W&WP July 2004

 


One on One:
Two Views of the Furniture Antidumping Decision

Opponents of the controversial wood bedroom furniture antidumping case voice state their respective cases on the U.S. Department of Commerce's preliminary decision.


By Susan Lorimor and Rich Christianson


 

The wood bedroom furniture antidumping petition, which began as a legal battle pitting U.S. manufacturers against Chinese manufacturers, quickly escalated into a multi-fronted war that also encompasses heated opposition by a group of U.S. furniture retailers and Furniture Brands International.

Wood & Wood Products invited spokesmen for the American Furniture Manufacturers Committee for Legal Trade and the Furniture Retailers of America to share their views on the U.S. Department of Commerce's preliminary determination announced on June 18.


Representing the Committee for Legal Trade is Doug Bassett, vice president of sales for Vaughan-Bassett Furniture Co. of Galax, VA. Responding to questions on behalf of the Furniture Retailers of America is Michael Veitenheimer, vice president, secretary and general counsel for The Bombay Co. of Ft. Worth, TX.


 








Doug Bassett, Spokesman
American Furniture Manufacturers for Legal Trade


 

Opponents of the petition have said the U.S. Department of Commerce's preliminary duties are so low that they are almost a non-issue. How do you respond to that?

We are pleased by the Department of Commerce's preliminary decision announced on June 18. The DOC investigated seven Chinese furniture companies to see if they were illegally dumping bedroom furniture into the U.S. market and they found that all seven are in fact guilty of illegal dumping. No amount of spinning by the PR firms and lawyers representing the other side can change that central fact.


This is only a preliminary decision. The duties are based solely on data provided by the Chinese companies to the DOC using the "Honor System." We understand that there are many holes in the record, because the Chinese companies have failed to provide all of the information requested by the DOC. Common sense and recent antidumping history will tell you that the information the Chinese is withholding is probably not beneficial to the Chinese.


The preliminary decision is really a half-time score, and the Chinese got to play the first half with the wind at their back. None of their data has been verified and much of the information that the DOC needs has been withheld by the Chinese. Therefore, we look forward to the next phase of the investigation and are hopeful that the final duties will be higher than the preliminary duties were.


What will be the immediate and future impact of the DOC's preliminary decision on companies like Vaughan-Bassett Furniture Co.?


It's too soon to tell. There was uncertainty in the marketplace before the June 18 announcement, and there continues to be uncertainty in the marketplace. Some Chinese suites have duties as low as 5% while others are being assessed 198% duties, and we need to know more about which suites and which companies got low or high duties.


Last month, Vaughan-Bassett announced it would close its Sumter, SC, facility, which was caused by the loss of volume and market share to what we now know is illegal dumping by the Chinese. We look forward to the completion of the investigation - which by law must be finished by December of 2004 - and to the day when the U.S. government prevents further job losses caused by illegal activity by China.


Has the Committee for Legal Trade been contacted by Canadian furniture makers who are reportedly investigating the potential of filing their own antidumping case against Chinese manufacturers?


No, we have not been contacted by the Canadians. But the antidumping laws in all 147 countries belonging to the World Trade Organization are virtually identical, so the basic facts in our case would apply to Canada as well.


The Furniture Retailers of America still alleges that the Byrd Amendment, which allows a portion of duties generated in a successful antidumping case to be shared by the petitioning companies, motivated your group to file its antidumping petition. What is your response to the FRA on this point?


This charge is the most hypocritical of the charges made by the FRA. In November, when the Commerce Department was polling U.S. manufacturers to determine if a majority supported the antidumping investigation, the FRA members sent letters to U.S. manufacturers stating that the Byrd Amendment had been ruled illegal by the WTO. The FRA pointed out that U.S. manufacturers would be unlikely to ever see one dime of Byrd money because of this fact.


A few months later, they now claim that our sole motivation for asking for the investigation is to get Byrd Amendment money. So which time was the FRA telling the truth? Were they telling the truth to the manufacturers in November or to the retailers now?


This issue is a red herring to distract people from the central truth of this investigation: The Chinese are guilty of illegal dumping, and those benefiting from the illegal dumping don't want the investigation to be completed.


Based on the DOC's preliminary ruling, does the Committee for Legal Trade have any plans to file additional antidumping petitions covering other product categories?


Because Vaughan-Bassett does about 95% of our business in bedroom furniture, this petition addresses the major issue facing our company. I would suggest talking to other companies with more diverse product lines.


