The Advantages of the Port of Seattle’s Free Trade Zone

In September, Seattle Port Commissioner John Creighton moderated a panel of federal, state and local officials on “How to Increase Your Bottom Line with Exports” at the Seattle International Textile Expo.

While the fashion and textile industry often seems to go unnoticed in the Pacific Northwest, Washington State represents the 4th largest fashion cluster in United States. Major players like Nordstrom, REI and Eddie Bauer mix with high fashion companies like Luly Yang; small boutiques and designers focused on local hipsters mix with businesses like Tactical Tailor that provide uniforms for the military; and of course the Northwest is home to lots of outdoor gear manufacturers such as Filson and Zumiez.

The Port of Seattle together with the Port of Tacoma constitutes the 3rd largest seaport cluster in the United States. Seattle-Tacoma International Airport is the 16th busiest commercial airport in the country. And according to a recent study, two out of every five jobs in Washington State, or 40%, are based on international trade. In short, Pacific Northwest fashion and other businesses looking to increase revenue through exports are well-positioned to do so.

A good example of a clothing wholesaler and retailer that has used the Port of Seattle’s trade infrastructure to its advantage is the Norwegian company Helly Hansen in June 2012 edition of Containerisation International). A significant majority of the leisurewear that Helly Hansen exports to North America comes from Asia. Helly Hansen has been able to take advantage of the Port of Seattle’s Free Trade Zone (FTZ). FTZs are a duty-free, quota-free, secured area in a designated customs “port of entry,” considered outside US Customs territory. Within a zone, foreign goods can be brought into the United States without formal customs entry for assembly, manufacture, display, destruction or other processing. Duty payments can be deferred, reduced or eliminated when an FTZ is utilized.

The FTZ has allowed Helly Hansen to lower high apparel import taxes, with some duties being reduced and others deferred. Use of the port’s FTZ also has allowed Helly Hansen to reduce processing and entry fees and related paperwork. Moreover, because the Port of Seattle’s FTZ is approved under the federal government’s “Alternative Site Framework” (ASF) scheme, it only took Helly Hansen 30 days to get FTZ accreditation, something that otherwise could have taken up to 18 months and cost significantly more. According to Commissioner Creighton, the Port of Seattle was one of the first ports in the United States to secure the ASF option.

“The Port of Seattle’s FTZ helps companies level the playing field with competitor operations in overseas markets,” said Commissioner Creighton. “With today’s global economy, we need every competitive advantage we can get in order to help create jobs in the Pacific Northwest.”

Author: Steven Matsumoto

Steven Paul Matsumoto is the founder of Seattle Fashion Incubator, and an active member of the Seattle business community. Currently Mr. Matsumoto sits on Advisory Boards for the University of Washington Fashion Certificate Program, and the Trade Development Alliance of Greater Seattle.

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