Letter to the Honorable Andrew McGilvray, Executive Secretary, Foreign-Trade Zones Board, U.S. Department of Commerce

Letter

Today, U.S. Senator Charles E. Schumer released a letter to Andrew McGilvray, Executive Secretary for the Foreign-Trade Zone Board at the Department of Commerce, urging him to reject a foreign-trade subzone request by Dow Corning that would undermine jobs in Western New York. Dow is asking for an exemption to use dumped silicon metal from China and Russia within a new foreign-trade subzone without payment of dumping duties which would have a direct and negative impact on a major employer in Niagara Falls, Globe Specialty Metals.

In his letter, Schumer insisted that Dow Corning not be allowed to undermine the U.S. trade law -- the antidumping law -- that was instrumental in Globe Specialty Metals reopening its silicon metal manufacturing facility in Niagara Falls.

Dumping occurs when a foreign producer sells a product in the United States at a price that is below that producer's sales price in its home market, or at a price that is lower than the cost of production. The U.S. Department of Commerce instructs U.S. Customs to collect antidumping duties on imports of a product found to be dumped and causing injury to the domestic industry.

"It just flies in the face of common sense to exempt Dow Corning from payment of antidumping duties on imports of Chinese and Russian silicon metal because doing so would undercut jobs in Western New York," Schumer said. "Globe Specialty Metals employs about 100 New Yorkers in good paying jobs and all they are asking is that a big corporation like Dow not ask for special treatment at the expense of domestic producers already hit hard by dumped imports. Granting this exemption would be an absolute smack in the face to hardworking Western New Yorkers."

Jeff Bradley, CEO of Globe Specialty Metals said: "We have invested more than $30 million to bring the Niagara Falls plant back on line, refurbish its furnaces, and install state-of the-art pollution control equipment. This commitment to U.S. manufacturing will generate hundreds of jobs in an area hard hit by the economic downturn. We greatly appreciate the important action Senator Schumer has taken on the FTZ issue. It will help ensure that fair trade ground rules are maintained that will allow the plant and its workers to compete successfully and on a level playing field."

Specifically, Dow Corning is applying for permission to use dumped silicon metal within a new foreign-trade subzone without paying any antidumping duties. Foreign-trade zones are designated sites in the United States licensed by the Foreign-Trade Zones (FTZ) Board at the Department of Commerce where companies can benefit from delayed or reduced customs duties and federal excise taxes, as well as other savings. Subzones are special-purpose zones, usually at manufacturing plants.

The U.S. silicon metal industry has twice been devastated by surges of unfairly low-priced imports. The dumped imports -- first from China in the early 1990's and then from Russia in the early 2000's -- were sold at prices that undercut domestic producers prices and caused the U.S. market to collapse. During the second surge of dumped imports, Global Metallurgical in Niagara Falls was forced to shut down and ultimately file for bankruptcy in a process that saw more than three-quarters of the company's production workers lose their jobs. After the U.S. Commerce Department imposed antidumping duties on silicon metal imports from Russia, the Niagara Falls plant was able to restart as Globe Specialty Metals.

The duties imposed on dumped imports of silicon metal from China and Russia have been instrumental in Globe Specialty Metals reopening its silicon metal production facility in Niagara Falls. But Globe's growing domestic silicon metal production business and the economic health of the Niagara Falls region would be seriously undermined if the FTZ Board agrees to allow use of any unfairly priced silicon metal in the new subzone.

Just last year, Globe Specialty Metals -- the largest U.S. producer of silicon metal -- reopened its Niagara Falls plant. Globe's initial investment of $30 million to renovate and upgrade its shuttered facility was welcome news in throughout the region. The Niagara Falls facility now provides well paying jobs and attractive benefits to about 100 people. Also, the company plans to invest another $35 million in the Niagara Falls facility over the next several years. The expanded production capacity will create up to another 400 good paying jobs, providing another major boost to the local economy.

The economic growth in Niagara Falls since the reopening of Globe's silicon metal manufacturing facility would be imperiled if the Foreign-Trade Zone Board permits Dow Corning to use any amount of dumped silicon metal in the new subzone without payment of antidumping duties.

Today, Schumer asked the FTZ Board and the Department of Commerce to protect the public interest and deny Dow Corning's special request to undermine domestic silicon metal production. In his letter, he cited the success of Globe Specialty Metal and made the case that acceding to Dow's request would threaten the viability of Globe's Niagara Falls facility.

Schumer added, "In these tough economic times, we should not undermine new manufacturing ventures willing to invest and create new jobs in hard hit communities. This is no time to be making exceptions that we know will cost jobs and create uncertainty in the marketplace."

Mr. Andrew McGilvray
Executive Secretary, Foreign-Trade Zones Board
U.S. Department of Commerce
Room 2111
1401 Constitution Avenue, NW
Washington, DC 20230

Dear Mr. McGilvray,

I write to express concern about a pending FTZ subzone application (Foreign-Trade Zone 29; Docket 20-2009) that would allow unfairly traded silicon metal from China and Russia to escape payment of antidumping duties. Given the recent reopening of a silicon metal production facility in Niagara Falls, New York, I am concerned that creating a new FTZ subzone with access to dumped silicon metal without payment of antidumping duties would have a significant negative economic impact on the region and on local jobs.

The Board has broad authority to impose restrictions to protect the public interest. I respectfully request that you exercise that authority and not permit the applicant to use any dumped silicon metal within the new subzone without paying antidumping duties.

Just last year, Globe Specialty Metals -- the largest U.S. producer of silicon metal -- reopened its Niagara Falls plant. Globe's initial investment of $30 million to renovate and upgrade its shuttered facility was welcome news in a region hit hard by the economic downturn. The Niagara Falls facility now provides well paying jobs and attractive benefits to about 100 people. It is my understanding that the company plans to invest another $35 million in the Niagara Falls facility over the next several years. The expanded production capacity will create up to another 400 good paying jobs, providing another major boost to the local economy.

The duties imposed on dumped imports of silicon metal from China and Russia have been instrumental in Globe Specialty Metals reopening its silicon metal production facility in Niagara Falls, New York. But Globe's growing domestic silicon metal production business and the economic health of the Niagara Falls region would be seriously undermined if the FTZ Board agrees to allow use of unfairly priced silicon metal in the new subzone.

The FTZ Board staff found that access to even a limited amount of silicon metal without payment of dumping duties would decrease the average price of silicon metal paid by the applicant which, in turn, would result in a decline in the U.S. price of silicon metal. "[This] weakening of the U.S. price of silicon metal could threaten the viability of [Globe's Niagara Falls] facility, as well as the continuation of production at other domestic facilities." I agree and respectfully urge you to accept the staff's preliminary recommendation to prohibit admission of any amount of dumped silicon metal into this subzone without payment of antidumping duties.

Sincerely,

Charles E. Schumer

United States Senator

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