Many keeping eye on antidumping ruling
By Powell Slaughter -- Furniture Today, June 28, 2004
High Point — The investigation of wood bedroom furniture imports from China could result in a landmark antidumping ruling, and as such has attracted considerable attention from outside the furniture industry.
Major news media, a well-known Washington think tank and the investment community are awaiting the ruling with great interest.
The Wall Street Journal is preparing a major report on the investigation.
Earlier this month, the Cato Institute, a Washington think tank espousing free trade and limited government, weighed in with a report, calling the furniture case the "poster child for antidumping reform."
Finally, the case has the investment community "scratching its head," said Keith Hughes, an analyst who follows the furniture industry for SunTrust Robinson Humphrey. "There's a lot of confusion among investors regarding a potential tariff, ... confusion about how the process works, and confusion about the effect of duties."
He said investors aren't sure how to react to the varying success of strategies to accommodate imports, and to the turmoil of U.S. plant closings and layoffs.
"The lack in general of detailed industry data can prevent investors from judging companies relative to the industry," Hughes said. "You take that situation and lay a tariff on top of it, and you get more confusion."
The Cato Institute has been highly critical of U.S. antidumping law. Daniel Ikenson, a Cato policy analyst and author of "Poster Child for Reform: The Antidumping Case on Bedroom Furniture From China," said antidumping law increasingly is used to hamper legitimate competition.
That's especially true, he said, in cases involving non-market economies, which use so-called surrogate market economy countries to develop what Cato analysts call unfair, unrealistic cost comparisons.
Ikenson doesn't expect lawmakers will change U.S. antidumping rules any time soon. Busy legislators hear terms like "level the playing field" and don't take the time to wade through the complexities of the law, he said.
"It's a combination of a failure on the part of people like myself to educate policy makers, and there's an interest in not crossing certain senators and congressmen," Ikenson said. "There's a lot of resistance on the Hill to do anything about this. It's a sacred cow because people want to think it's working the way defenders of the law say it works."
One of the petitioners in the bedroom investigation, Vaughan-Bassett, was named in the Cato report, which stated the manufacturer had invited Chinese producer Lacquer Craft to videotape plant operations in Galax, Va., for the purpose of producing furniture for Vaughan-Bassett in China; and that Vaughan-Bassett representatives were in Vietnam to explore sourcing opportunities.
Wyatt Bassett, executive vice president of Vaughan-Bassett, said those issues relied on information that opponents later had to withdraw.
"We went through the Lacquer Craft plant sometime prior to their visit at our plant," Bassett said. "It's a standard practice: If you get a walk-through of their plant, you reciprocate with the same courtesy. We not only did not ask them to videotape, we would have forbidden it if we'd known of it at the time. That put an end to our practice of letting offshore manufacturers visit our plant."
Bassett said Vaughan-Bassett does not have sourcing in Vietnam, and the petition opponents withdrew those allegations in amendments to its original post-conference brief to the International Trade Commission in the wake of a public hearing last November.
