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No Canada safeguards?

CITT: Petition short on information

By Michael J. Knell -- Furniture Today, March 19, 2006

Ottawa — The Canadian International Trade Tribunal said last week it would not investigate whether the rise in Chinese imports of household furniture has harmed the domestic industry, saying manufacturers hadn't provided enough information to support an inquiry.

Reaction was swift and angry. "I am appalled at the way that they arbitrarily and summarily dismissed this matter," said Vincent Routhier of the Montreal-based law firm Faskin, Martineau DuMoulin LLP, counsel to the Canadian Council of Furniture Manufacturers.

CCFM President Terry Clark said he was upset and angry about the rejection, adding it's too soon to make a formal response or decide on the next step.

The industry appears to have four options: drop the matter, lobby the Cabinet of Prime Minister Stephen Harper for an order compelling the CITT to hear the matter, seek a review in the federal courts, or file another complaint more likely to meet the CITT's requirements.

In October, the CCFM asked the CITT to recommend that safeguard measures be put in place for a three-year period to give the industry time to adjust to a new trading environment, which has seen furniture imports from China skyrocket 1,296% over the past decade.

"It's not that there's no evidence; it's that there's not enough information for the tribunal to determine if it's a properly documented complaint, and those are legislative requirements," said CITT Secretary Helene Nadeau.

In a letter to Routhier, CITT Acting Secretary Susanne Grimes said the tribunal only investigates complaints on behalf of producers "of goods that are like or directly competitive with goods originating in the People's Republic of China," and that the CCFM's complaint covered too broad a spectrum of product.

"The tribunal finds that the complaint which covers 'residential furniture' does not provide the necessary information to comply with ... the CITT Act," the letter said. "Specifically, the complaint fails to provide sufficient support for or detail of the facts with regard to the allegations of market disruption or the threat of market disruption to domestic producers for each of the classes of like or directly competitive goods included within the range of goods identified in the complaint."

The CITT is a quasi-judicial body, and panel members are considered experts in matters of trade, tariffs and customs.

In a survey sent to all members of Furniture West, the Ontario Furniture Manufacturers Assn. and the Quebec Furniture Manufacturers Assn. in mid-December, the CITT sought detailed data on eight industry sub-sectors: juvenile furniture; upholstered seats and chairs; non-upholstered seats and chairs; bedroom furniture; living room furniture; kitchen furniture; cabinets, chests and other storage furniture made of metal and other materials; and cabinets, chests and other storage furniture made of wood.

These categories are different from those in the North American Industry Classification System, and also different from the Harmonized System of classification used by the World Trade Organization.

"They created a very artificial group of eight sub-sectors," Routhier said. "They seem to have rejected the complaint because it doesn't fit into the pigeon holes that they simply created. The fundamental problem is those categories don't fit with how we make and sell our products."

The CITT's Grimes said the data provided by the CCFM was based on only three broad divisions — upholstery, case goods and metal furniture. "The tribunal is of the opinion that these categories appear to be too broad to meet the requirements of like or directly competitive goods."

"The complaint sought to portray the industry as it is," Routhier said. "The tribunal is using parameters that they fully concocted by themselves."

He said the three broad divisions more accurately reflect how the industry is structured, and that other branches of the federal government such as Industry Canada and Statistics Canada gather information based on that structure.

"The way we proceeded was consistent with how the industry is defined by the federal government, but the tribunal seems to see us as eight industries, not one," Routhier said.

He said he met with CITT officials to explain in detail how the complaint was structured and how the industry functions.

It's likely that no furniture manufacturer who's a member of any of the three factory associations produces cabinets as defined by the CITT, Routhier said.

CITT's letter seems to indicate that while furniture makers can provide sufficient information for one category — upholstered chairs and seats — they can't do so for the other sub-sectors, and that the CITT won't proceed until they believe a case can be made across the board.

Routhier said that since the CITT's segments are wrong, that may not be possible. "It's virtually impossible to organize the information the way they want it," he said. "The tribunal could have worked with the industry to get the information in support of the allegation."

The CITT's Nadeau said, "You have to compare apples to apples and oranges with oranges." But the rejection letter doesn't mean the issue is dead. "Another complaint can be made," she said.

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