[Federal Register Volume 78, Number 9 (Monday, January 14, 2013)]
[Notices]
[Pages 2657-2658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-00587]


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DEPARTMENT OF COMMERCE

Foreign-Trade Zones Board

[Docket 30-2011]


Foreign-Trade Zone 141--Rochester, NY, Application for 
Manufacturing Authority, Firth Rixson, Inc. d/b/a Firth Rixson Monroe, 
Comment Period on Revised Preliminary Recommendation

    On April 29, 2011, an application was submitted by Monroe County, 
New York, grantee of FTZ 141, requesting authority on behalf of Firth 
Rixson, Inc. d/b/a Firth Rixson Monroe (Firth Rixson) to manufacture 
aircraft turbine components under FTZ procedures within FTZ 141 (76 FR 
25300-25301, 5/4/2011). In January 2012, the applicant was notified of 
the FTZ Board staff examiner's preliminary recommendation for approval 
of the request with a restriction requiring that foreign-origin 
titanium be admitted to Firth Rixson's FTZ operation in privileged 
foreign status (19 CFR Sec.  146.63) (absent that restriction, at the 
time that U.S. customs entry is made on aircraft turbine components 
produced in the FTZ incorporating foreign-sourced titanium, Firth 
Rixson would be able to apply to the foreign-sourced titanium the lower 
duty rates applicable to aircraft turbine components--an ``inverted 
tariff'' benefit). In June 2012, the applicant submitted new evidence 
and information in response to the factors considered in the 
preliminary recommendation. Firth Rixson's June 2012 submission was the 
subject of a Federal Register notice (77 FR 43572-43573, 7/25/2012) 
inviting public comment. Firth Rixson subsequently made a rebuttal 
submission in response to comments received during the comment period.
    After a full review of the evidence and information on the record 
to date (including all submissions by the applicant and other parties) 
in the context of the applicable criteria from the FTZ Board's 
regulations (15 CFR part 400), the examiner issued a revised 
preliminary recommendation on December 28, 2012. The examiner's revised 
preliminary recommendation is to approve the requested authority--i.e., 
to allow unrestricted FTZ benefits on foreign titanium used in 
production for the U.S. market and export--for a period of five years. 
Any authority beyond the five year period would require an additional 
application to the FTZ Board.
    The examiner's revised preliminary recommendation also includes a 
requirement for Firth Rixson to provide data on an ongoing basis to 
enable the FTZ Staff to conduct enhanced monitoring of the actual 
impact of Firth Rixson's FTZ use. If there were to be evidence of 
negative effects resulting from the company's FTZ use, the FTZ Board 
could review the activity and determine whether negative public 
interest impacts existed that warranted the imposition of a prohibition 
or restriction (see 15 CFR Sec.  400.49).
    The examiner's analysis indicates that allowing unrestricted FTZ 
benefits on foreign titanium used in production for the U.S. market and 
export for an initial five-year period should result in significant 
public benefits--such as maintained or increased U.S. employment--
without negative economic effects (e.g., would not result in increased 
imports of titanium alloy that otherwise would not have

[[Page 2658]]

occurred). In particular, the revised preliminary recommendation is 
based on an assessment that the requested authority is unlikely to have 
a negative impact on related domestic industry--such as reduced 
purchases of U.S.-produced titanium products--because key customers' 
contracts with Firth Rixson involve ``directed buys'' wherein the 
customer dictates the specific supplier of the titanium to be used by 
Firth Rixson in the production of its aircraft turbine components for 
the customer's use. ``Directed buy'' contracts enable the customer to 
retain tight control over the specifications and quality of the 
titanium used to produce components for that customer. Key ``directed 
buy'' contractual provisions include a designated source (i.e., the 
actual supplier of the titanium alloy to be processed by Firth Rixson) 
and a transaction price(s) (i.e., unit price(s) for titanium alloy pre-
established by negotiations solely involving Firth Rixson's customer 
and the producer of the titanium alloy selected by that customer). 
Under longstanding ``directed buy'' practices within the aerospace 
industry, Firth Rixson does not control the sourcing of titanium alloy 
and the price of that material for key contracts. What Firth Rixson 
does control in that situation is whether the production will occur at 
a company facility in the United States or abroad.
    The examiner's analysis indicates that, given that certain 
``directed buy'' contracts mandate the use of titanium from a specific 
foreign producer, the competitiveness of Firth Rixson's Rochester plant 
would be improved (relative to Firth Rixson's plants offshore and to 
competitors' plants abroad) through unrestricted FTZ benefits on its 
processing of foreign-origin titanium. (In that situation, because 
Firth Rixson's potential ``directed buy'' customer is seeking a company 
to process the specific, foreign-produced titanium already selected by 
the customer, there should be no impact on U.S. titanium producers.) In 
the absence of FTZ benefits, Firth Rixson would be more likely to need 
to conduct significant portions of its activity at one of its overseas 
plants in order to secure or retain a contract to process the specific 
foreign-origin titanium mandated by a potential customer. This would 
ultimately produce negative effects on employment at the U.S. plant and 
potentially on the plant's overall viability. FTZ authority should 
reduce the apparent risk of loss of that activity (and associated 
employment) to foreign locations. Further, helping to maintain Firth 
Rixson's production and employment at the Monroe County plant through 
FTZ authority would likely promote positive secondary economic effects 
(particularly through maintained or increased purchases of titanium 
alloy from U.S. mills for contracts that do not mandate the use of 
specific, foreign-produced titanium alloy).
    Public comment is invited through February 13, 2013, on the revised 
preliminary recommendation and its underlying bases. Rebuttal comments 
may be submitted during the subsequent 15-day period, until February 
28, 2013. Submissions shall be addressed to the Board's Executive 
Secretary at the following address: Office of the Executive Secretary, 
Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., 
Washington, DC 20230-0002.
    For further information, contact Pierre Duy at [email protected] 
or (202) 482-1378.

    Dated: January 9, 2013.
Andrew McGilvray,
Executive Secretary.
[FR Doc. 2013-00587 Filed 1-11-13; 8:45 am]
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