International Trade Law News

Published by Jacobson Burton Kelley PLLC

The U.S. Department of Commerce will issue the preliminary results of the antidumping duty investigation on wooden bedroom furniture on June 17, 2004 and announce the preliminary results to the public on June 18, 2003 at noon. In anticipation of that determination, the Cato Institute's Center For Trade Policy Studies has recently issued a report that severely criticizes the antidumping petition filed by a group of U.S. furniture manufacturers against Chinese wooden bedroom imports. The report, entitled "Poster Child for Reform: The Antidumping Case on Bedroom Furniture from China," analyzes the antidumping petition filed by 26 companies seeking duties as high as 440 percent against $1 billion worth of Chinese wooden bedroom imports and concludes that the case "has nothing to do with unfair trade and is a perfect example of the need for antidumping reform."

Using the Chinese wooden bedroom furniture dumping petition as an example of how poor antidumping rules are abused for commercial gain, the report analyzes the duplicity of the petitioners shift in sourcing from China to other countries such as the Philippines, Indonesia, Brazil and Vietnam; the divisions within the domestic furniture producers in supporting the petition, Byrd Amendment incentives for filing the petition, underlying market distortions and U.S. producers' original cultivation of the Chinese furniture industry.

The report states that the "The filing of this case was a tactical maneuver by one group of domestic producers that seeks to exploit the gaping loopholes of the antidumping laws to get a leg up on its domestic competition. Domestic producers realize that the only way to compete and offer their customers variety is to source at least some production from abroad. Instead of preserving or returning jobs to the U.S. (which is the public justification for the petition) import restrictions will cause a shift in sourcing from China to places like the Philippines, Indonesia, Brazil and Vietnam -- places from which many of the petitioners have begun or are posted to being importing themselves ... the unfortunate result is a greater cost burden for import- using industries and higher prices for consumers."

With respect to the Byrd Amendment, the report says "One can only wonder how much influence the Byrd Amendment and its potential to reward only supporters of the petition affected the level of industry support ... If the prospect of the Byrd Amendment money persuaded even one of the estimated 125 petitioners of wooden bedroom furniture to support the petition, the provision's existence ... might have tipped the balance in favor of initiating the case."

The report concludes, "Imposing restrictions on imports of wooden bedroom furniture from China would amount to nothing more than picking winners and losers. Those who have invested in Chinese facilities and those who have developed relationships and nurtured their Chinese supply chains successfully will effectively be penalized for their success. Those whose business models were less successful and who have begun cultivating relationships with suppliers in other countries will be granted a head start in the inevitable process of foreign source-shifting. Whatever happens, production is highly unlikely to return to the United States."

A copy of "Poster Child for Reform: The Antidumping Case on Bedroom Furniture from China," can be found at: www.freetrade.org.