Chinese Flooring Producers Face U.S. Import Duties

 
The U.S. Department of Commerce's International Trade Administration has set preliminary countervailing duties against 130 Chinese wood flooring producers, including Fine Furniture Shanghai, a major supplier of wooden bedrooms to the U.S. that has a sideline flooring business.

Fine Furniture Shanghai is one of three mandatory respondents in the case, receiving a preliminary duty of 2.25%.

Two other mandatory respondents, Zhejiang Layo Wood Industry Co. and Zhejian Yuhua Timber Co. Ltd. received zero percent rates, while 127 other factories received preliminary duty rates of 27.01%.

Final duties are expected to be determined in June and the imposition of these duties wouldn't occur until the U.S. International Trade Administration completes an investigation that determines whether imports of wood flooring have caused material injury to the domestic wood flooring industry. The ITC will make its determination by July 21.

The wood flooring business is the latest industry in China to face what is known as countervailing duties from the U.S. government. The government began the inquiry into the Chinese wood flooring industry last year in response to requests from a group of U.S. petitioners, producers known as the Coalition for American Hardwood Parity.

The product in question includes multilayered wood flooring. According to the ITA, imports of this product from China rose 76% to $119.7 million from 2007-2009.

The petitioners and the government claim that Chinese wood flooring producers are being subsidized by the Chinese government, which they believe gives those producers an unfair competitive advantage in the marketplace.

The case is of interest to the U.S. furniture industry because some producers like Fine Furniture also produce wood bedrooms sold to the U.S. market. If these same producers face duties on flooring, that in turn, could affect the profitability of their production facilities and also affect price competitiveness in furniture.

For a list of the Chinese producers visit http://frwebgate1.access.gpo.gov/cgi-bin/TEXTgate.cgi?WAISdocID=2HtP1G/3/1/0&WAISaction=retrieve

It was immediately unknown how many of these companies produce wooden bedroom furniture, an industry in China that faces antidumping duties from the U.S. government. Many producers on the list are in Foshan, a major furniture production area in the Guangzhou Province in southern China.

By definition, an antidumping case states that producers sell goods below materials costs, a violation of international trade laws, whereas a countervailing duty case alleges that a particular government is subsidizing factories either through a direct ownership or tax rebates.

Duties in these types of cases are typically assigned to the factories but paid by importers of record of the product. In many cases, the two parties are said to share the cost of the duties.

Michael Moh, the chief executive with Fine Furniture Shanghai, was traveling and could not immediately be reached for comment.

Should the ITC determine material injury and final duties be imposed on these companies, the DOC will instruct U.S. Customs and Border Protection to begin collecting the duties.