PROVIDENCE – The R.I. Commerce Corp. has applied for what effectively will be a statewide designation as a Foreign Trade Zone, under an administrative rule that allows an existing trade zone to be broadened within 60 miles of the U.S. Customs port of entry.
In Rhode Island, that port happens to be in Warwick, which would put all of the state into a Foreign Trade Zone. If the expansion is authorized, all companies in the state would become eligible to apply for designation as an approved zone user, according to John Riendeau, director of business development for Commerce RI.
The benefits for companies that use foreign materials in domestic sales include reduced tariffs on imported materials or products that are then enhanced or made into a final product, and more flexibility in paying tariffs.
Companies that import products or materials, and work on them before reselling to international customers pay no tariff if the activity is in a foreign trade zone.
While the U.S. has several thousand tariffs, depending on the material and the country of origin, a company that imports a raw material, then refinishes it into a product, always pays the lesser of the tariff for the finished good or the original material, Riendeau said.
“You always, always pay the lesser value,” he said.
The Commerce RI application, filed late in December, is now before the Foreign-Trade Zones Board, a federal entity that reports to Congress. A hearing date has not been scheduled.
The state now has a single foreign trade zone with three locations: 880 acres at Quonset Business Park, including the Port of Davisville; 43 acres at the Airport Business Center near T.F. Green Airport and 32 acres at the Port of Providence.
The Providence Business News on Friday will report in greater depth, in a cover story, on what the expansion could mean for Ocean State businesses.
Mary MacDonald is a staff writer for the PBN. Contact her at macdonald@pbn.com.
