Foreign-Trade Zone 38-Spartanburg County, South Carolina, Application for Subzone, Leiner Health Products LLC (Ibuprofen Products), Fort Mill, South Carolina

An application has been submitted to the Foreign-Trade Zones (FTZ) Board (the Board) by the South Carolina State Ports Authority, grantee of FTZ 38, requesting special-purpose subzone status with manufacturing authority for certain ibuprofen products at the pharmaceutical manufacturing facility of Leiner Health Products, LLC (Leiner), located in Fort Mill, South Carolina. Leiner is a manufacturer of store-brand vitamin, mineral and nutritional supplements (VMS) and over-the-counter (OTC) pharmaceutical products. 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 March 2, 2007.

The proposed subzone (1 building of 620,000 square feet of enclosed space on 27 acres) is located at 355 Crestmont Drive, in Fort Mill, South Carolina. The Leiner plant (600 permanent employees and 100-200 seasonal employees) manufactures, packages, and warehouses both solid-dose VMS and OTC pharmaceutical products.

Initially, Leiner is proposing to manufacture ibuprofen products under zone procedures at the plant. At the outset, inverted tariff zone savings will result from the production of finished ibuprofen mixture (HTSUS 3003.90, duty-free) and finished ibuprofen products (HTSUS 3004.90, duty-free; up to 2.5 billion pills per year) using foreign-sourced active ingredient ibuprofen (HTSUS 2916.39, 6.5% duty rate).

The application also indicates the possibility of producing bulk acetaminophen mixture (HTSUS 3003.90, duty-free) and finished acetaminophen products (HTSUS 3004.90, duty-free), which the company may produce at the plant in the future, using foreign-sourced active ingredient acetaminophen (HTSUS 2924.29, 6.5% duty rate). (New major activity for this product would require review by the FTZ Board.) Leiner also plans to admit other foreign inputs under FTZ procedures, but will make customs entry before manufacture into products at the Fort Mill facility or before distribution to other Leiner U.S. manufacturing facilities.

For Leiner's ibuprofen-related production, zone procedures would exempt the company from Customs duty payments on foreign materials used in production for export. On domestic shipments, the company would be able to choose the duty rate during Customs entry procedures that applies to finished ibuprofen mixture and products (duty-free) for the otherwise dutiable foreign active ingredient inputs (6.5% duty rate) noted above (inverted tariff).

Leiner would also obtain duty deferral savings and be able to avoid duty on foreign inputs which become scrap/waste (approximately 5% scrap and waste rate). Additionally, Leiner may realize logistical/procedural and other benefits from subzone status. The application projects up to $642,000 in total FTZ savings (some 65% of which are tied to the inverted tariff on ibuprofen), which it indicates would help improve the international competitiveness of Leiner's Fort Mill plant.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 is invited from interested parties. Information submitted for the record generally should be in a non-proprietary format. If there is a need to submit business proprietary information, it should be appropriately marked and summarized or ranged (in the case of numerical data) in the public submission, which should be accompanied by a single business proprietary version.

Submissions (original and 3 copies) shall be addressed to the Board's Executive Secretary at the address below. The closing period for the receipt of the public comment submissions is May 10, 2007. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period through May 25, 2007.

A copy of the application will be available for public inspection at each of the following locations: U.S. Department of Commerce Export Assistance Center, 521 East Morehead Street, Suite 435, Charlotte, NC 28217; and, Office of the Executive Secretary, Foreign-Trade Zones Board, Room 2814B, U.S. Department of Commerce, 1401 Constitution Avenue, NW, Washington, D.C. 20230-0002.

For further information, contact Diane Finver at Diane_Finver@ita.doc.gov or (202) 482-1367.