Bill seeks to boost local economy by making Guam US free trade zone | Local Business

Vice Speaker Tony Ada has introduced Bill 174-38 to establish Guam as a Free Trade Zone to help diversify and boost the local economy.

The measure seeks to leverage Guam’s favorable location in the Western Pacific and “transform the island into a strategic logistics hub for U.S. exports to Asia.”

“Guam lies within direct proximity to major Indo-Pacific markets including Japan, Korea, Taiwan, and the Philippines, and is outside the U.S. Customs Zone, making it an ideal jurisdiction for an export zone,” according to a news release from Ada.

The proposed zone would enable goods to be routed through Guam for repackaging, value-added processing, and transshipment, enhancing efficiency and reinforcing America’s regional trade capacity, Ada said.

The U.S. Customs and Border Protection website describes Free Trade Zones, or Foreign-Trade Zones, as secure areas under CBP supervision that are generally considered outside CBP territory upon activation.

They are generally located in or near CBP ports of entry, and are designated areas within the U.S. where goods can be imported, stored, processed, and re-exported without the immediate application of customs duties and certain federal excise taxes, CBP stated.

These zones offer businesses significant benefits like duty deferral, elimination of duties on re-exported goods, and streamlined customs procedures.

According to the Bill, the designation would position Guam as a Pacific transshipment hub, linking Asia, Micronesia, and U.S. markets, while creating many new jobs across several industries on island.

“We are talking about producing training and high skilled jobs in various industries, opportunities of federal investments in government owned infrastructure, an expansion of Guam’s role in U.S. trade, private investments, and a new tax base,” Ada said.

He said the legislation is just a starting point in what will be a lengthy process to obtain CBP approval for an FTZ, and Congressional approval for Regional Export Zone designation.

“Our office is also engaging in conversations with federal partners to concurrently pursue this endeavor,” Ada said.

He has written to the chairpersons of the House and Senate Natural Resources Committees and to CBP for technical assistance for the government of Guam. 

According to the CBP, a number of major U.S. cities such as Los Angeles, New York, Houston and Seattle have FTZ’s.

The Port of Los Angeles stated on its website that it’s FTZ, established in 1994, strengthens the region’s ability to create jobs and expand business by:

• Encouraging local companies to grow and participate in international trade;
• Attracting secondary and associated business to locate in the region;
• Increasing local employment opportunities and local tax base;
• Encouraging the retention of local jobs while attracting offshore companies and international businesses to the region; and
• Helping U.S. manufacturing companies by leveling the playing field with foreign competitors.

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