David Godbout, a state economic development specialist.

“We’re already asking how we can utilize a subzone in Boise,” he said.

But North Idaho is a good location for the zone itself, Godbout said. The zone operates under the supervision of U.S. Customs agents, which are already located at the port-of-entry in Eastport, he said.

Eastport Industries has five years to demonstrate to the U.S. Department of Commerce that the zone is being used. If it isn’t, the designation will be discontinued.

More than 200 foreign trade zones exist in the U.S., including one at the Spokane International Airport, Felts Field and an adjoining business park.

The Spokane airport received the designation in August of 1997. It is actively marketing the zone, but it hasn’t found any takers yet, said Todd Woodard, director of marketing and public relations.