E9-29472. Foreign-Trade Zone 74-Baltimore, MD: Application for Subzone Michelin North America, Inc. (Tire Distribution and Wheel Assembly); Elkton, MD

An application has been submitted to the Foreign-Trade Zones Board (the Board) by the City of Baltimore, grantee of FTZ 74, requesting special-purpose subzone status for the distribution facility of Michelin North America, Inc. (MNA), located in Elkton, Maryland. The application was submitted pursuant to the provisions of the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a-81u), and the regulations of the Board (15 CFR part 400). It was formally filed on December 3, 2009.

MNA's facility (130 employees, approximately 71 acres/756,600 enclosed square feet) is located at 515 Fletchwood Road, Elkton, Maryland. The facility is primarily used for the storage and distribution of tires and tire accessories (duty rates range from duty-free to 4.0%); however, the applicant is also requesting manufacturing authority to perform wheel assembly at the proposed subzone.

On its distribution activity, FTZ procedures could exempt MNA from customs duty payments on the foreign products that are exported (3 to 7% of shipments). On its domestic sales, the company would be able to defer duty payments until merchandise is shipped from the facility and entered for consumption. Certain tires from China are temporarily subject to additional duties imposed in a Section 421 safeguard case; such tires will be admitted to the proposed subzone under privileged foreign status (19 CFR 146.41) or domestic (duty paid) status (19 CFR 146.43).

As noted above, the applicant is also requesting to perform wheel assembly (up to 100,000 units annually) using domestic and foreign components on behalf of auto manufacturer clients. Foreign-sourced components include tires (HTSUS 4011.10, 4011.20, 4011.61, 4011.62, 4011.63, 4011.92, 4011.93, 4011.94, 4011.99, duty-free to 4.0%), wheel rims (HTSUS 8708.70, duty-free to 2.5%), flaps (HTSUS 4012.90, duty-free to 4.2%), valves (HTSUS 8481.80, 2% to 5.6%), tubes (HTSUS 4013.10, 3.7%), gaskets (HTSUS 4016.93, 2.5%), sensors (HTSUS 8525.10, duty-free), and nuts (HTSUS 7318.16, duty-free).

FTZ procedures could exempt MNA from customs duty payments on the foreign components used in production for export to non-NAFTA countries. On shipments for U.S. consumption and to NAFTA markets, MNA could elect the wheel assembly duty rate (generally dutiable as an auto part—2.5%) for the foreign components (mostly tires, dutiable at 4%) listed above. The auto part duty rate (2.5%) would apply if the wheel assemblies are shipped via zone-to-zone transfer to U.S. motor vehicle assembly plants with subzone status.

FTZ designation would further allow Michelin to realize logistical benefits through the use of certain customs procedures and duty savings on scrap and waste. The request indicates that the savings from FTZ procedures would help improve the facility's international competitiveness.

In accordance with the Board's regulations, Diane Finver of the FTZ Staff is designated examiner to evaluate and analyze the facts and information presented in the application and case record and to report findings and recommendations to the Board.

Public comment is invited from interested parties. Submissions (original and 3 copies) shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is February 8, 2010. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to February 23, 2010.

A copy of the application will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 2111, U.S. Department of Commerce, 1401 Constitution Avenue, NW., Washington, DC 20230-0002, and in the “Reading Room” section of the Board's Web site, which is accessible via http://www.trade.gov/​ftz.

For further information, contact Diane Finver at [e-mail] or [phone].

Dated: December 3, 2009.

Andrew McGilvray,

Executive Secretary.