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Section A duties cut

By Powell Slaughter -- Furniture Today, January 9, 2005

Washington — Correcting some clerical errors, the U.S. Department of Commerce late last month reduced the duty rate on Chinese-made wood bedroom furniture for Section A companies from 8.64% to 6.65%.

The Section A rate covers about 55% of wood bedroom furniture imported from China. The reduction largely resulted from adjustments to six mandatory respondents in the DOC's antidumping investigation. Those companies, among the largest Chinese bedroom suppliers to the U.S. market, and their rate changes are:

Dongguan Lung Dong: 2.32%, up from 2.22%.
Dorbest Group/Rui Feng: 7.87%, down from 16.7%.
Lacquer Craft: 2.66%, down from 6.95%.
Markor: 0.83%, up from 0.79%.
Shing Mark: 4.96%, down from 5.07%.
Starcorp: 15.78%, up from 15.24%.

Another mandatory respondent, Techlane, was thrown out of the weighted average for computing the Section A rate in November, when DOC ruled the manufacturer's response to the investigation was insufficient and gave the company the all-China rate of 198.08%, which remains unchanged.

U.S. Customs agents now have begun collecting the duties. Importers have been posting bonds to cover duties since June 2004. Through October, those deposits came to just over $52 million, according to U.S. Customs.

Mike Veitenheimer, president and general counsel of The Bombay Co. and a spokesman for the Furniture Retailers of America, a group of retailers that opposed the duties, was pleased with the further reduction in rates.

"Our goal was twofold: first, to avoid duties entirely, and, second, to make sure any duties that did apply were minimal," he said. "While we didn't get the first, we did get the second."

Veitenheimer worries that the addition of $500 million to $1 billion of new Asian production capacity outside China, especially in Vietnam, will increase deflationary pricing pressures.

"Because of the uncertainty surrounding the investigation, so many companies went to Vietnam and placed orders there," he said. "Those orders will be filled there, even though we can anticipate the types of quality problems you have when you shift sourcing. But the minute (Vietnam) gets it right, there's a worldwide glut of capacity."

For their part, those who sought duties are ready to live with the investigation's results and concentrate on business.

"Our motto here in '05 is, 'Let's get back to selling furniture'," said Doug Bassett, vice president of sales and marketing for Vaughan-Bassett, one of the U.S. case goods companies that petitioned for the antidumping investigation.

Will U.S. companies target any other categories or countries for antidumping investigations? Don't look for any other actions in the wood category for now.

Compared to bedroom, the dining and occasional categories have little significant capacity remaining in the United States, so those areas are unlikely targets for future antidumping cases.

With bedroom production shifted away from Chinese plants facing prohibitive duties, and most remaining producers facing relatively low duties, no one expects the final duties to have a big impact on retail pricing. That doesn't mean the case had no effect.

"The companies that were investigated weren't the ones creating the problem," said industry analyst Jerry Epperson of Mann, Armistead & Epperson. "There were other (Chinese) manufacturers that did have problems, and they either got the 198% rate, or were put on notice."

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DOC cuts Section A rate to 6.65%

Jan 10, 2005

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