Foreign-Trade Zone 134-Chattanooga, Tennessee Application For Foreign-Trade Subzone Status Komatsu America International Co. (Construction Equipment); Chattanooga, TN

An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Chattanooga Chamber Foundation, grantee of FTZ 134, requesting special-purpose subzone status for the manufacturing facilities (construction equipment) of Komatsu America International Company (Komatsu), located in Chattanooga, Tennessee. The application was submitted pursuant to the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a-81u), and the regulations of the Board (15 CFR part 400). It was formally filed on August 11, 2000.

The Komatsu facilities (48.95 acres, 494,559 sq. ft.) are located at 409 Signal Mountain Road. These facilities (425 employees) are currently used for the manufacture of hydraulic excavators, wheel loaders, motor graders, and mobile cranes. Some of the components used in manufacturing these products may be purchased from abroad (domestic content on certain products can range up to 77%), including the following categories: internal-combustion piston engines and engine parts; hydraulic turbines; turbojets, turbopropellers, and other gas turbines; liquid, air and vacuum pumps; air-conditioning machines; gaskets, gasket sets, and mechanical seals; electric motors and generators; primary cells and primary batteries; electric storage batteries; electrical equipment (including for ignition, starting, lighting, or signaling, and windshield wipers and defrosters); styrene polymers; plastic products (including tubes, pipes, hoses, fittings, plates, sheets, film, foil, tape, strip, closures, and builders' ware); vulcanized rubber products (including plates, sheets, strip, rods, profile shapes, tubes, pipes, hoses, and conveyor or transmission belts); leather articles for technical uses; agglomerated cork; paper and paperboard products (including labels, cellulose wadding, and webs of cellulose fibers); glass products (including safety glass, mirrors, envelopes for lamps, signaling glassware and optical elements, and glass fibers and articles thereof); reservoirs, vats and similar containers of iron or steel; fasteners of iron or steel; iron or steel springs; copper products (including bars, rods, profiles, plates, sheets, strip, foil, tubes, pipes, tube or pipe fittings, nails, tacks, drawing pins, and staples); aluminum products (including plates, sheets, strip, tubes, pipes, and tube or pipe fittings); hand tools; spanners and wrenches; padlocks and locks; base metal products (including mountings, fittings, castors, stoppers, caps, lids, and sign plates); taps, cocks, and valves for pipes, boilers, shells, and vats; portable electric lamps; electric heating equipments; microphones, loudspeakers, headphones, and earphones; sound reproducing devices; radio and television receivers; electrical resistors; electrical switching apparatuses; electric lamps; insulated wire, cable, and conductors; motor vehicle bodies, parts, and accessories; instruments, meters, and counters; seats and other furniture; and cigarette and other lighters. Duty rates on these categories range from duty-free to 12.5%.

Zone procedures would exempt Komatsu from Customs duty payments on foreign components used in export production. On domestic shipments, the company would be able to defer Customs duty payments on foreign materials, and to choose the duty rate that applies to the finished products (duty free) instead of the rates otherwise applicable to the foreign input materials (noted above). The company would also be exempt from duty payments on foreign merchandise that becomes scrap/waste (scrap rate estimated at 5% to 7% of parts). FTZ procedures will help Komatsu to implement a more cost-effective system for handling Customs requirements (including reduced Customs merchandise processing fees). FTZ status may also make a site eligible for benefits provided under state/local programs. The application indicates that the savings from zone procedures would help improve the facilities' international competitiveness.

In accordance with the Board's regulations, a member of the FTZ Staff has been designated examiner to investigate the application and report to the Board.

Public comment on the application is invited from interested parties. Submissions (original and three copies) shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is October 16, 2000. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to October 31, 2000.

A copy of the application and the accompanying exhibits will be available for public inspection at each of the following locations:

Office of the Executive Secretary, Foreign-Trade Zones Board, U.S. Department of Commerce, Room 4008, 14th and Pennsylvania Avenue, N.W., Washington, D.C. 20230.

U.S. Department of Commerce Export Assistance Center, 601 West Summit Hill Drive, Suite 300, Knoxville, TN 37902.