FTZB Considers Banning Admission of AD/CV Product into Subzone
The Foreign Trade Zone Board is inviting public comment by July 12, 2010 on its staff's preliminary recommendation pertaining to the application by the Port of Moses Lake Public Corporation to establish a subzone at the REC Silicon facility in Moses Lake, Washington. Rebuttal comments are due by July 27, 2010.
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FTZB Staff Says Ban Would Protect Domestic Silicon Metal Production
The staff's preliminary recommendation is for approval of the application with a restriction prohibiting admission of foreign status silicon metal subject to an antidumping duty or countervailing duty order, as full approval of the request could negatively impact domestic silicon metal production.
This finding is based primarily on the potential impact to domestic silicon metal prices compounded by multiple applications potentially involving avoidance of AD/CVD duties on silicon metal used in export production.
Similar Application Pending for Dow Corning Corporation, and Others Expected
In addition to the REC Silicon application, a similar application is pending for Dow Corning Corporation in Kentucky and the FTZB has received indication that further requests are being prepared for additional facilities.
In its application, REC Silicon indicates that if it is granted full approval, other U.S. polysilison producers will likely apply for similar benefits. Given the production capacity of REC Silicon's domestic facilities, as well as those of the other U.S. producers, the ripple effect on silicon metal suppliers would be significant and the resulting impact would likely be a decline in the U.S. price of silicon metal.
(Currently, very little silicon metal subject to AD/CVD orders is imported into the United States. However, the potential increase in supply to the U.S. market from the use of silicon metal subject to AD/ CVD orders at this plant and others in the industry, and the resulting price effect, would likely be significant. (Note that AD orders are in place against silicon metal from countries such as Brazil and China.))
FTZB Staff Find Net Economic Effect Would be Negative, if AD/CV Silicon Metal Allowed
The FTZ regulations require that evaluations of manufacturing authority consider, whether the approval is consistent with trade policy and programs, and whether its net economic effect is positive'' .In this case, given the potential impact on the silicon metal industry and based on the evidence currently on the record, the staff is unable to find that the net (national) economic effect of approving the use of silicon metal subject to AD/CVD orders for export production would be positive.
While unrestricted approval could have a negative impact, the issues raised do not extend to silicon metal not subject to AD/CVD orders. No arguments or evidence have been presented to the FTZ Board in opposition to FTZ savings on silicon metal not subject to AD/CVD orders.
Subzone Applicant Does Not Currently Plan to Use AD/CV Silicon Metal
Since REC Silicon indicated that they do not currently anticipate using silicon metal subject to AD/CVD orders, activity under the proposed restricted approval would provide REC Silicon with the full savings estimated in the application. The company has indicated that those savings would enhance the cost competitiveness of its Washington facility, which would help to encourage continued production and employment at the facility.
(FR Pub 06/04/10, Docket 22-2009)