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Foreign Trade

Queen Creek votes to support LGES bid for foreign trade zone

Posted 12/21/23

The Queen Creek Town Council voted on Wednesday to support LG Energy Solution’s foreign trade zone application. The item was on the council consent agenda, but Council Member Leah Martineau …

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Foreign Trade

Queen Creek votes to support LGES bid for foreign trade zone

Posted

The Queen Creek Town Council voted on Wednesday to support LG Energy Solution’s foreign trade zone application.

The item was on the council consent agenda, but Council Member Leah Martineau pulled it out for a separate vote. The vote was 5-2, with Martineau and Council Member Travis Padilla voting against the item.

Martineau said at the meeting that the foreign trade zone designation went against her fiscal conservative principles.

The FTZ designation is part of the town’s agreement with LGES to build its electric battery factory in Queen Creek. LGES is investing $5.5 billion in the project and has announced it will be building two facilities on the property.

Under the development agreement with South Korea-based LG Energy Solution, Queen Creek “acknowledges and supports LG’s intentions to seek FTZ approval and the town agrees to support LG’s application to the city of Phoenix to obtain FTZ approval. Town of Queen Creek will enter into an intergovernmental agreement with the city of Phoenix, FTZ No. 75, to outline responsibilities associated with the FTZ and the property tax reclassification,” according to the council staff report.

The facility, generally on 650 acres at the northeast corner of Ironwood and Germann roads, is expected to generate 3,700 full-time jobs when it is fully operational.

In March 2022, the council approved supporting a FTZ application from ES America LLC. As a name change occurred to the company that succeeded ES America, LG Energy Solution Inc., the company is now ready to resume the application process under the name LG Energy Solution Arizona Inc.


Foreign trade zones were developed by the federal government in the 1990s as an incentive for foreign companies to relocate operations to the U.S.

According to a staff report, a FTZ allows a company to:

  •  Be exempt from duties or quota charges on re-exports.
  • Defer payment of customs duties and federal excise tax on imports.
  • To possibly pay a lower duty rate than a higher foreign-trade inputs rate on products finished in the zone.
  • Have access to streamlined customs procedures.
    Have foreign and domestic goods held for export to be exempted from state/local inventory taxes.
  • Be eligible for state/local benefits that are unrelated to the FTZ Act property tax reduction.

In Arizona, an activated FTZ site provides a property tax benefit to qualified companies reducing the real and personal property tax assessment ratio from 17.5% to 5%,” the staff report stated. “Property tax savings to companies are only realized after they have activated FTZ sites and the company has made significant investments increasing the tax base on the property.”

We’d like to invite our readers to submit their civil comments, pro or con, on this issue. Email AZOpinions@iniusa.org. Janet Perez can be reached at jperez@iniusa.org.