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Free trade zone ties Cascadia into global economy

Cascadia has been granted a 500 acre duty-free zone in its business park

By Dennis Box

The Courier-Herald

When Patrick Kuo talks about his vision of Cascadia he means business, literally.

Kuo is president of Cascadia Development Corporation and the designer of the 4,719 acre community that sets on the southern border of Bonney Lake.

Cascadia is called an "employment-based planned community" by Kuo. Once the development is fully built - over the span of the next 20 years with 6,700 homes and more than 16,000 people - the community is projected to offer nearly 10,000 jobs.

To help attract these businesses, Kuo had 500 acres of the business park designated as a free-trade zone. Free-trade zone licenses are granted by the Foreign Trade Zones Board of the federal government.

The zone could potentially attract a variety of businesses, from electronic to automobile.

"A free-trade zone is a designation of property that makes it technically outside the boundaries of the United States for customs only," said Jeff Bishop, spokesman for the Port of Tacoma. "It's not outside for any other purpose, just in terms of paying import duties."

The concept of a free-trade zone is a federal program that began in the 1930s. The intent of the program, then and now, is to improve American competitiveness in global trade.

"They are most popular when the economy is poor," Bishop said. "It depends on the trade policy at the time. During the trade imbalances of the '70s and '80s free-trade zones became very popular."

Currently, oil companies are one of the major users of the zones along with automobile and electronic manufactures.

The zone inside Cascadia is central to the live-and-work community Kuo is creating.

"In context of the global economy, this is a link to create jobs in a community where we don't all have to travel a long distance everyday to work," Kuo said. "It will help create a more beautiful community for everyone."

Some of the basic benefits a business receives when it operates in a free-trade zone is duty payments on imports are deferred, eliminated or reduced.

The duty fee is paid when the imported material leaves the free-trade zone. However, if imported parts were used to manufacture an item, like a radio, the business can pay either the duty on the radio or the parts, whichever is less expensive.

Damaged or defective items - for example, shoes - can be destroyed and no duty will be charged.

Companies in free-trade zones that have a proven track record can have direct delivery from ship to warehouse without going through U.S. Customs' clearance and inspections.

Another less obvious benefits is burglary of a company in a free-trade zone is a smuggling charge and a federal crime.

There are 261 free-trade zones across the country and 456 subzones currently listed by the Foreign Trade Zones Board.

The Ports of Tacoma and Seattle are both free-trade zones. Companies such as Reebok, Wal-Mart and Maytag all use free-trade zones.

Cascadia's first phase, which will include nearly 1,700 homes and part of the business park, is set to begin moving dirt for roads, water and sewer lines later this year.

Dennis Box can be reached at dbox@courierherald.com.

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