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U.S. ruling on China furniture to benefit Canada

Canadian manufacturers want Ottawa to follow suit on anti-dumping duties

Courtesy The Globe & Mail

by Shirley Won

Tuesday, June 22, 2004 - The Globe & Mail, Page B6

A decision last week by the U.S. Commerce Department to slap anti-dumping duties of up to 198 per cent on Chinese wood bedroom furniture is also a victory for some Canadian furniture makers who want to see the same thing happen in this country.

In addition, several large Canadian companies, who sell substantial amounts of their products to the United States and helped to fund the legal battle by U.S. furniture makers, will also benefit from the new tariffs that take effect this week.

Last Friday's preliminary ruling, in the largest anti-dumping case ever brought by U.S. manufacturers against their Chinese rivals, imposed duties of 5 per cent to 198 per cent, although the percentages could change with a final ruling this December.

Hugh Owen, president of the Ontario Furniture Manufacturers' Association, said in an interview that the U.S. ruling represents a "bargaining chip" to make a case that China is selling furniture below the cost of production in Canada as well.

Mr. Owen said his association and its two other peers across the country are now conducting a study on the impact of Chinese imports on the domestic wood furniture, leather upholstery and metal dinette industries to see if they have evidence to file a complaint with the Canadian International Trade Tribunal.

"We are doing it is because we realize that they [Chinese imports] are having an effect on us," Mr. Owen said.

"Canadians have the same problems as the Americans, and we are optimistic that we will be able to encourage our government to take the same steps."

The U.S. group, which sought duties of up to 440 per cent, included about 30 firms with names like Bassett Furniture Industries Inc. and La-Z-Boy Inc. It argued that the industry has lost some 35,000 jobs since 2000 because the Chinese government has unfairly subsidized furniture factories in that country to undercut American competitors.

The issue has been very divisive within the U.S. furniture industry. American furniture retailers, who sell Chinese-made furniture, opposed the duties, and some of them were even boycotting some of the manufacturers who became involved in the legal battle.

Canadian companies such as Durham Furniture Inc. of Durham Ont., Shermag Inc. of Sherbrooke, Que. and Palliser Furniture Ltd. of Winnipeg helped to fund the lobbying efforts by the U.S. furniture makers to get duties on Chinese bedroom imports.

While these firms were happy to get a ruling in their favour, they also suggested that the effective duty only amounts to about 11 per cent for most of the Chinese imports coming into the United States, and will not truly level the playing field.

John Scarsella, chief executive officer of Durham Furniture, said the effective 11-per-cent duty "will help us a little bit," but he had been hoping for a 50-per-cent tariff.

"I see some of the pricing on some of the stuff [from China] and shake my head," said Mr. Scarsella, whose firm exports 80 per cent of its products to the United States.

"I couldn't buy the lumber for that."

Durham Furniture has also had problems with Chinese companies copying its designs and selling knock-offs at much cheaper prices in the United States, he added.

"They took my best-selling contemporary design and copied it. That's what really hurts."

Art DeFehr, chief executive officer of Winnipeg-based Palliser Furniture, said the effective 11-per-cent duty "levels the playing field in a partial way.

"But I don't think that is going to significantly slow China down," said Mr. DeFehr, whose company does more than 60 per cent of its business in the United States.

But Doug Bassett, spokesman for the U.S. manufacturers, said that he expects that anti-dumping duties will be "driven up" after U.S. investigators travel to China in the coming months to verify the numbers it has collected through written communication.

The numbers represent "a floor" and "not the ceiling," he added.

Column courtesy The Globe & Mail © worldwide 2004

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