Any additional petitions would have to be supported by a majority of that industry's U.S. production by volume, so we will not be a major player if any other petition gets filed.


The shorter version of this is I don't know.


 


Michael Veitenheimer, Spokesman
Furniture Retailers of America

What impact will the duties have on furniture retailers?

The impact is varied among retailers. Preliminary rates on about 80% of the products from China are about 11%, lower than expected - and nowhere near the 158% to 440% proposed by the petitioners. But for some retailers, it still creates a very difficult situation. Many retailers and importers have a number of vendors who were hit with the countrywide rate of 198% and will be forced to pay a huge new tax, thanks to the petitioners. A number of additional retailers and importers have called to ask us how they can join us to fight this case. Other retailers didn't see a very noticeable effect.


The main point though is that there shouldn't be any duties on these furniture imports at all. A duty of any size in this case is unjustified and will only hurt retailers and retail workers, while raising prices and limiting choices for American consumers. It's the consumers who will indirectly be stuck with paying the price tag of the duties - some estimates say over $60 million, all into the pockets of the petitioners.


The Furniture Retailers of America will continue to fight the duties, working to bring the rates lower, or eliminate them, at the final ITC determination.


How will furniture retailers protect themselves against the impact of the duties?


Some retailers may have to raise costs. It's then the consumer who unfortunately is forced to pay those increases. Some retailers may have to let employees go or go out of business. We are still determining the full affects and implications.


But this case is far from over. We have until mid-December at the ITC final determination to protect ourselves against the final duties. We will be out in full force, using every possible means to continue fighting. Our members refuse to accept this hypocritical case - which is only serving to benefit those 26 manufacturers who can't or won't compete in the global market like the rest of us.


The next step for our members is to complete the ITC's questionnaires. We then intend to show that the Chinese imports are not what have caused the economic difficulties to the domestic manufacturers and that no jobs are going to be saved or returned to the U.S. a result of this case.


What are the current lobbying tactics of the FRA? What is your group doing to influence legislators and government officials to create outcomes that will be beneficial to Bombay Co. and other furniture retailers?


Informing our legislators of the potential impact of these duties is very important. Our member companies have been mobilized and are energetically communicating with their senators and representatives to inform them of how the duties will affect their businesses and possibly jobs in their district. We have also been educating members of Congress of the potential impact of protecting one industry (furniture manufacturing) at the expense of another (retailing). So far we have had a number of key congressmen send letters to (Department of Commerce) Secretary (Donald) Evans stressing the potential impact of the duties on their constituents and asking that the concerns of retailers be given full consideration in the DOC's continuing deliberations. Letter-writers include U.S. Rep. Kay Granger (R-TX), U.S. Rep. Dave Camp (R-MI), U.S. Rep. Julia Carson (D-IN); and U.S. Rep. Mark Kirk (R-IL).


Our legislators must be told the entire story of how downstream industries can bear the burden of a trade case, especially in a case like this where the facts don't support a finding of any duty.


How have you and other FRA members assured Chinese furniture suppliers that you remain behind them? For instance, I heard that Keith Koening of City Furniture flew to China to reassure his suppliers that he will continue to do business with them. Do you know of anyone else who has taken similar actions?


Each retailer is doing what it can to protect its business. Some, as you mentioned, have gone to China to reassure Chinese suppliers or assist them through the complicated investigation process by the Department of Commerce. Others, fearing the potentially disastrous consequences of the duties, moved or are moving production to other countries, which we are now finding out may have prices lower than those in China. Nevertheless, we will have to live with the disruption that this case has caused.


Do you believe the Byrd Amendment, which calls for duties collected in antidumping cases to be dispersed among the successful petitioners, influenced the American Furniture Manufacturers Committee for Legal Trade's decision to file the petition in the first place?


Based on public estimates, the Byrd money could be millions of dollars per company, which is a lot of motivation to file the petition! This is just a conservative assumption based upon the fairly low preliminary duties imposed.


The Byrd payouts explain why the companies supporting the petition argued for ridiculously high duties - as high as 440%. It's a move by a small number of manufacturers based on the possibility of significant personal gain that will come right from the pockets of American retailers and their customers through what is essentially a tax imposed on imported bedroom furniture.


Consumers are the ones getting badly burned - having to pay the millions and millions of dollars in duties to these 26 petitioners. It's a horrible misuse of trade regulations.


 

                                                                                                                                                                                           

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