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

Letter

Today, U.S. Senator Charles E. Schumer called on the Foreign Trade Zone Board within the Department of Commerce to grant North American Tapes (NAT), in Jefferson County, the FTZ manufacturing designation it needs to remain competitive with foreign suppliers, keep producing athletic tape in New York, and keep over 20 jobs from moving to Canada. Foreign-trade zones are designated sites in the United States licensed by the FTZ Board where companies can benefit from delayed or reduced customs duties.

"We need the feds to release North American Tapes from the penalty box. This company want to stay here in the North Country and grow, but anticompetitive tariffs are hampering their ability to do business," said Schumer. "We need to do everything we can to hang on to North Country jobs like those at North American Tapes. Give them a level playing field and they can compete with anyone, and they can do it from Watertown. I'm strongly urging the Foreign Trade Zone Board to do the right thing for Jefferson County, and give this terrific company the designation and flexibility it needs to keep jobs right here in New York where they belong."

North American Tapes manufacturers and sells pressure-sensitive adhesive athletic tape, like hockey tape, and must compete with tape imports from Canada, Brazil and, more recently, China. But NAT faces a significant competitive disadvantage compared to foreign suppliers. NAT currently pays high duties on the textile input materials it uses in manufacturing adhesive tapes, approximately $13,000 a month. Just across the border, competing Canadian adhesive tape manufacturers pay no duties on these imports -- and Canadian exports to the U.S. of finished athletic tape also are not subject to duties.

Canadian and other foreign manufacturers have a significant cost advantage over Watertown's North American Tapes. Without FTZ manufacturing authority, NAT might be forced to move manufacturing and jobs to lower-cost Canada to stay competitive. Schumer today called on the FTZ Board to grant NAT's request for permanent manufacturing authority which would allow NAT to source the textile materials it needs to make adhesive tapes free of duties, lowering the company's costs and helping keep jobs in Jefferson County.

North American Tapes (NAT), a company in Jefferson County that employs over 20 people, has asked the Foreign Trade Zone Board for permanent manufacturing authority which would allow it to import textile materials needed to produce its hockey tape duty free. Canada, located just 30 minutes from the headquarters of NAT, remains an exit strategy NAT is considering because Canada has no duty in place for the input materials NAT needs. With FTZ Board approval, NAT could realize a savings of $13,000 per month, grow jobs, and remain in the U.S.

The text of Senator Schumer's letter to the head of the Foreign-Trade Zones Board appears below:

November 10, 2011

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 understand the Jefferson County Industrial Development Agency has submitted a request for manufacturing authority on behalf of North American Tapes, LLC (Foreign-Trade Zone 109). I write to express my strong support for North American Tapes' ("NAT") application. Approval for manufacturing authority will benefit the retention of existing industry and employment in Watertown, New York, by improving NAT's international competitiveness.

North American Tapes is a small, niche-product manufacturer. It specializes in pressure-sensitive adhesive athletic tape -- e.g., hockey tape -- at its sole production facility located in Watertown, NY. Founded only eight years ago, NAT now employs 20 people in Watertown and has become an integral part of the local economy. FTZ manufacturing authority is critical to ensuring NAT can remain competitive with foreign suppliers.

NAT and its Watertown, NY, facility currently compete with imports from Canada, Brazil and, more recently, China. As a result of so-called "inverted tariffs," NAT faces a significant competitive disadvantage vis-à-vis foreign suppliers. In particular, the duties on imports of finished athletic tape are significantly lower than duties on imports of the textile backing input materials -- zero to 2.9 percent for athletic tape, as compared to 10.5 to 14.9 percent for the textile input materials. This "tariff inversion" means that foreign manufacturers and exporters have a significant cost advantage over U.S. manufacturers like Watertown's North American Tapes.

Mr. McGilvray, as you well know, FTZs are intended to create and maintain employment by supporting manufacturing and value added in the United States which, for customs reasons, might otherwise be carried on abroad. The tariff inversion faced by North American Tapes -- and the impact on its international competitiveness -- is exactly the scenario contemplated under FTZ rules and a compelling reason why the Board should grant NAT's manufacturing authority request.

I believe that North American Tapes has demonstrated the need for FTZ services and I respectfully urge the Board to grant the manufacturing authority request submitted by the Jefferson County Industrial Development Agency on behalf of North American Tapes. FTZ manufacturing authority will allow NAT to remain competitive with offshore producers of competing products and keep jobs in Watertown, NY. I ask that you please keep me apprised of developments with respect to NAT's application, and I thank you for your consideration of this matter.

Sincerely,

Charles E. Schumer

United States Senator

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