Duty-Free Zones Are Established in the San Gabriel Valley

The San Gabriel Valley became decidedly more international with the recent designation of two Foreign Trade Zone sites there by the Department of Commerce.

In a move that brings the first duty-free zones to that area, the federal government has allowed the Port of Long Beach to carve a chunk out of an Ontario Foreign Trade Zone to create two five-acre zones in El Monte and Pomona. The sites include El Monte’s San Gabriel Valley International Business Incubator and Pomona’s Fairplex, said Bruce Ackerman, president of the San Gabriel Valley Economic Partnership, which helped broker the deal.

The zones “give companies located in the U.S. the ability to compete internationally and offset some of the increased labor costs that we’ve got in competing with some of the South American and Asian companies,” he said.

While the zones have been approved in concept, details of who will operate within them--and how--remain to be submitted for federal approval. The El Monte site covers Pacific Place, developed by the Titan Group, which includes the incubator. Businesses operating there will probably import, reassemble and export high-tech products, Ackerman said. The Fairplex, in contrast, intends to use the zone for marketing and trade fairs, he said.

Businesses operating in the zone are exempt from duties on reexported merchandise. If merchandise is sold domestically, no duty is paid until the goods leave the zone. Among other benefits, foreign and domestic merchandise in the zones can be stored, repacked, manipulated, manufactured, processed or otherwise altered or changed without duty.

“It’s significant,” said Titan Group CEO John Leung. “We are leveling the playing field. The whole purpose is to . . . make sure we all have an environment that’s conducive to international trade.”

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Lee Romney can be reached at (213) 237-4884 or via e-mail at lee.romney@latimes.com.