E7-15166. Foreign-Trade Zone 7-- Mayaguez, Puerto Rico, Request for Manufacturing Authority, Merck Sharpe & Dohme Quimica de Puerto Rico Inc., (Pharmaceutical Manufacturing)

An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Puerto Rico Industrial Development Company (PRIDCO), grantee of FTZ 7, requesting authority on behalf of Merck Sharpe & Dohme Quimica de Puerto Rico Inc. (MSDQ) to conduct pharmaceutical manufacturing operations under FTZ procedures within FTZ 7 at the MOVA Pharmaceutical Corporation (MOVA) pharmaceutical manufacturing facility in Caguas, Puerto Rico. The application was filed on July 27, 2007.

The MOVA facilities (650 employees, 16 acres, buildings totaling 250,000 sq. ft, 40 percent of which is devoted to manufacturing) are located on State Road 1, Km 34.8, within the Villa Blanca Industrial Park in Caguas, Puerto Rico (Site 1, Parcel 2). MSDQ will act as the operator within FTZ 7, with the manufacturing activity being contacted by MOVA on behalf of MSDQ. The company has indicated that the square footage of the buildings devoted to manufacturing operations could grow to include up to 70 percent in the near future. MSDQ has requested authority to manufacture two pharmaceutical products, MK-431A (HTSUS 3004.90) and sitagliptin (HTSUS 2933.59) for the U.S. market and export. Duty rates on the finished products range from duty-free to 6.5 percent. Foreign components that would be used in the manufacturing process (up to 25 percent of total content) include sitagliptin (HTSUS 2933.59), metformin hydrochloride (HTSUS 2925.20), enamine amide (HTSUS 2933.59) and butyl josphos (HTSUS 2931.00), with duty rates of 3.7 to 6.5 percent, ad valorem.

The application also requests authority to include a broad range of inputs and finished pharmaceutical products that MSDQ may produce under FTZ procedures in the future. (New major activity involving these inputs/products would require review by the FTZ Board.) The duty rates for these inputs and final products range from duty-free to 10 percent.

Zone procedures would exempt MSDQ from customs duty payments on the foreign components used in export production to non-NAFTA countries. Exports account for approximately 30 to 40 percent of production. On domestic sales and sales to NAFTA countries, MSDQ could defer duty until the products are entered for consumption or exported, and choose the lower duty that applies to the finished product for the foreign components used in production. The company would also realize certain logistical savings related to zone-to-zone transfers and direct delivery procedures as well as savings on materials that become scrap/waste during manufacturing. The application indicates that FTZ-related savings would help improve MSDQ and MOVA's international competitiveness.

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 October 2, 2007. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period (to October 17, 2007).

A copy of the application and accompanying exhibits will be available for public inspection at each of the following locations:

U.S. Department of Commerce Export Assistance Center, Centro Internacional de Mercadeo, Tower II, Suite 102, Road 165, Guaynabo, Puerto Rico, 00968-8058.

Office of the Executive Secretary, Foreign-Trade Zones Board, U.S. Department of Commerce, Room 2111, 1401 Constitution Ave. NW, Washington, DC 20230.

For further information, contact Christopher Kemp at [e-mail] or [phone].

Dated: July 30, 2007.

Andrew McGilvray,

Executive Secretary.