Intent on becoming a center of international commerce, the city of Lancaster is applying for federal designation as a foreign trade zone in the hopes 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. “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.
Carrie Rogers, Palmdale’s enterprise zone manager and foreign trade zone manager, said the fact that Palmdale’s zone has gone unused 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. 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 that, the board is expected to make a decision within nine months.
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.