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FTZ Actions for North Carolina, Kentucky and California Zones

Tuesday, November 26, 2013
Sandler, Travis & Rosenberg Trade Report

The Foreign-Trade Zones Board has recently taken the following actions.

Proposed Production Activity for North Carolina Zone. The FTZ Board is seeking comments by Jan. 6 on a notification of proposed production activity submitted by the Triangle J Council of Governments, grantee of FTZ 93, on behalf of GlaxoSmithKline, PLC, located in Zebulon, North Carolina. The facility is used for the production and packaging of pharmaceutical products. Production under FTZ procedures could exempt GlaxoSmithKline from customs duty payments on the foreign status components used in export production. On its domestic sales, GlaxoSmithKline would be able to choose the duty rates during customs entry procedures that apply to inhalers, tablets and capsules that treat a variety of medical conditions (duty rates range from free to 6.4%) for a range of foreign status inputs. Customs duties also could possibly be deferred or reduced on foreign status production equipment.

Proposed Production Activity for Kentucky Zone. The FTZ Board is seeking comments by Jan. 6 on a notification of proposed production activity submitted by the Louisville and Jefferson County Riverport Authority, grantee of FTZ 29, on behalf of Hitachi Automotive Systems Americas Inc. for its facilities located in Harrodsburg, Kentucky. HIAMS-HK already has authority to produce various automotive components within Subzone 29F, including mass air sensors, throttle bodies and chambers, starter motors, motor/generator units, alternators, distributors, other static converters, inverter modules, rotors/stators, batteries, ignition coils, sensors and modules, fuel injectors, emissions control equipment, valves, pumps, and electronic control units for engines and transmissions. The current request would add finished products (lithium-ion hybrid battery pack assemblies, electrical power steering modules, and electronic torque, traction and transmission control modules) and certain foreign components to the scope of authority.

FTZ activity would be limited to the specific foreign status components and specific finished products described in the submitted notification and subsequently authorized by the FTZ Board. Production under FTZ procedures could exempt HIAMS-HK from customs duty payments on the foreign status components used in export production. On its domestic sales, HIAMS-HK would be able to choose the duty rates during customs entry procedures that apply to lithium-ion hybrid battery pack assemblies, rotors A&B, stators A&B, electrical power steering modules, and electronic torque, traction and transmission control modules (free to 3.4%) for the foreign status inputs noted below and in the existing scope of authority. Customs duties also could possibly be deferred or reduced on foreign status production equipment.

The components and materials sourced from abroad include plastic grommets, rubber drain tubes, bushings, gaskets, lead/tin solder, parts of batteries (covers, cover assemblies, cell case assemblies, insulator covers, cells, inlet/outlet harness holders, inlet/outlet ducts), resolver rotors and battery control units (duty rates range from free to 5.3%).

Reorganization Application by California FTZ Approved. The FTZ Board has approved an application by the City of San Jose, grantee of FTZ 18, requesting authority to reorganize this zone to expand its service area under the alternative site framework. The zone currently has a service area that includes all of San Jose, Calif., and the applicant requested authority to include all of Santa Clara County, the cities of Santa Cruz and Scotts Valley in Santa Cruz County, and the cities of Fremont, Hayward, Newark and Union City in Alameda County, Calif., adjacent to the San Jose U.S. Customs and Border Protection port of entry. 

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