WASHINGTON – A majority of hardwood and decorative plywood imported from China will face a countervailing duty of 22.63 or 27.16 percent, according to a preliminary affirmative determination announced this week by the U.S. Department of Commerce. A final determination will be issued this summer.

The DOC announced Feb. 27 that imports from all but three companies are subject to the countervailing duties. The three companies currently exempt are: Linyi City Dongfang Jinxin Economic & Trade Co. Ltd., Linyi San Fortune Wood Co. Ltd. And Shanghai Fancywood Inc. alkla Shanghai Senda Fancywood Industry Co. The U.S. Customs and Border Protection has been instructed to collect cash deposits from all other producers of the products.

A companion antidumping investigation on hardwood and decorative plywood could increase the liability for monetary deposits by U.S. importers of the Chinese product. A preliminary determination is set for the end of April, with a final determination date by the DOC for both the antidumping and countervailing assessments scheduled for July 15, 2013.

The DOC’s announcement has been met with mixed reactions. Speaking on behalf of the Coalition for Fair Trade of Hardwood Plywood (CFTHP), which filed the initial petition Sept. 27, 2012, Attorney Jeff Levin, Levin Trade Law, said in a statement that the CFTHP “will be documenting additional subsidy programs, which could add to the margins by the final determination.” The initial petition documented antidumping and countervailing duty margins in excess of 300 percent.

“No one should feel comfortable about the pervasiveness of unfair trading in the U.S. market,” Levin said in a statement. “The proposition that ‘cheap is good, regardless of whether it is fair or not,’ has been rejected by the United States and most of our trading partners – including China when it joined the WTO,” Levin said. “Unfair subsidization, like that found by the Commerce Department, harms all parties in the commercial channel – not just domestic manufacturers but ultimately importers, distributors and consumers as well.”

In a statement to its customers, Timber Products, a member of the CFTHP, also said, "Chinese hardwood plywood has emerged as a substantial part of the North American marketplace through what we believe to be unfair trade practices. This preliminary determination is the first in what we see to be several steps by the federal government that could drastically change the price and availability of Chinese hardwood plywood sold in the U.S."

Opposing the decision, the American Alliance of Hardwood Plywood (AAHP), which challenged the petition, claims the countervailing ruling will not only penalize jobs, but “severely damage the American industries that depend on this unique hardwood plywood.”

AAHP Co-Chair Greg Simon said in a statement, “I am very disappointed in the preliminary determination – from the beginning of this process we have had a genuine fear of the impact this could have on American jobs, across so many sectors. At a time when our economy is already struggling, it seems unfair to impose further costs on American businesses by restricting choice, and by potentially sending thousands of high quality downstream American manufacturing jobs overseas.”

Added Gregg Wilkinson, AAHP Co-Chair, “We are obviously confounded by this result – as is our entire industry and related industries. But we are mindful that this is only the preliminary CVD determination, so we will be working hard to ensure that the final duties, if any, fairly and accurately reflect the reality that Chinese hardwood plywood producers are not subsidized. American consumers need access to this unique and vital resource.”

Wilkinson continued, “As to whether the Chinese government is systematically subsidizing its plywood industry – well, they were clearly found not guilty. But based on today’s preliminary determination, the American consumer is still being unfairly punished.”

The decision will raise prices on the imported hardwood plywood, affecting U.S. businesses and consumers, added Ashley Amidon, manager of Government and Public Affairs for the International Wood Products Association.

It was on Nov. 13, 2012, that the U.S. International Trade Commission voted unanimously "that there is a reasonable indication that a U.S. industry is materially injured by reason of imports of hardwood plywood from China that are allegedly subsidized and sold in the United States at less than fair value."

According to DOC, hardwood and decorative plywood imports from China were valued at approximately $616.5 million. Hardwood plywood and decorative plywood are used in a number of products manufactured in the United States, including furniture, cabinetry, closets and components.

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