• Thomas Russell

Effect of hardwood plywood duties remains uncertain

Duties on imports could force domestic furniture and cabinet makers to rethink materials purchasing

RESTON, Va. – How any duties on Chinese-made hardwood and decorative plywood producers affect domestic residential furniture producers would depend to a large extent on how producers use those materials in their finished goods.

The case clearly does not affect finished goods coming in from China but rather panels that are imported from China and used in the assembly of kitchen cabinets and some furniture still made in the U.S.

This includes hardwood and decorative plywood and certain veneered panels, which are described as a “generally flat, multilayered plywood panel or other veneered panel that consists of two or more layers of wood veneers and a core.” The core of the hardwood and decorative plywood consists of layers of one or more materials that are between the face and back veneers.

Officials familiar with the case described this material as being used in higher priced vs. lower or promotionally priced goods. Thus the order exempts structural /industrial plywood panels as well as RTA furniture that is typically flat packed and assembled by the consumer or end user. The order also excludes fully assembled kitchen cabinets and RTA kitchen cabinets.

The case dates back to November, when a group of 12 U.S. hardwood plywood manufacturers called the Coalition for Fair Trade of Hardwood Plywood filed a petition with the U.S. government supporting both antidumping and countervailing duties. The primary concern is that the unfairly priced goods have caused injury to their industry in both financial losses and mass layoffs.

On April 25, following several months of investigation, the U.S. Department of Commerce announced countervailing duties of up to 111.09% on 61 Chinese board producers for product shipped to the U.S. market in 2015. These duties aim to address allegations that the Chinese government is subsidizing these and other factories.

A related anti-dumping case requested as part of the petition aims to address concerns that products included in the scope of the investigation are being sold into the U.S. at unfair prices, or prices that are considered below raw materials costs. Preliminary anti-dumping duties could be announced in June.

Final duties could be determined later this year, pending further investigation by the U.S. International Trade Commission regarding injury to U.S. hardwood and decorative plywood producers.

Kip Howlett is president of the Hardwood Plywood and Veneer Assn. in Reston, Va., which supports the initiative. He believes the effect on the domestic furniture industry will depend how they are using materials covered in the scope of the investigation in their finished goods – and whether those materials are imported or domestic.

“If you apply the unfair trading duties on the Chinese product, the cost of those materials are going up because our government will be saying, “They are now priced fairly,”” he noted, of the duties, which are assigned to the factories, but paid by importers of record.

Items, he said, that could be affected are those using higher priced goods such as veneered MDF (medium density fiberboard) panels, which can be used on table tops, shelving and headboard panels.

He also believes the duties won’t create a disadvantage for domestic producers that may be now using unfairly priced imported product.

“The point being that the domestic industry has to find its sweet spot relative to the U.S. market,” he said, adding that he doesn’t see the component pricing affecting competitiveness as much as quality construction and speed to market that many domestic companies are already offering.

The American Alliance for Hardwood Plywood, a group of importers, manufacturers, and retailers of hardwood plywood products, has gone on record against the duties, saying that they are unwarranted and will do nothing to help save American jobs.

“We look forward to preserving American manufacturing jobs by defeating this bogus case again,” said AAHP Chairman Greg Simon, in a statement that referenced the 100,000 U.S. jobs at employers represented by the AAHP along with a previous petition by the Coalition rejected by the ITC in 2013.

But Howlett said that the case aims to address China’s violations of U.S. trade laws, and thus would be something that many American consumers would support. Selling illegally priced goods, he noted, is akin to a jeweler selling counterfeit watches.

“All we are doing is pursuing our rights under the law,” he said, noting that product can also come in from Brazil or Mexico as long as it is traded fairly. “If you break the law, there are consequences…Nobody is putting up a barrier to Chinese plywood coming into the U.S. It just has to be fairly priced – it can’t violate the law.”

Thomas RussellThomas Russell | Associate Editor, Furniture Today

I'm Tom Russell and have worked at Furniture/Today since August 2003. Since then, I have covered the international side of the business from a logistics and sourcing standpoint. Since then, I also have visited several furniture trade shows and manufacturing plants in Asia, which has helped me gain perspective about the industry in that part of the world. As I continue covering the import side of the business, I look forward to building on that knowledge base through conversations with industry officials and future overseas plant tours. From time to time, I will file news and other industry perspectives online and, as always, welcome your response to these Web postings.

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