NEW CATO INSTITUTE REPORT SLAMS CHINA WOODEN BEDROOM FURNITURE CASE
AS “PERFECT EXAMPLE OF THE NEED FOR ANTIDUMPING REFORM”

Washington, DC — The Furniture Retailers of America (FRA) commended a new Cato Institute report released today that severely criticizes the antidumping petition filed by a group of U.S. furniture manufacturers against Chinese wooden bedroom imports. The report, “Poster Child for Reform: The Antidumping Case on Bedroom Furniture from China,” written by noted trade expert Dan Ikenson of Cato’s Center for Trade Policy Studies, analyzes the petition filed with the U.S. International Trade Commission (ITC) 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, Ikenson 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.

“Cato’s report is a dead-on analysis of all that is inherently wrong with the petition against wooden bedroom furniture,” said Mike Veitenheimer, FRA spokesperson and Vice President and Counsel of The Bombay Company. “It confirms what
FRA members have been arguing since the petition was filed, that this is a brazen and hypocritical attempt by some domestic furniture companies to use the U.S. government to manipulate the bedroom furniture market in their favor, at the expense of American consumers and independent furniture retail stores.”

In the report, Ikenson states, “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 end result is a greater cost burden for import-using industries and higher prices for consumers.”

Ikenson also reviews the extraordinary circumstances involved in the filing of the petition. He writes, “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 domestic producers of wooden bedroom furniture to support the petition, the provision’s existence. might have tipped the balance in favor of initiating this case.”

Adding that imports of wooden bedroom furniture from China have increased over the past few years, he concludes that domestic producers have played a “major role” in the increase. Domestic producers’ shipments sourced from China increased from 6 percent in 2000, to 19.6 percent in 2002 and 26.6 percent in mid-2003.

He 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.”

The Department of Commerce will announce preliminary dumping margins (if any) on or around June 17.

Veitenheimer concluded, “Cato’s study is further evidence that this case lacks any foundation or logic. We are confident that if the Commerce Department conducts a fair and impartial investigation, it will conclude that no dumping has occurred and no duties should be imposed.”

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

The Furniture Retailers of America (FRA) is comprised of large and small retail companies throughout the U.S. formed to protect its customers from a group of domestic furniture manufacturers seeking to restrict consumer access to high quality wooden bedroom furniture by filing an anti-dumping petition with the U.S. International Trade Commission. FRA now represents well over 3,500 retail outlets and 200,000 associates/employees nationwide.