US decision harms interests of both sides

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Last updated at: (Beijing Time) Monday, January 12, 2004

US decision harms interests of both sides

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Chinese furniture manufacturers and US retailers have joined forces to condemn the US International Trade Commission's preliminary approval of duties of more than US$1 billion of wooden bedroom furniture from China, seen as a bid to garner support from the US manufacturing sector ahead of this year's presidential elections.

The commission claimed on Friday there was a reasonable indication that low-priced imports from China were harming domestic furniture makers.

A group of 27 US companies want duties ranging from 158 per cent to 441 per cent to offset what they allege is dumping by 135 Chinese competitors.

The commission's 6-0 vote paves the way for the Commerce Department to set preliminary anti-dumping duties on April 28.

The commission will then hold a final hearing in middle of the year and issue a final injury determination in the autumn.

But local furniture makers said the US manufacturing industry will not get any benefit from the dumping charges.

"Even if the high duty was imposed, no jobs would be created for the US industry," said Liu Shande, a manager from Guangdong-based Jixiang Wood Products Co.

Orders would shift from China to other countries like Malaysia, the Philippines and Viet Nam, he added.

However, Liu believed many Chinese jobs would be lost because of the unfair decision.

Although declining to offer the company's prices for exports, Liu said the exported furnitures make more profits than those sold domestically.

"We are not dumping. We export because the products can sell at higher prices than at home," he said.

The average profit of exports could be as much as 30 per cent according to industrial sources.

However, the US authorities refused to admit the Chinese costs because they still view China, a WTO member, as a non-market economy.

But, at least, the Chinese Ministry of Commerce said the furniture industry should be granted market economy treatment.

Most of the exporters are private companies that have not been subsidized by the government. These companies have formed a special committee to deal with the case.

Another coalition was formed by US furniture retailers to challenge the petition by US manufacturers following the commission preliminary ruling.

The Furniture Retailers of America (FRA) coalition, participated in by over 60 retail companies throughout the United States, is to fight the ill-conceived and damaging petition filed with the commission, the FRA statement said.

"This is one of the most cynical trade cases brought before the ITC in recent memory," said William Silverman, FRA Counsel and an attorney with Hunton & Williams.

According to Silverman, the US manufacturers helped create the Chinese bedroom furniture industry years ago to obtain access to low-cost, high quality furniture that it then resold directly to US retailers.

Some of the petitioners have imported wooden bedroom furniture from China for years and profited by reselling these Chinese imports to major retailers, he said.

"Once retailers went to China directly, thereby eliminating petitioners" profits as middlemen, the group of domestic producers responded by filing this dumping case with the ITC," he said.

Two of the US furniture chain retailers have decided in November to stop buying products from manufactures whose executives signed the petition against Chinese companies.

China exported US$2.8 billion worth of furniture to the United States last year and exports of wooden bedroom furniture accounted for about half.

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