Tax Breaks on Imports Sought for L.A. Port : Commerce: A foreign trade zone would defer assessments on goods until they are sent to market, harbor commissioners say.

The Los Angeles Harbor Commission is moving forward with a plan to create a foreign trade zone at the port to boost business and jobs in the area, officials say.

The proposal, which would need approval from the federal Foreign-Trade Zones board, would benefit companies located in the zone by allowing them to defer taxes on imported goods until those products are sent to market, officials say.

While in the zone, imported goods could be used as ingredients in manufactured products. The finished product would then be subject to far lower import taxes than the raw materials, said Karen Tozer, marketing manager for the Port of Los Angeles.

Consumers would not be able to buy duty-free products in the zone, since retailing would be prohibited. But the lower import taxes would likely be reflected in cheaper prices for trade zone products once they reach the marketplace, officials said.

The plan has been in the works for a few years, but it gained momentum last month with the hiring of a consultant who will direct the port’s application to the Foreign-Trade Zones Board in Washington.

This week, the Board of Harbor Commissioners authorized executive director Ezunial Burts to sign the application to the U.S. Foreign-Trade Zones Board.

Tozer said the application probably will not be ready for at least four or five months. The step was taken now, she said, in case Tuesday’s City Council elections result in the replacement of Harbor Commission members, whose terms are concurrent with the council members who appoint them, she said.

If all goes well, the foreign trade zone would be created by the end of 1994, she said.

“We view the foreign trade zone for the port as bringing us into a level playing field with other ports in the United States,” Tozer said.

There are some about 500 such zones in the nation, 14 of them in California. Texas has the most, with 54.

The closest one to Los Angeles has been in operation since 1985 at the Port of Long Beach. It is a 117,000-square-foot warehouse in which about 70 importers store goods tax free until they are ready to be shipped into the U.S. marketplace.

Long Beach officials credit the zone with luring 70 importers and increasing ancillary work at the docks and customs house, but officials caution against viewing the zones as a sure-fire way to increase business.

Officials still are working out how Los Angeles Harbor’s foreign trade zone would operate. Officials are considering making the entire port the zone boundary, but no decision has been made.

Tozer could not provide estimates on the economic impact at the port. About 200,000 workers are employed in foreign trade zones nationally, she said. The Foreign-Trade Zones Board estimates that for every worker employed in a zone, two jobs are created or preserved outside of it through support services.

Exports from foreign trade zones exceed $10.5 billion annually, she said.

Foreign trade zones were established in 1934 to encourage U.S. participation in foreign trade.

Over the past 10 years, interest in the zones has increased because of increased foreign competition in manufacturing, Tozer said.

Los Angeles officials considered seeking a joint foreign trade zone with Long Beach, but it was ruled out because of concerns that bureaucracy at both commissions could stymie the project, Tozer said.