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 at the Department of Commerce to reject three foreign-trade subzone requests that could undo economic progress and undermine jobs in Western New York. The three new subzones would provide preferential customs treatment to unfairly-priced silicon metal from China and Russia which would have a direct and negative impact on a major employer in Niagara Falls, Globe Specialty Metals. The resulting increased volume of foreign-origin silicon metal imports would have a negative impact on the price competitiveness and viability of U.S. suppliers, including Globe's Niagara Falls facility, and could result in a giant step backwards for a positive economic engine in Western New York. Following Mayor Paul Dyster's trip to Washington to advocate for Globe Specialty Metals, Schumer today is calling on the Commerce Department to reject the three pending FTZ manufacturing subzone applications and instead protect the jobs in Niagara Falls.

"Globe Specialty Metals is turning the corner and helping drive economic progress in Western New York," said Schumer. "But the federal government could open the flood gates for imported silicon metal, at the expense of Global Specialty Metals and the Western New Yorkers they employ. We cannot let that happen. I'm strongly urging the federal government to do right by Western New York and reject efforts to undermine American jobs with these Foreign Trade Zone requests. Getting this plant back up and running was a big moment for Niagara Falls, and we have to keep that positive momentum moving full steam ahead."

Commerce and the FTZ Board are considering three pending FTZ subzone applications that would allow for preferential access to imported silicon metal. 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 is again threatened if the FTZ Board agrees to license three additional subzones with preferential access to unfairly-priced silicon metal imports.

In 2009, Globe Specialty Metals -- the largest U.S. producer of silicon metal -- reopened its Niagara Falls plant. Globe's investment of $40 million to refurbish the plant, install state-of-the-art pollution control equipment, restart production, and further upgrade the plant was welcome news throughout the region. The Niagara Falls facility now provides well paying jobs and attractive benefits to about 100 people.

Schumer has successfully prevented the abuse of the FTZ manufacturing subzone program before. In October of 2010, Schumer asked the FTZ Board and the Department of Commerce to protect the public interest and reject an FTZ subzone request that would have allowed unfairly trade silicon metal from China and Russia to escape payment of antidumping duties. In his letter, Senator Schumer cited the success of Globe Specialty Metal and made the case that creating a new FTZ subzone with duty-free access to dumped silicon metal would threaten the viability of Globe's Niagara Falls facility.

Following his push, the Commerce Department through the Foreign-Trade Zone Board announced that they would deny the request to avoid payment of antidumping duties -- a move that will protect 100 well-paying jobs in Niagara Falls and a business, Globe Specialty Metals that has provided an economic shot in the arm to the region. Now that three new FTZ subzone requests are again threatening to undermine Globe's business, Schumer is again calling on the Commerce Department to protect Western New York jobs.

The text of Senator Schumer's letter to the Commerce Department appears below:

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 three pending FTZ manufacturing subzone applications (Docket Nos. 60-, 61-, 62-2011; Foreign-Trade Zones 140 and 78). It is my understanding that licensing three additional subzones with preferential access to imported silicon metal would have significant adverse economic effects on Niagara Falls' Globe Specialty Metals. I respectfully urge the FTZ Board to consider that 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 continues to expand access to foreign-origin silicon metal.

Imports of silicon metal from countries like China and Russia -- two major global suppliers -- already enjoy significant unfair price advantages as a result of predatory pricing practices, state-sponsored subsidies, lax regulatory environments, low wages, and currency manipulation. Furthermore, unfairly-priced Chinese and Russian exports to third-country markets depress silicon metal prices in those markets. The result is distortions that impact the U.S. industry when customers shift their silicon metal purchases predominantly to foreign sources. For this reason, facilitating access to ever-increasing volumes of imports would likely have a negative impact on the price competitiveness and viability of U.S. suppliers, including Globe's Niagara Falls facility. In reviewing subzone applications, the FTZ Board must determine whether the proposed manufacturing activity is in the public interest and will result in a net positive economic effect. I respectfully suggest that, in this case, expanding the number of subzones designed to facilitate the purchase of imported silicon metal meets neither test.

Globe Specialty Metals -- the largest U.S. producer of silicon metal -- recently reopened its Niagara Falls plant. Globe's investment of $40 million to refurbish the plant, install state-of-art pollution control equipment, restart production, and further upgrade the plant was welcome news in a region hit hard by the economic downturn. The Niagara Falls facility now provides well-paying manufacturing jobs and attractive benefits to about 100 people. The company is continuing to invest in the Niagara Falls facility, which is boosting the local economy. Globe's continued economic health is critical to the region and to growing local jobs.

I respectfully urge the Board to recognize that, in this case, continuing to increase the number of FTZ subzones designed to facilitate imports of foreign-origin silicon metal would threaten the viability of Globe's Niagara Falls plant and have a serious negative economic impact on the region and on local jobs. Thank you for your consideration of this matter.

Sincerely,

Charles E. Schumer

United States Senator

Source