AUBURN – The U.S. Department of Commerce has approved a section of Auburn as a Foreign Trade Zone, a designation that local officials hope will attract new business, help existing ones and create a greater awareness of the area as a commercial transportation hub.

“We’re obviously elated,” said Paul Badeau, marketing director for the Lewiston Auburn Economic Growth Council, after receiving notification Thursday morning. “This is an important tool for our economy.”

A Foreign Trade Zone is considered to be outside U.S. Customs territory, which exempts goods that pass through it from certain duty taxes. Manufacturers in foreign trade zones that receive supplies and raw materials from overseas, as well as distributors who import and warehouse goods from overseas, can save thousands of dollars a year in reduced, deferred or exempted duty taxes.

Roland Miller, Auburn’s economic development director, said savings can run from $200,00 to $300,000 a year for some manufacturers who get raw materials from overseas and ship finished goods to world markets.

“These are the types of benefits we can bring to business and help ensure that they can be competitive in a world market,” he said.

“My response is, Yahoo!'” said Ford Reiche, president of Safe Handling, which imports chemicals and raw materials from overseas and transports goods to paper mills throughout Maine. Safe Handling’s Rodman Road complex was included in the foreign trade zone application.

“This is an important step forward for three specific customers we have and for many others who we anticipate will benefit from the great rail service we have to the Pacific,” said Reiche. “This will make Auburn the port of entry for a lot of products coming in from overseas.”

Two businesses have already expressed interest in the foreign trade zone for manufacturing or value-added operations, said Miller. He declined to name the businesses. A value-added operation takes a product, enhances it in some way and then sends the finished product out into the market.

Representatives from Tambrands, Formed Fiber Technologies, L.L. Bean, Safe Handling and other local businesses testified in support of the application at a public hearing last May. Although all of them are not within the zone, with the new designation, businesses within a 60-mile radius of the zone can apply for sub-zone status, which gives them the same advantages as a business sited within the zone.

None of the companies has made public whether it intends to apply.

In anticipation of the designation, city and economic development officials have been preparing the zone area for development. If they succeed in attracting new businesses to the FTZ, it will mean more jobs and an expanded tax base for the area.

Nearly 200 of the 750 acres designated as the foreign trade zone have been set aside as a new industrial park, ready for buildup for potential tenants who want to take advantage of the designation. The other foreign trade zone in Maine is in Bangor, but has only one small user. The next such zone of any size is in Boston.

The site is centered around the Auburn-Lewiston Intermodal Transfer Facility, which expanded in July 2001 from 16 to 35 acres after the number of units handled at the terminal went up 35 percent in fiscal 2001. Founded in 1994 with the capacity to handle 15,000 rail containers a year, it can now handle 100,000.

The area has also been designated a Pine Tree Zone, making some state-backed tax breaks available to qualifying businesses. Developers chose the area for the zone because of shipping access via the St. Lawrence-Atlantic Railroad and air transport via the Auburn-Lewiston Municipal Airport. It received a designation as a Port of Entry for customs inspections from the Department of Commerce last year.

“Now, with the Pine Tree Zone and the Foreign Trade Zone, we can offer a corporate environment … that is very unique,” said Miller.

Badeau said the LAEGC will step up its marketing of the zone now that it’s official. The growth council will act as its overseer. Ben Hayes, a development specialist at LAEGC and the principal promoter of the zone, will begin attending classes for zone operation.

“It was an arduous process; I commend Ben for all his hard work,” said Miller.