DOC reduces preliminary dumping rates, admits ‘significant ministerial errors’ in initial decision

Home Inside FCNews DOC reduces preliminary dumping rates, admits ‘significant ministerial errors’ in initial decision

HICKSVILLE, N.Y.—Following an error review request by Samling Group, one of the three mandatory companies in the ongoing federal investigation concerning allegations of engineered wood flooring dumping, the Department of Commerce (DOC) admitted to making “certain significant ministerial errors” in its preliminary determination in setting tariff rates (FCNews, May 30/June 6).

In the initial ruling, Samling was given a preliminary dumping rate of 10.88% while the other two mandatory companies—Zhejiang Layo Wood Industry Co. (Layo) and Zhejiang Yuhua Timber Co. (Yuhua)—received rates of 0%.

Samling felt the agency made three errors when calculating the company’s rate and, as entitled to by law, requested the DOC review its preliminary findings.

In admitting it made “errors in the preliminary determination of sales at less than fair value in the antidumping duty investigation,” DOC re-calculated the anti-dumping duty margin for Samling. It also re-calculated the rates for the 70 additional exporters who were given a 10.88% in the preliminary ruling as well as for all other Chinese producers/exporters that were subjects of a China-wide dumping rate of 82.65%. The net result of the re-calculations is Samling got reduced to a de minimis rate of 0%, while the 70 other companies had their rates dropped to 6.78% and the country rate was cut to 27.12%. Barring another revision, these rates are in effect until October, when the government is expected to make its final rulings.

In addition to antidumping charges, the case includes countervailing duties. In this area, preliminary rates have been established at zero for Layo and Yuhua; 2.25% for Samling and the 70 other companies, and 27.01% for those lumped under all others (FCNews, April 4/11). And, as both sides of the dispute noted following the original preliminary antidumping announcement, the end result could be much different than the preliminary rulings.

“The dumping rates issued are preliminary,” noted Jeff Levin, counsel for the Coalition for American Hardwood Parity (CAHP), “and subject to change.” CAHP is the ad hoc association of U.S. manufacturers petitioning the government to set tariffs based on dumping charges.

He told FCNews CAHP has “in hand” data and information not yet considered by the Commerce Department which it has “strong reason to believe will greatly alter the preliminary calculations and which calls into serious question the accuracy of some of the information presented by the Chinese producers.”

At the end of the day, Levin added, “after additional, factual information is brought to light, after verification and briefings are completed and the final dumping margins are calculated, [we] fully expect the final rates to be substantially higher than the margins just issued.”

Meanwhile, Jonathan Train, import product manager of SwiffTrain and president of the Alliance for Free Choice and Jobs in Flooring (AFCJF), a group of flooring distributors, retailers and importers created to oppose the unfair trade petition, was “pleased” with the revised decision because it means “almost all flooring imports” will be subject to either 0% or less than 10% additional duties. “Three of the largest producers in China are able to export at a zero rate to some of the largest companies in the U.S.”

He added the revision is “further affirmation the petitioner’s initial allegations were wildly inaccurate and erroneous. After extensive investigation, the DOC has yet to find any evidence of significant dumping or subsidies. We believe that these findings will help demonstrate to the International Trade Commission (ITC) that they should dismiss the case in the fall.”

Furniture precedent

The reason AFCJF wants to see the case dismissed is because of what has taken place regarding wooden bedroom furniture (WBF). In October 2003, the American Furniture Manufacturers Committee for Legal Trade (AFMC), an ad hoc association of U.S. manufacturers of wooden bedroom furniture, and six labor unions filed an antidumping duty petition concerning imports of WBF from China.

Based on this case, Train said it is unpredictable what the final decision will be for flooring. “Rates could go higher or they could go lower. There is simply no way to predict the new rates.”

He explained, “In anti-dumping cases, it doesn’t matter if Commerce sets rates at 2%, 20% or 200%; they can constantly change because of annual audits and reviews. And of course the stinger is retroactive liability, meaning an importer may not learn the actual rate for a container of imports for over two-and-a-half to up to even five years after it has been imported.”

In the WBF case, Train added, in the initial investigation dumping margins ranged from 0% to 16%. “In every single subsequent administrative review,            dumping margins increased to a range of 18% to over 30% with some soaring to over 200%, bankrupting dozens of firms. Dismissing [CAHP’s] petition is the industry’s only chance to eliminate this disruptive influence on what has become a global supply of hardwood flooring.”

He said AFCJF feels it is “necessary for all companies, large and small, to compete on a level playing field, so we are focusing now on getting ‘A Zero for Everyone.’ We plan to make a strong presentation at the ITC final hearing in October and demonstrate that punitive duties will only hurt the American flooring industry.”

CAHP’s Levin countered, saying, “While the reduction in the preliminary rates may be touted as some sort of victory for Chinese manufacturers and traders hoping to maintain their supply line to Chinese imports, the fact remains that unfair trading on the scale encompassed by the preliminary determination stands as an intrinsic threat to U.S. manufacturing. While CAHP understands there are some elements within the U.S. market beholden to the axiom ‘cheap is good, regardless of whether it is fair or not,’ that is not a foundation on which the competitive viability of American manufacturing can long survive.”

For more on CAHP, visit usfloorparity.org. For more on AFCJF, visit choiceandjobs.com. For more on the government’s investigation, visit usitc.gov.

-Matthew Spieler

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