US restriction on China's furniture unreasonable

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Last updated at: (Beijing Time) Tuesday, December 16, 2003

US restriction on China's furniture unreasonable

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On December 11, the US Department of Commerce, in response to the application of some US furniture manufacturers, formally placed a case on file for anti-dumping investigation into the wooden bedroom furniture imported from China.

The US International Trade Commission will make a ruling early next year on whether China's furniture constitutes an industrial damage. If the US Department of Commerce and the International Trade Commission both passed a judgment that the case of dumping of China's furniture was tenable, the US Department of Commerce would determine the range of dumping and would then levy anti-dumping tax on the furniture imported from China, which would be carried out by the customs department.

Once the appeal was established, China's exports worth nearly US$1 billion would be affected, this is thus far the anti-dumping investigation involving the largest amounts of Chinese products.

Adverse effect to be exerted on Sino-US trade

In recent years, with the vigorous development of China's furniture industry, the export of the product has increased rapidly at an average annual rate of over 30 percent, and China has thus swiftly become the second largest furniture exporter in the world. In a short space of several years, Chinese furniture enterprises have done much to improve product quality and shorten the delivery time, and Chinese house-furnishings have developed from low-priced commodities to "hot consumer goods" enjoying a brisk market in the United States.

In face of the increase in the import of Chinese furniture, some US furniture factories submitted an anti-dumping application to the American International Trade Commission and the US Department of Commerce on October 31. The American Furniture Manufacturers Association claimed in the plaint that the imported furniture from China had caused 34,000 Americans to lose their jobs over the past two and a half years, and "is destroying the US furniture industry". While making an anti-dumping application, the US Furniture Manufacturers Association also levied 158 percent-440 percent anti-dumping tariffs on China's wooden furniture. It is reported that a total of 135 Chinese furniture enterprises were included into the list for investigation.

On the very day when the US Department of Commerce made a decision to place the case on file for investigation and prosecution, the Chinese Ministry of Commerce spokesman Chong Quan pointed out in his talks that the Chinese side firmly opposed the US practice of insisting on placing the case on file under the circumstance in which the petitioner was obviously lacking the standing to sue. The practice runs counter not only to the American law, but also to the related rules of the World Trade Organization (WTO).

Meanwhile, the petitioners in the appeal charged that China's furniture sector as non-market economy sector, and it is unfair for them to use a substitute country's data to accuse Chinese products of existing dumping. In fact, Chinese furniture enterprises are mainly private and Sino-foreign joint venture enterprises. It is hoped that the US side could look squarely at the objective fact of the development of the Chinese market economy, fulfill its WTO commitments and grant Chinese furniture industry a market economy position.

Chong Quan emphasized that the case is the largest anti-dumping case China has ever experienced, which is bound to cause adverse effect on the normal trade between China and the United States. He expressed the hope that the US side would change its wrong line of action, so as to maintain the normal development of China-US trade relations.

Chinese enterprises should learn to "walk on two legs"

Generally, there are two ways for the entry of Chinese products into the US market: First, exporting products directly to large foreign importers, wholesalers and distributors, or cooperating with large chain stores, letting them act as agents or engage in consignment sales, chain stores shall undertake the responsibility for after-sale service;

Second, investing and setting up factories in the United States, products can be sold locally, or be exported to other countries. In recent years, relying mainly on price advantages, Chinese house-furnishings have entered the United States by the first way, as for the second way of setting up factories in the United States, few people care to ask about the matter, thus giving rise to the situation of "walking on single leg" in regard to exporting to the United States.

At present, US furniture industry's protection of its trade with China is gaining momentum with each passing day, some Congressmen also actively spur the Bush administration to conduct anti-dumping investigation into Chinese furniture and adopt special guarantee measures, regarding this, Chinese furniture enterprises not only should be prepared to respond to prosecution, but also should make preparation in advance to invest and set up factories in the United States. Setting local factories not only can break down American restrictions on the import of Chinese furniture, but also represents an important step to be taken by Chinese enterprises to go toward the international arena.

Experts remind Chinese furniture enterprises which intend to invest and set up factories in the United States of the need to have a full understanding of US laws and market conditions, such as the categories and rates of taxes to be levied in various American states, the reduction or exemption of taxes, such as company income tax, local realty tax and sales tax, the encouraging policies adopted by local governments to attract foreign enterprise investments, local workers' wage levels, land price, tariffs on the import of spare parts and components, as well as traffic conditions and the requirements of environment protection, etc. It is most advisable for enterprises to invite specialized consulting companies and lawyers to conduct necessary evaluation and market investigation, select proper sites and reduce production cost to the maximum.

Making rational use of China's advantage of labor force

The US government has conducted frequent anti-dumping investigation into China's over-concentration of export products, this situation will become even grimmer during US presidential election next year. Related domestic enterprises and government departments should make internal coordination and preparations for responding to prosecution, so as to prevent emergence of the situation of huge amounts of Chinese furniture products come in swarms at irrational prices within a short space of time. In addition, it is necessary to upgrade and increase the added value of Chinese exported furniture. The workmanship and quality of Chinese high-grade furniture are far inferior to those of the same products of US and European countries, although Chinese furnishings have a fairly large share in the US market, there is still a large space for increase in terms of value.

Another trend is also worth vigilance: low labor cost may also be used as a pretext by the United States to restrict Chinese furniture. In order to avoid accusation and prosecution by US domestic labor organizations, US importers pay great attention to the suppliers' production environment, the degree of labor protection for workers and wage levels, they do not import products of excessively low labor cost and even destroy on the spot products imported unintentionally. Similar problems had occurred to shoes and textiles China exported to the United States in the past, furniture enterprises should take the initiative to improve workers' pay and labor protection in line with international standards, so as to avoid affecting export. Currently, some US furniture enterprises have begun to complain that workers' wages in Chinese enterprises are too low and labor protection is inadequate, demanding that the US government prohibit the import of commodities exported from China's "blood and sweat factories".

The above article appeared on Page 17 of Global Times December 15 was written by the newspaper's special correspondent Zhang Jie stationed in the United States and translated by PD Online.

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