ITC hears full day of arguments on furniture antidumping duties
Commission will decide whether to leave duties in place
Thomas Russell -- Furniture Today, October 6, 2010
WASHINGTON — The U.S. International Trade Commission heard from furniture manufacturers, retailers and importers on Tuesday during a hearing aimed at collecting evidence in support and opposition to the continuation of duties on wooden bedroom furniture for another five years.
The hearing also addressed the subject of private cash settlements paid by Chinese factories in order to keep low duties and avoid being hit with higher retroactive rates during annual audits of the factories.
Joe Dorn, an attorney with King & Spalding, representing U.S. companies that originally petitioned for antidumping duties on Chinese-made bedroom furniture, was among the opening speakers. He said such private cash settlements are legal.
The ITC opened its five-year Sunset Review in the wood bedroom antidumping case by listening to testimony from both the petitioners and from representatives of China factories. The better part of the morning and early afternoon session was taken up by petitioner arguments and testimony. The petitioners also answered questions from six ITC commissioners who presided over the hearing.
By the end of the year, the ITC is expected to rule on whether the duties should remain in effect.
Dorn, who represents the petitioning group, the American Manufacturers Committee for Legal Trade, said the cash settlements were a legal and voluntary way that Chinese manufacturers have sought to avoid a full audit during administrative reviews. In such reviews, duties are examined each year by U.S. Department of Commerce officials to determine whether the rates assigned to Chinese producers for shipments in previous years need to be adjusted.
By paying private settlements to the petitioners, the Chinese factories can escape the reviews and avoid the risk of receiving higher, retroactive duties.
Throughout the petitioners' and Dorn's testimony this morning, it became clear that settlement payment have largely gone to offset legal expenses incurred in the case, but it was unclear how much has been collected through the settlements.
Opening statements were also made by William Silverman of Drinker, Biddle & Reath, who spoke on behalf of the Furniture Retailers of America, a group of U.S. retailers who believe the duties should end.
U.S. Reps. John Dingell and Rich Boucher testified on the petitioners' behalf, saying they believe the duties should continue for another five years.
Petitioners argued that the duties have been effective since they were implemented in 2004. They argued that U.S. furniture imports from China have declined since the duties took effect.
They said that in addition to helping the U.S. petitioners make necessary capital investments in their factories, the duties also helped offset the effects of illegally priced bedroom furniture. Under a provision called the Byrd Amendment, which has since been repealed, duties paid through September 2007 have gone to the petitioners, except for an amount tied up in court cases.
For the first two years the duties were collected, the petitioners said their businesses were doing well for the most part, a factor they attributed partly to the imposition of duties.
The petitioners also discussed the recession and its effect on reducing sales and demand for wooden bedroom furniture. They said that should the duties end, their factories and the domestic industry could be vulnerable, leading to further plant closures and job losses.
Silverman, speaking for opponents of the duties, said many U.S. companies shifted their import sourcing from China to Vietnam, which has no antidumping duties, meaning that U.S. workers have seen no real benefits.
He also argued that some of the petitioners were among those shifting production to Asia, and that some saw that collecting the duties and settlement monies was a better way to make money than actually producing furniture in the United States.
The afternoon session mostly included arguments from opponents of continuing duties for another five years. Among them were Keith Koenig, president of Fort Lauderdale, Fla.-based retailer City Furniture, and George Tsai, chairman of Chinese case goods producer Fairmont Designs. Koenig spoke on behalf of the Furniture Retailers of America, while Tsai spoke on behalf of the Guangdong Furniture Manufacturers Assn.
They argued that the duties haven't had the intended affect of bringing back jobs to the U.S. Instead, they said, they have shifted bedroom production to places like Vietnam, Indonesia and Malaysia.
They added that because of a changing landscape in China that includes worker shortages, higher wages and reductions in bedroom production capacity, they don't believe that revoking the order will bring a huge volume of bedroom business back to China.
Tsai said the number of finishing lines in Vietnam has doubled in the past six years. He believes that will provide it the opportunity to increase production there as the economy improves.
"It has the extra capacity to sustain growth," he said. "China does not have the workers to run existing lines and the labor costs have gone up."
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