Friday, July 25, 2014

FTZ Approved for Coleman Company, But With No Duty Reduction on Textile Inputs

On July 25, 2014, the Foreign Trade Zone Board published in the Federal Register (79 FR 43390) Foreign-Trade Zone 119--Minneapolis, Minnesota; Authorization of Limited Production Activity; The Coleman Company, Inc. (Textile-Based Personal Flotation Devices); Sauk Rapids, Minnesota.


On March 13, 2014, The Coleman Company, Inc. submitted a notification of proposed production activity to the Foreign-Trade Zones ("FTZ") Board for its facility at 1100 Stearns Drive, Sauk Rapids, Minnesota. The facility is used for the production of personal flotation devices and cushions constructed with textile fabrics. Production under FTZ procedures will exempt Coleman from customs duty payments on foreign status components used in export production. On its domestic sales, Coleman wanted to be able to choose the duty rates during customs entry procedures that apply to personal flotation devices (4.5%, 7.0%) and flotation cushions (6.0%) for the foreign status, which is lower than the rate of duty on the imported foreign components, which can be as high as 20%.

The components and materials sourced from abroad include: Plastic buckles; carrying bags of plastic and textile materials; woven nylon fabrics; woven polyester fabrics; woven fabrics of synthetic yarns; knit fabrics of elastomeric yarns; neoprene fabrics; webbing of man-made fibers; and, polyvinyl chloride foam (duty rate ranges from 5.3% to 20%).

The FTZ Board authorized the production activity described in the notification on a limited basis, subject to a restriction requiring that all foreign status textile fabrics and cases of textile materials (classified within HTSUS Subheadings 4202.92, 5407.42, 5407.51, 5407.52, 5407.82, 6004.10, 5906.91, and 5806.32) be admitted to the zone in domestic (duty-paid) status (19 CFR 146.43) or privileged foreign status (19 CFR 146.41). That means that in the case of the textile inputs, Coleman will continue to pay the full rate of duty unless the final product is exported.

The notice generated significant interest and several sets of public comments were received by the FTZ Board.

In support:

  1. U.S. Representative Michele Bachmann (May 9, 2014)
  2. Continental Press (April 23, 2014)
  3. Duro Textiles, LLC (May 12, 2014)
  4. Henderson Sewing Machine Company (April 17, 2014)
  5. M-Associates (April 15, 2014)
  6. Mitsubishi Electric Automation (April 21, 2014)
  7. Outdoor Industry Association (March 31, 2014)
  8. U.S. Representative Ed Perlmutter (May 8, 2014)
  9. U.S. Representative Mike Pompeo (May 8, 2014)
  10. Pregis Corporation (April 17, 2014)
  11. SPSI Inc. (May 7, 2014)
  12. T.J. Elias Sales and Service (April 29, 2014)

In opposition:

  1. AFMA, NCTO, and USIFI (May 12, 2014)
  2. Milliken and Company (May 12, 2014)

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