A Foreign-Trade Zone approval today continues a trend Agathon Associates reported June 1st of companies opting to omit textile inputs from their FTZ applications.
On October 18, 2016, CGT U.S., Ltd., submitted a notification of proposed production activity to the Foreign-Trade Zone Board for its facility in New Braunfels, Texas, where the company manufactures Polyvinyl Chloride coated upholstery fabric cover stock. Today the FTZ Board announced approval of the appliocation subject to the restriction requiring that foreign-status polyester and polycotton knit fabrics be admitted to the subzone in privileged foreign-status, thus precluding relief from inverted tariff on the textile components.
Production under FTZ procedures will exempt CGT from customs duty payments on the foreign-status components used in export production. On its domestic sales, CGT will be able to choose the duty rate during customs entry procedures that applies to the PVC coated upholstery fabric cover stock (duty free) for the foreign-status inputs noted below. Customs duties also could possibly be deferred or reduced on foreign-status production equipment.
The components and materials sourced from abroad include: Compound stabilizer for plastics; antimony trioxide (low-tint); flat release paper; polyester knit fabric; polycotton knit fabric; polyurethane top finish dull; polyurethane top finish gloss; polyvinyl chloride dispersion resin; carbodimide crosslinker; aqueous (water base) polyurethane top finish; polyurethane top finish; aqueous (water base) silicone modifier; aqueous (water base) silicone hand modifier; polyurethane; polyisocyanate crosslinker; defoamer; polyfunctional aziridine crosslinker; wetting agent top coat; and, stabilizers (duty rates range from duty free to 10%).
The request indicated that CGT would admit foreign-status polyester and polycotton knit fabrics (HTSUS 6006.31.00) in privileged foreign status (19 CFR 146.43), thereby precluding inverted tariff benefits on these inputs.