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Foreign-Trade Zone 203; Application for Subzone Authority; REC Silicon; Invitation for Public Comment on Preliminary Recommendation

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The FTZ Board is inviting public comment on its staff's preliminary recommendation pertaining to the application by the Port of Moses Lake Public Corporation to establish a subzone at the REC Silicon facility in Moses Lake, Washington (Docket 22-2009). The staff's preliminary recommendation is for approval of the application with a restriction prohibiting admission of foreign status silicon metal subject to an anti-dumping duty (AD) or countervailing duty (CVD) order. The bases for this finding are as follows:

Analysis of the application record indicates that full approval of the request could negatively impact domestic silicon metal production. This finding is based primarily on the potential impact to domestic silicon metal prices compounded by multiple applications potentially involving avoidance of AD/CVD duties on silicon metal used in export production.

Although REC Silicon's current domestic purchases account for only a small portion of domestic silicon metal production, the company has been expanding its capacity and will need increased amounts of silicon metal as that production comes online. Thus, access to silicon metal subject to AD/CVD duties for its export production (currently over 95% of production) could encourage the company to source silicon metal subject to AD/CVD orders for its expanded production, instead of increasing domestic sourcing or sourcing imported silicon metal that is not subject to AD/CVD orders.

A key consideration in this request is the cumulative effect on domestic silicon metal prices and on the integrity of the domestic silicon metal industry's AD/CVD relief should there be multiple applications to avoid AD/CVD duties on silicon metal for export production. In addition to the REC Silicon application, a similar application is pending for Dow Corning Corporation in Kentucky and we have received indication that further requests are being prepared for additional facilities. In its application, REC Silicon indicates that if it is granted full approval, other U.S. polysilison producers will likely apply for similar benefits. Given the production capacity of REC Silicon's domestic facilities, as well as those of the other U.S. producers, the ripple effect on silicon metal suppliers would be significant and the resulting impact would likely be a decline in the U.S. price of silicon metal.

Currently, very little silicon metal subject to AD/CVD orders is imported into the United States. However, the potential increase in supply to the U.S. market from the use of silicon metal subject to AD/CVD orders at this plant and others in the industry, and the resulting price effect, would likely be significant.

In part due to the AD/CVD duties in place, U.S. silicon metal prices have increased. This has led to the recent restarting of a shuttered silicon metal production facility in New York. A weakening of the U.S. price of silicon metal could threaten the viability of this facility as well as the continuation of production at other domestic facilities.

Given the volume of silicon metal involved in the current and anticipated applications, even a limit on the amount of silicon metal subject to AD/CVD orders that could be used in the facility for export production could have a significant impact on the U.S. price of silicon metal. The timing of that impact would also be occurring as domestic silicon metal production facilities are recovering and restarting, likely due (at least in part) to the relief provided through the AD/CVD orders that are in place. The FTZ regulations require that evaluations of manufacturing authority consider, “whether the approval is consistent with trade policy and programs, and whether its net economic effect is positive” (15 CFR 400.31(a)). In this case, given the potential impact on the silicon metal industry and based on the evidence currently on the record, the staff is unable to find that the net (national) economic effect of approving the use of silicon metal subject to AD/CVD orders for export production would be positive.

While unrestricted approval could have a negative impact, the issues raised do not extend to silicon metal not subject to AD/CVD orders. No arguments or evidence have been presented to the FTZ Board in opposition to FTZ savings on silicon metal not subject to AD/CVD orders. Since REC Silicon indicated that they do not currently anticipate using silicon Start Printed Page 31763metal subject to AD/CVD orders, activity under the proposed restricted approval would provide REC Silicon with the full savings estimated in the application. The company has indicated that those savings would enhance the cost competitiveness of its Washington facility, which would help to encourage continued production and employment at the facility.

Public comment on the preliminary recommendation and the bases for the finding is invited through July 12, 2010. Rebuttal comments may be submitted during the subsequent 15-day period, until July 27, 2010. Submissions (original and one electronic copy) shall be addressed to the Board's Executive Secretary at: Foreign-Trade Zones Board, U.S. Department of Commerce, Room 2111, 1401 Constitution Ave., NW., Washington, DC 20230.

For further information, contact Elizabeth Whiteman at Elizabeth.Whiteman@trade.gov or (202) 482-0473.

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Dated: May 28, 2010.

Andrew McGilvray,

Executive Secretary.

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[FR Doc. 2010-13455 Filed 6-3-10; 8:45 am]

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