U.S. Senators Susan Collins and Angus King and U.S. Representatives Chellie Pingree and Bruce Poliquin announced today that they have sent a letter to the Foreign-Trade Zones (FTZ) Board in support of Maine manufacturer Flemish Master Weavers’ (FMW) trade appeal.
The Sanford-based rug manufacturer has applied to the FTZ Board for production authority status that would exempt them from certain tariffs. Currently, textile tariffs that are designed to protect American manufacturers like FMW are actually putting the company at a disadvantage and stifling growth.
“A strong manufacturing industry is essential to Maine’s future, and securing fair trade regulations for Maine-based companies is of critical importance to our communities and economy,” wrote the Maine Congressional Delegation in their letter. “Flemish Master Weavers employs 127 people in Sanford, Maine, and is one of Southern Maine’s largest manufacturing employers. […] Approval of the FTZ application would not only increase competitiveness, but set the company on a track to expand operations.”
Flemish Master Weavers manufactures machine-made woven area rugs, and as the smallest of only four such producers in the United States, faces competition from foreign manufacturers who increasingly dominate the area rug market here at home. In order to remain competitive, FMW imports yarn that carries an eight-percent U.S. tariff. Despite being designed to protect U.S. businesses, that tariff is actually putting FMW at a competitive disadvantage against the foreign competitors who enjoy duty-free access to the U.S. for the area rugs they manufacture abroad with identical yarn.
If the Foreign-Trade Zones Board approves FMW’s application for production authority status, the company would be able to avoid the eight-percent yarn tariff. That would increase FMW’s competiveness and potentially set the company on a course to expand operations.
Flemish Master Weavers is based in Sanford and employs 127 people. One of Southern Maine’s largest manufacturing employers, FMW has eleven high-speed looms and fully-automated packing and finishing operations. If granted production authority status, the company has indicated that it could potentially increase employment to 170 jobs as part of a 72,000 square foot building expansion.
The foreign-trade zones (FTZs) program was authorized by Congress in 1934 and is used to support U.S. companies in competition with foreign alternatives by allowing delayed or reduced duty payments on foreign merchandise, as well as other savings. The Foreign-Trade Zones Board licenses designated sites as FTZs.
Text of the letter is below
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November 30, 2016
Mr. Andrew McGilvray
Executive Secretary
Foreign-Trade Zone Board
U.S. Department of Commerce
1401 Constitution Ave., NW Room 21013
Washington, DC 20230
Dear Mr. McGilvray:
We write to express our support for Flemish Master Weavers’ (FMW) recent appeal to the Foreign Trade Zone Board for production authority to manufacture area rugs at FTZ 186, subzone 186A. A strong manufacturing industry is essential to Maine’s future, and securing fair trade regulations for Maine-based companies is of critical importance to our communities and economy.
Flemish Master Weavers is a Maine manufacturer of machine-made woven area rugs and is the smallest of four such producers in the United States. The company competes for market share with foreign manufacturers who increasingly dominate the domestic area rug market. To remain competitive, FMW imports continuous filament polypropylene yarn, a material carrying a U.S. tariff of eight percent. Despite efforts to adjust to a changing market, FMW still faces an uphill battle as foreign area rug competitors enjoy duty-free access to the United States for area rugs made in foreign factories with identical yarn. In other words, foreign rugs with the same yarn come in with no U.S. tariff, while FMW’s ability to make the rugs in America is stymied by a U.S. tariff on yarn imports. The end result is that American jobs are, ironically, threatened by a tariff designed to protect them. Inverted tariff relief through production authority is needed to ensure that U.S. tariff policy is not putting FMW at a disadvantage relative to foreign area rug producers.
Flemish Master Weavers employs 127 people in Sanford, Maine, and is one of Southern Maine’s largest manufacturing employers. With 11 high speed looms, fully automated packing, and finishing operations, FMW provides meaningful employment to its workers in Maine, helping them to maintain and improve their financial stability. Approval of the FTZ application would not only increase competitiveness, but set the company on a track to expand operations. The company has stated its interest in a 72,000 square foot building expansion and the addition of two new looms and four replacement looms, which could potentially increase employment from 127 to 170 jobs.
