Anchorage partners with China to further open trade

Agreements could open door for city to distribute Chinese products in North America

Posted: Wednesday, August 22, 2007

ANCHORAGE - Leaders of the world's third-largest air cargo airport signed several agreements with Beijing officials Tuesday, vowing to increase the nearly half billion dollars in exports Anchorage delivers to China each year.

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Anchorage officials worked to strengthen the city's ties to China when they met high-ranking officials from the Beijing Investment Bureau and the Beijing Liqiao Free Trade Center, signing a set of agreements that could open the door for Anchorage to distribute or provide quality control for Chinese products headed to North America.

"The relationships are not built in one day, and this forms the foundation for a lasting relationship," said Mayor Mark Begich. "This sets the stage and creates the relationship in a formal way."

Anchorage is in a key location to serve as a warehousing and distribution hub for China-based exporters, said Bill Popp, president and CEO of the Anchorage Economic Development Corp. It is one of five General Purpose Foreign Trade Zones in Alaska, and the only one that is actively used.

The Liqiao free trade zone in Beijing is similarly designated, meaning trade within the two ports is exempt from import duties, inventory taxes, duty drawback and quota restrictions. All of those factors can stimulate economic growth, Popp said.

With more than 19 million people, Beijing is a major Asian economic hub, and Anchorage has been actively working to strengthen the relationship for years, Begich said. Exports from Alaska to China totaled more than $474 million in 2006, up from $337 million in 2005. About 72 percent of that came from seafood, an industry that Begich said has the potential for massive growth in China.

Aside from the obvious step of sending components to China for assembly, plans call for the opposite: Flying goods to Anchorage, manufacturing end products within the port free trade zone and shipping the finished products out, Popp said. That will result in savings because only the end product, rather than its components, will be subjected to tariffs, he said.

The agreements can also mean that goods from China can be sent to Anchorage and warehoused until they are needed in the Lower 48, thereby saving delivery time, Popp said.

Critics have said the free-trade arrangement could hurt, rather than help, Alaska's economy because of the potential for cheap labor in China. But former AEDC President Bob Poe said such criticism is off-target. The arrangement will actually benefit the state, he said.

"You might be knocking some state workers out of work, but you're actually saving the jobs of Alaska fishermen," Poe said.

"The relationship between Beijing and Anchorage is so critical to promote economic growth," Wang Rong, director of Beijing Lianhebaotong International Freight & Forwarding Co., Ltd., said through a translator. "We're searching for solutions for collaboration."

The first agreement is between the Port of Anchorage and the Beijing Liqiao Bonded Logistics United Development Co., Ltd. It partners the two free trade zone license holders as economic partners that will continue to explore growth opportunities.

The second was an agreement between the Anchorage Economic Development Corp. and its Beijing counterpart, the Beijing Investment Promotion Bureau, stating that the organizations will continue to work together by investigating trade and investment opportunities.

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