Duties sought on plywood
Thomas Russell -- Furniture Today, November 12, 2012
WASHINGTON - An antidumping petition filed by U.S producers of hardwood and decorative plywood could have raw materials pricing implications for U.S. case goods and upholstery producers.
But how it specifically affects those producers will largely depend on what types of materials they are using and how much of it is imported versus domestically made.
The petition was filed Sept. 27 with the U.S. International Trade Commission by a group called the Coalition for Fair Trade of Hardwood Plywood. This group consists of six major U.S. hardwood plywood producers - Columbia Forest Products of Greensboro, N.C.; Commonwealth Plywood of Whitehall, N.Y.; Murphy Plywood of Eugene, Ore.; Roseburg Forest Products of Dillard, Ore.; States Inds. of Eugene, Ore., and Timber Products of Springfield, Ore.
These companies allege that Chinese producers are selling such materials into the U.S. market at less than fair market value and thus undercutting them on their prices.
The group says that these alleged unfair trade practices are causing material injury to their companies in the form of lost sales and jobs. To help level the playing field they are asking that duties of up to 320% be placed on a variety of hardwood plywood products from China.
These could come in the form of both antidumping and countervailing duties. Antidumping duties would address the issue of goods sold below materials and production costs, while countervailing duties address the issue of Chinese producers could be receiving government subsidies that ultimately could lower the cost of their goods that are shipped to the U.S.
The petitioners have asked the U.S. government to investigate the matter and determine whether duties are warranted. If approved, importers of record would have to pay the duties, which could push up the price of finished goods made with imported hardwood plywood.
The case has uncertain implications for the furniture industry.
Some hardwood plywood is used for parts like drawer sides, door inserts, table, desk and dresser tops, case goods side and interior panels and even upholstery frames. But officials involved in the case estimate that less than 10% of sales of the hardwood plywood material in question is used in furniture. It's mainly used in kitchen cabinets and in products like store shelving, boats and RVs.
As with the wooden bedroom furniture case eight years ago, battle lines are being drawn among producers and importers of such goods. U.S. producers that support the case represent about 80% of domestic production. Importers and other distributors of the Chinese-made boards oppose the duties because of the cost implications for end users.
"These sorts of cases are not meant to embargo product," said Jeff Levin, a trade attorney representing the petitioners. "It is just to establish fair pricing according to fair trade laws.... If the Chinese want to sell into the market even if there is an (antidumping) order in place, that is fine as long as there is a fair price."
Others believe the case would have a negative impact on the industry. Brent McClendon, executive vice president of the International Wood Products Assn., which represents North American companies that import wood products, said the petition would largely affect imports of a type of plywood that isn't widely produced in the U.S.
The scope of the subject merchandise defined in the petition includes hardwood plywood composed of two or more layers or plies of wood veneers in combination with a core. These layers are glued together to form a finished product that is primarily manufactured as a panel. The petition cites the most common panel sizes as 48 by 72 inches, 48 by 96 inches and 48 by 120 inches and ranging in width between 3.2 mm and 25.4 mm.
But McClendon said the mass of Chinese imports that would be affected by the petition are five millimeters and less in thickness, a size that has "not really been made in the U.S. for decades."
"That product has taken market share from Indonesia and Malaysia. And if the petition is successful, especially at the rates they're alleging, 300% or so - that would block consumers of that product," he said.
"If the U.S. industry hasn't been making it yet and they want to block it from coming in, that's a pretty transparent way of trying to gain market share or to block competition when in fact it's not a like product," McClendon said.
Kip Howlett, president of the Hardwood Plywood & Veneer Assn, said that furniture constitutes about 5% of the U.S. market for hardwood plywood. But he said he believes the case is an important one for any industry that uses the product.
"The furniture industry has to decide whether it wants to be concerned or not," he said. "If the Chinese manufacturers are dumping product into our market at low prices (because they have overproduced) and want to unload that product, that harms American industry and violates fair trade laws."
Howlett added that whether furniture manufacturers are purchasing plywood from either foreign or domestic sources, "the outcome of this case can clearly impact the sources of supply."
By Nov. 13, the U.S. ITC is expected to make a preliminary decision whether the issue has caused material injury to domestic producers.
The U.S. Department of Commerce has said it plans to investigate the matter and is expected to make preliminary determinations on the countervailing duties between Dec. 21 and March 5, and on the antidumping duties between March 6 and April 26.
If the ITC decides the case did not result in injury to U.S. producers, the DOC will halt its investigations.