McKeon to Petition for Foreign Trade Zone to Aid Manufacturers : Recovery: Exemption from customs and excise taxes would stimulate economic development, he says.

CHATSWORTH — Rep. Howard P. (Buck) McKeon announced Thursday that he will petition the U.S. Department of Commerce for a foreign trade zone to help West Valley manufacturers bounce back from the Jan. 17 earthquake.

The formation of a trade zone, which exempts manufacturers from paying customs and excise taxes on exports, would stimulate economic development by attracting new businesses and encouraging the expansion of existing ones, the Santa Clarita Republican said.

“The message here is clearly jobs,” said McKeon aide Armando Azarloza. “This is going to mean jobs in the area. It’s going to mean a revitalization of our economic base in the West Valley.”

McKeon, who is now in a reelection campaign against Democratic challenger James Gilmartin, will file the formal application after the Nov. 8 election, Azarloza said.

Gilmartin called the proposal a great idea but questioned whether McKeon has the political skill to fulfill it.

“The fact that he’s even thinking about a foreign trade zone is miraculous,” Gilmartin said. “Mr. McKeon has not had one original thought in his two years in Congress.” Although an exact boundary for the proposed zone has not been determined, it would include portions of Canoga Park and Chatsworth, roughly bounded by Winnetka Avenue, Devonshire Street, Topanga Canyon Boulevard and Prairie Street, Azarloza said.

Azarloza said that locating in a trade zone can save a business up to 10% on the production cost of its exports. Duties on imported raw materials would be deferred until the sale of a finished product.

Such trade zones have been established at the ports of Los Angeles and Long Beach and a portion of Palmdale. The Port of Long Beach unsuccessfully opposed the application of its rival in Los Angeles, contending that its own benefits as a foreign trade zone would be diluted.

Azarloza said McKeon’s staff has briefly discussed the congressman’s proposal with Los Angeles Mayor Richard Riordan, and that he did not anticipate any opposition.

McKeon made the announcement at Duke’s Inc., a Chatsworth firm that manufactures general aviation equipment. He said the trade zone would help the $10-million company to better compete in foreign markets and, consequently, hire more employees.

Duke’s vice president Chet Huffman said the proposal was one of several factors weighing against a plan to relocate the company, which exports 20% of its production overseas.

“As competitive as things are getting with the areas we export to, anything is going to help,” Huffman said.

Authorized by the Foreign Trade Zones Act of 1934, trade zones are intended to stimulate an area’s economy and to increase U.S. exports. The use of trade zones blossomed in the 1980s. There are now 194 of them, according to the National Assn. of Foreign-Trade Zones.

McKeon’s application will be decided by the Foreign-Trade Zone Board, consisting of the Secretary of Commerce, Secretary of the Treasury and Secretary of the Army.

The review of the application could take up to a year, McKeon’s staff said.