follow us
Thomas Russell

Sunset Review may address thorny issues

April 30, 2010

If many in the industry could have their way, the U.S. government would put an end to duties on Chinese made bedroom furniture. That was a resounding message among retailers and importers attending a Furniture Retailers of America meeting held at the High Point Market.

Nonetheless, it’s far from certain the government will put an end to the duties during its upcoming “Sunset Review.” That’s partly because a large part of this review will be to determine whether imports continue to erode the domestic industry.

Evidence, including layoffs at U.S. manufacturers that supported the initial investigation into the pricing tactics of Chinese producers, shows that domestic producers continue to shed jobs. The Department of Commerce also has lent its support for the continuation of duties for another five years, saying that dumping of Chinese goods illegally priced below normal market values would continue if the order were lifted.

The political climate may also favor the continuation of duties, given concerns about China’s alleged manipulation of its currency and its concentration of state-owned or supported companies.

That’s not to say the opposition won’t have a strong case of its own before the International Trade Commission. Industry input already has led the ITC to perform a full versus expedited Sunset Review that will take up to a full year to complete versus several months in an expedited format.

And if the meeting in High Point is any indication of what’s to come, there will be some serious questions raised including:

How has antidumping actually helped the domestic industry? Given the shift in bedroom production from China to Vietnam, it’s clear the duties haven’t stopped the industry’s ongoing search for low-cost labor.

How has the domestic industry used the millions of dollars collected in duties? Have the producers actually invested the money in their factories to make them more competitive? If not, where has it gone?

Have domestic producers used the government by collecting duties while still buying parts or finished goods from China?

Finally, how will the domestic industry address the issue of cash settlements made by Chinese factories to lock in duty rates during annual administrative reviews? In the most public discussion of this issue yet, retailers and importers at the High Point meeting showed their disdain for these secretive deals. Attorneys at the meeting also discussed the settlements openly, making it clear they thought the ITC should be aware of the issue as it reviews the case.

Since the start of this debate in 2003, there have been two sides to this subject, making it one of the most divisive issues in the industry’s history. Domestic producers and the U.S. government argue that China is employing illegal tactics to sell its goods into the U.S. But importers and retailers buying these goods say the duties are not good for the consumer or the economy.

What are your thoughts? Should the duties be continued for another five years?