Washington - The protectionist campaign against imported Chinese hardwood plywood has effectively eliminated a vital raw material from the supply chain for thousands of manufacturers, creating long-term market uncertainty that will drive jobs out of the U.S., the American Alliance for Hardwood Plywood (AAHP) said.
Yesterday, the Department of Commerce announced severe and unprecedented deposit requirements for estimated dumping and subsidy margins, totaling 73% on almost all imported Chinese hardwood plywood entering the U.S. The deposit rates are an absurd spike from preliminary Commerce rates announced earlier this spring, which totaled an outrageous 45%. Those initial rates have already created a shock wave throughout critical supply chains, increasing the cost of imported hardwood plywood virtually overnight and creating painful shortages due to lack of sufficient domestic supply.
"This is a deathblow to the U.S. cabinet industry and many other manufacturers that heavily rely on imported Chinese hardwood plywood," said AAHP Co-Chairman Greg Simon. "The methodology in the duty determination by the Department of Commerce clearly ignores sound market variables, equates China and Bulgaria, and is effectively putting the nail in the coffin for an entire industry."
For the first time in US history, the Commerce Department has used a European Union country, Bulgaria, as the source of all of the cost data used to determine whether the Chinese industry is dumping. China is a non-market economy, and requires comparison to a market economy. Commerce originally used the Philippines in the preliminary investigation, and then changed to Bulgaria in the final determination, a decision that has rocked the industry. Initial reviews indicate that Commerce used convoluted methods in an extreme fashion to reach this result that will likely be appealed both to the US courts by the private parties and/or to the WTO by China.
AAHP further noted that any company that is able to survive the initial deposit rate would still be subject to tariff fluctuation as part of an annual administrative review process. The final accounting on an entry remains "open" and no importer will be able to anticipate in advance what the ultimate liability will be. Any future rate determinations are very unlikely to tilt in favor of imports, and regardless of future rate fluctuations, manufacturers that depend on Chinese hardwood plywood, many of which are small businesses, will face difficult choices as a result of this decision.
As the International Trade Commission (ITC) begins its final investigation phase this week, AAHP urges the Commissioners to keep in mind that despite the petitioner assertions, there has been no flood of imported hardwood plywood into the U.S. market and no move to use domestic products as a substitute for Chinese hardwood plywood. This case has been brought by domestic producers whose actions have harmed their own customers, American consumers, and numerous small businesses.
"Artificial price spikes and supply constraints will eliminate many American jobs at a critical time in our economy." AAHP Co-Chairman Gregg Wilkinson said. "Those companies and jobs that do survive will be shackled by federal bureaucracy for years, or even decades, to come. Without a crystal ball importers and manufacturers alike will be hesitant to place orders today on raw material that can experience a dramatic price change a year from now. As an independent body, the ITC has the power to do the right thing and terminate this case."
The American Alliance for Hardwood Plywood (http://www.aa-hp.org) is an organization of American importers, distributors and manufacturers of hardwood plywood, along with other U.S. companies that depend on the availability of global resources.
Have something to say? Share your thoughts with us in the comments below.