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Paying for peace or passing the buck

June 3, 2011

There's been good national news coverage this year of the antidumping case on wooden bedroom furniture. I continue to think this typically not very sexy topic warrants attention because it has layers of interesting storylines.

The initial order placing antidumping duties on Chinese wood bedroom imports began in 2004 after the U.S. government concluded that those products were unfairly priced too low and granted the original petitioners - the U.S. manufacturers who sought the duties - trade relief aimed at creating a fair market price.

As the years passed, the case has involved political, local and world economic, jingoist and class issues. White and blue collar workers and company owners have a stake in it.

Our country values free trade and hates seeing its manufacturing base recede. Our economic livelihood is at stake, petitioners have argued.

Each side has a logical and deeply held belief as to why it's right. And each makes a good case. It's been a story that begs to be written about by curious reporters.

Furniture/Today last year covered many of these issues in a fifth anniversary series looking back on the case and its implications. Later, After a "sunset review" last year, the U.S. government decided to keep the duties in place for another five years.

Both sides think they're getting a bum rap. Importers of record and the Chinese factories hate the duties because they willingly or unwillingly pay backdoor "settlements."

Those payments are probably in an importer's interest if it doesn't want its source factories' duty rates reviewed each year, which could result in higher rates that would increase the cost of the furniture.

They begrudgingly pay - or not - the domestic petitioners who collect "settlement" payments for legal fees and income. And, I would guess, for petitioners, it's sometimes a best shot at getting paid if an IOR decides to skedaddle.

This year, the Wall Street Journal and more recently The Washington Post have covered the story. Both focused on the settlement payments. Both quoted petitioners' attorney Joe Dorn as saying the settlements were sought by the Chinese.

When Furniture/Today began reporting on the issue of private settlements, few people wanted to acknowledge them.

The U.S. Department of Commerce has not taken a clear position on the settlement payments and I foresee further scrutiny as the buck is passed.

The Wall Street Journal quoted a commissioner with the International Trade Commission saying he could not figure out how the payments were legal. Until DOC says otherwise, off the book settlements and oversight of them, look to continue as gray areas.

The Post story quotes factory representatives as saying they "pay for peace" and that the case "is like the mafia: you buy protection."

For more specific stories than you might read elsewhere, you can still check Furniture/Today. Associate Editor Thomas Russell has reported probably more extensively than any source I've seen on this subject and his stories reflect an educated background on the topic.