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Thursday, Aug 18, 2022
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Lancaster

WADE DANIELS Staff Reporter Intent on becoming a center of international commerce, the city of Lancaster is applying for federal designation as a foreign trade zone in the hope of attracting companies that would like a break on import and export taxes. The city is seeking trade zone designation for two areas. One is an existing business park and the other is a 3,040-acre site that officials hope will become the launch pad for VentureStar, a reusable space vehicle under development by Lockheed Martin Skunk Works in Palmdale. “Having the foreign trade zone designation would give us a competitive advantage,” said Stafford Parker, Lancaster’s redevelopment director, who explained that there are 18 states vying to be chosen as the site of the launch pad. “Aerospace companies that use the launch pad can get parts and supplies from other countries and could avoid some duty if the pad is in the foreign trade zone,” he said. Lancaster officials are undaunted by the fact that Palmdale has had foreign trade zone designation for two years, yet that program has met with limited success. Palmdale received foreign trade zone designation in January 1993, covering nine separate sites for a total of 1,300 acres. During its first two years, two companies took advantage of the zone’s tax breaks. A textiles maker that utilized it ended up moving to the Long Beach area, while the plumbing parts manufacturer in the area stopped importing goods due to quality problems with the foreign parts. Carrie Rogers, Palmdale’s enterprise zone manager and foreign trade zone manager, said the fact that Palmdale’s zone has gone unused in the last two years is a reflection of the economy and not how it’s being run. In a foreign trade zone, excise and customs duty taxes are not required for products exported from the United States. Companies can import goods to the zone and use them in the manufacturing process, and need not pay taxes if the goods are then sent to another country. However, customs duty and excise taxes are due when the goods are sold or are transported to companies in the U.S. U.S. Customs Service Foreign Trade Zones Board officials held a public hearing on the proposed trade zone in early August, and are accepting written public comments on the project through the beginning of September. After the public comment period, the board is expected to make a decision on the proposal within nine months, Parker said. Greg Matranga, district director for 36th District Assemblyman George Runner, R-Lancaster, believes it’s unlikely federal officials will grant Lancaster its own trade zone with zones in Palmdale so close, but they may agree to expand Palmdale’s zones to take in Lancaster. Palmdale is formally opposed to Lancaster receiving a separate trade zone designation and has asked the government to deny the application. When asked why, City Manager Bob Toone would say only “there’s no need for another one.” Palmdale has offered to expand its trade zone to take in Lancaster provided Palmdale continues to administer the zones in both cities, but Lancaster officials rejected that plan because they want control over their own zones. Matranga said a compromise might be worked out in which Palmdale’s zone would be expanded while both cities would be allowed to administer their own zones.

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