In October 2003, a group of U.S. furniture manufacturers filed a petition with the International Trade Commission (ITC) claiming that a “flood” of Chinese bedroom furniture imports have caused them injury. The ITC and Department of Commerce (DOC) are now investigating the petitioners’ claims.

Import data and ITC testimony reveal the long-standing relationship between the U.S. wooden bedroom furniture industry and China’s nascent furniture industry. In the 1990s, U.S. furniture manufacturers, including some of the petitioners, were instrumental in stimulating the construction of new or improved production facilities in China. The U.S. manufacturers shared their furniture designs with Chinese manufacturers in order to produce similar products at an acceptable price and quality level for importation into the U.S. Petitioners themselves increased their imports over time and naturally bargained for the lowest possible prices.

For example, one Chinese company identified at least 69 visits by domestic furniture manufacturers to it beginning in 1998. It was also revealed that one petitioner invited a large Chinese producer to its factory to videotape its furniture production. This was done so that the Chinese company could reproduce bedroom furniture for the domestic furniture manufacturers to import and resell.

The manufacturers, including some petitioners, negotiated the lowest possible prices from the Chinese and resold the imported furniture, supplementing their own product lines, to large and small American retailers at a 30 to 40 percent profit. These middleman profits were in addition to the profits they earned by selling the furniture within their own product lines.

Over the past several years, the Chinese have established direct channels with retailers and other customers in the U.S. The petitioners — having lost their position as middlemen — are attempting to reclaim this role by shutting off Chinese imports via filing the dumping case.

The ITC testimony also revealed the active efforts of the domestic furniture manufacturers to set up operations in numerous third world countries, such as Indonesia and Vietnam. Based on this information, if duties are placed on Chinese imports of wooden bedroom furniture, it appears highly unlikely that domestic furniture manufacturers will expand operations in the U.S., but instead, will shift production to other countries and reposition themselves as middlemen.

The evidence in this case clearly indicates that U.S. bedroom furniture manufacturers encouraged and created business for the Chinese industry until losing their position as middlemen. Conversely, domestic manufacturers continue to import furniture, despite their attempt to use U.S. trade law to cut off supplies to their customers — American retailers.