Coleman Proposed Compromise in FTZ Filing

As reported yesterday, the Foreign-Trade Zone Board has reopened, through September 21, the comment period for the Coleman application for FTZ procedures for certain polyester and nylon fabric. The Coleman proceedings, now in their fourth year, have been quite contentious. In their most recent, July 31, filing, Coleman offered to accept restrictions on there imports using FTZ procedures, stating:

"Coleman is prepared to accept two restrictions on manufacturing authority in Sauk Rapids. First, leaving aside a permanent grant of authority, Coleman’s preference would be for a 10-year duration. However, for the sake of compromise and to facilitate a positive decision, Coleman can accept a shorter duration, given that continuation of the status quo disadvantages our operations in Sauk Rapids. Therefore, Coleman proposes a 7-year time limit (subject to review and renewal). This would give Coleman an adequate duration to enable an acceptable return on the additional investment Coleman makes in Sauk Rapids. After the agreed upon duration, the FTZ board will be able to review the situation and determine if a further continuation of the manufacturing authority for the nylon and polyester fabrics provides a net economic benefit to the United States.

"Second, Coleman is willing to accept annual quantity limitations. [I]n hopes of achieving a constructive, mutually beneficial approach, Coleman would accept quantitative limitations on polyester (HTS subheading 5407.52.00) fabric that is entered for use in PFDs produced in the FTZ that would then enter the United States at an effective 4.5% duty, as normally applicable to finished PFDs. Coleman suggests 1.5 million linear yards with an annual increase of 5%. Coleman recognizes that the nylon fabric (HTS subheading 5407.42.20) has been of greater sensitivity and, therefore, suggests 800,000 linear yards with no growth rate. The nylon used by Coleman for PFDs made in the FTZ also would enter the United States at the 4.5% duty rate applied to finished PFDs, which is the same effective duty rate paid for the fabric when it enters incorporated in PFDs made by Coleman’s Asian sources and competitors."