Trade Zone to Be Created Along Border : Area on Otay Mesa Will Offer Companies Import-Fee Advantages

The U.S. government agreed Tuesday to establish a 1,400-acre foreign trade zone in Otay Mesa, a move the zone’s advocates say will draw commerce to the region and create jobs on both sides of the U.S.-Mexican border.

Creation of San Diego’s first foreign trade zone, which was announced Tuesday afternoon by Rep. Bill Lowery (R-San Diego), is designed to enhance the competitiveness of firms inside it by giving them the same import fee advantages enjoyed by businesses in similar trade zones in other cities in the United States and around the world.

Backers described San Diego as an ideal site for such a zone because of its geographic position on the Pacific Rim and its access to Latin America through Mexico.

With two-thirds of the nation’s import-export trade occurring along the Pacific Rim, creation of the zone will be a boon to the city’s economy, particularly for high-technology firms, said Lowery.

“With our leadership in the area of advanced technologies and those technologies finding their way into the import-export business, it’s going to speak very, very well for San Diego’s economy in the future,” he said.

“I just think it’s going to mean countless jobs for San Diegans and for the Tijuana area,” said San Diego City Councilman Ed Struiksma, who has been pushing for a foreign trade zone since he established a task force on the issue in 1983. “It’s a magnet. It attracts businesses.”

Firms that store, assemble, test or package goods in a foreign trade zone are allowed to send those finished products overseas without paying U.S. import duty or excise taxes on the raw materials they import to manufacture the goods.

If the goods are sold within the United States, the payment of import fees is delayed until the finished product is sold, giving the manufacturer a cash flow advantage.

Most firms operating within the Otay Mesa trade zone will probably send raw materials to assembly plants on the Mexican side of the border, where labor is less expensive, then bring the finished goods back to the zone before shipping them out, officials said. Thus the zone will help create jobs in Tijuana, as well.

The trade zone is actually five non-contiguous parcels totaling 1,416 acres on Otay Mesa, the largest of which is 900 acres at Brown Field, he said.

Lowery said other areas include the 312-acre De la Fuente business park; the 73.5-acre San Diego Business Park; the 70.7-acre Brittania Commerce Park; and the 60-acre Gateway, Otay International business area. Other areas may be designated sub-zones later, he said.