No need yet for Foreign Trade Zone in Northwest Arkansas

So far no Northwest Arkansas companies have become subzones of Foreign Trade Zone 14 in Little Rock. Rumors that a new foreign trade zone was coming to the area do not appear to be accurate given the issue was researched and discarded a year ago.

A foreign trade zone (FTZ) is the same as a free trade zone with the foreign trade zone moniker the most common in the United States, according to the Small Business Administration.

An FTZ is a class of special economic zone where companies can import goods that may need to be reconfigured or manufactured then either put into the US economy or re-exported to another country. No duty fees are charged on those components until the finished product goes into the U.S. commerce. Essentially, the FTZ acts as “foreign soil” despite being geographically located in the United States.  

About a year ago there was an effort to research applying for an FTZ in Northwest Arkansas but the idea was vacated. The Northwest Arkansas Council worked with several people more than a year ago to explore whether a free trade zone was needed in the area, and concluded that it isn’t needed.

“We hosted a group meeting to answer questions about what a FTZ does and doesn’t do. We priced the application/requirements process for us, and we stopped there,” said Rob Smith, spokesperson for the Northwest Arkansas Council. “Our alternative is that we can refer people to the Little Rock Free Trade Zone. They have a unique arrangement that allows them to extend their zone to individual companies anywhere in the state.”

The Arkansas Economic Development Commission is the grantee for FTZ 14 (the Little Rock Port), said spokesperson Scott Hardin.

“In this role, we approve subzone requests (subzones of FTZ 14),” he said. “We also monitor subzone reports from all FTZs in the state (subzone reports are completed annually). AEDC certainly supports the establishment of Foreign Trade Zones or subzones in the state as we want to take full advantage of any opportunity to help Arkansas companies with foreign trade.” 

James Firestone is the director of operations for the Little Rock Port Authority explained that when a subzone is approved, it must be for a specific product purpose. For example, a whiskey distributor could import glass, which is usually has a high duty, then “reassemble” the product into gift packs. The imported product also can’t be intermixed with locally produced products.

Usually a subzone must be two hours of driving time from Little Rock because of the inspections that customs agents must perform at the companies but the customs agents have been willing to work with them to accommodate companies that might be outside that range, Firestone said.

So far there are four subzones of FTZ  14: Shaw Mid States Pipe Fabricating, Inc. in El Dorado; Lion Oil Company in Jackson, Miss.; and Husqvarna Outdoor Products, Inc. in DeQueen and Nashville.

At one point a company with operations in the Fort Smith region applied to produce wind turbines, Firestone said. Mitsubishi, which completed an almost $100 million 200,000-square-foot wind turbine assembly plant in Fort Smith, never operated the plant.

What Northwest Arkansas does have is a Port of Entry, which is at the Rogers Airport, said Dan Hendrix, CEO of World Trade Center Arkansas. The only other Port of Entry in Arkansas is located in Little Rock.