05-24439. Foreign-Trade Zone 93-Raleigh-Durham, NC; Application for Subzone, Merck & Company, Inc. (Pharmaceutical Products), Durham, NC

An application has been submitted to the Foreign-Trade Zones (FTZ) Board (the Board) by the Triangle J Council of Governments, grantee of FTZ 93, requesting special-purpose subzone status for the pharmaceutical manufacturing facility of Merck & Company, Inc. (Merck), located in Durham, North Carolina. The application was submitted pursuant to 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 15, 2005.

The proposed subzone (15 buildings of 639,000 square feet on 262 acres, which includes a possible expansion of 11 buildings totaling 400,000 sq. ft.) is comprised of one site located at 5325 Old Oxford Road, in Durham, North Carolina. The Merck facility is currently under construction and the first phase is scheduled to be completed in May 2006. The plant (200 employees) will manufacture, test, package, and warehouse pharmaceutical products, activities which it is proposing to perform under zone procedures.

Initially, the company is proposing to produce vaccines for the prevention of measles, mumps, and rubella (MMR) and chicken pox under zone procedures at the plant. The applicant notes that material sourced from abroad (human albumin, HTSUS 3002.10.0190—duty-free) may initially represent less than half of the value of the finished products manufactured under the proposed primary scope.

The application also requests authority to include a broad range of inputs and pharmaceutical final products that it may produce under FTZ procedures in the future. (New major activity in these inputs/products could require review by the FTZ Board.) General HTSUS categories of inputs include: 1108, 1212, 1301, 1302, 1515, 1516, 1520, 1521, 1702, 1905, 2106, 2207, 2302, 2309, 2501, 2508, 2510, 2519, 2520, 2526, 2710, 2712, 2807, 2809, 2811, 2814, 2815, 2816, 2817, 2821, 2823, 2825, 2826, 2827, 2829, 2831, 2832, 2833, 2835, 2836, 2837, 2839, 2840, 2841, 2842, 2844, 2846, 2851, 2901, 2902, 2903, 2904 (except for 2904.20.5000), 2905, 2906, 2907, 2908, 2909, 2910, 2911, 2912, 2913, 2914, 2915, 2916, 2917, 2918, 2919, 2920, 2921, 2922, 2923, 2924, 2925, 2926, 2927, 2928, 2929, 2930, 2931, 2932, 2933, 2934, 2935, 2936, 2937, 2938, 2939, 2940, 2941, 2942, 3001, 3002, 3003, 3004, 3005, 3006, 3102, 3104, 3301, 3302, 3305, 3401, 3402, 3403, 3404, 3502, 3503, 3505, 3506, 3507, 3802, 3804, 3808, 3809, 3815, 3822, 3823, 3824, 3906, 3910, 3911, 3912, 3913, 3914, 3915, 3919, 3920, 3921, 3923, 4016, (4202.92.1000, 4202.92.9060, 4202.99.1000, 4202.99.5000 (plastic only)), 4817, 4819, 4901, 4902, 5403, 7010, 7607, 8004, 8104, 8309, 8481, 9018, and 9602. Duty rates for these materials range from duty-free to 20%.

Final products that may be produced from the inputs listed above include these general HTSUS categories: 2302, 2309, 2902, 2903, 2904, 2905, 2906, 2907, 2909, 2910, 2912, 2913, 2914, 2915, 2916, 2917, 2918, 2920, 2921, 2922, 2923, 2924, 2925, 2926, 2928, 2930, 2931, 2932, 2933, 2934, 2935, 2936, 2937, 2938, 2939, 2941, 2942, 3001, 3002, 3003, 3004, 3006, 3802, 3804, 3808, 3809, 3824, 3910, 3911, 3912, 3913, and 3914. Duty rates for these products range from duty-free to 7.5%.

Zone procedures would exempt Merck from Customs duty payments on foreign materials used in production for export. On domestic shipments, the company would be able to defer Customs duty payments on foreign materials, and to choose the duty rate that applies to finished products (duty-free to 7.5 %) instead of the rates otherwise applicable to the foreign input materials (duty-free—20%). Merck would also be able to avoid duty on foreign inputs which become scrap/waste, estimated at two percent of foreign material. Merck may also realize logistical/procedure and other benefits from subzone status, including zone to zone transfers between other Merck subzones. The application indicates that the savings from FTZ procedures would help improve the international competitiveness of Merck's U.S. operations.

In accordance with the Board's regulations, a member of the FTZ staff has been designated examiner to investigate the application and report 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 one of the following addresses:

1. Submissions Via Express/Package Delivery Services: Foreign-Trade Zones Board, U.S. Department of Commerce, Franklin Court Building—Suite 4100 W, 1099 14th St. NW., Washington, DC 20005; or

2. Submissions Via the U.S. Postal Service: Foreign-Trade-Zones Board, U.S. Department of Commerce, FCB—Suite 4100W, 1401 Constitution Ave. NW., Washington, DC 20230.

The closing period for their receipt is February 27, 2006. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period March 13, 2006.

A copy of the application and accompanying exhibits will be available for public inspection at the Office of the Foreign-Trade Zones Board's Executive Secretary at address Number 1 listed above, and at the U.S. Department of Commerce Export Assistance Center, 10900 World Trade Blvd., Suite 110, Raleigh, North Carolina, 27617.

Dated: December 16, 2005.

Dennis Puccinelli,

Executive Secretary.