WASHINGTON, DC — Domestic cabinet suppliers are vigorously applauding a U.S. Commerce Dept. decision supporting the tentative imposition of countervailing trade duties on Chinese imports of wooden cabinets, vanities and components.
Reaction by U.S. manufacturers came after Commerce Dept. officials last week issued an affirmative preliminary determination in a landmark countervailing duty investigation, ruling that Chinese cabinet and vanity exporters received trade subsidies ranging from 10.97 to 229.24 percent. Based on those preliminary rates, U.S. trade officials have instructed Customs and Border Protection agents to collect cash deposits from Chinese importers of solid- and engineered-wood cabinets and vanities – both assembled and ready-to-assemble (RTA) – as well as wooden components.
The Commerce Dept. decision stems from an unfair-trade petition filed in March by the American Kitchen Cabinet Association (AKCA). The 50-member coalition that has charged that, as a result of unfair Chinese trade practices in cabinet manufacturing and exporting, imports of illegally subsidized and dumped Chinese-made kitchen wooden cabinets, vanities and components, sold at lower than market value, have risen sharply in recent years and are undermining the businesses of U.S. firms. The AKCA has been pushing for the imposition of antidumping and countervailing duties on the imports, which were valued at an estimated $4.4 billion in 2018 and currently comprise more than one-third of the $9.5-billion domestic cabinet market.
“The U.S. cabinet and vanity industry and its workers have suffered for years due to dumped and subsidized imports from China,” said Timothy Brightbill, a partner at Wiley Rein LLP, the Washington, DC-based law firm serving as counsel for the AKCA. “We urge (U.S. trade officials) to continue to investigate these unfair trade practices and to apply the trade remedy laws to dumped and subsidized Chinese products.”
Last week’s Commerce Dept. decision, according to AKCA member Mark Trexler, was “an important step.”
“Illegally subsidized Chinese imports of kitchen cabinet and bath vanities into the U.S. have injured this important, multi-billion-dollar American industry,” said Trexler, president and CEO of Master WoodCraft Cabinetry. He added that the AKCA looks forward to the Commerce Dept. continuing “its efforts to push back on unfairly traded Chinese imports and ensure a level playing field for American workers.”
“With a level playing field, American kitchen cabinet manufacturers can compete with any company or country in the world,” said Trexler. “What we cannot compete with is China’s cheating. Our workers pride themselves in the tradition of American craftsmanship, and that tradition is under direct attack from China.”
U.S. trade law provides domestic companies with a mechanism to seek relief from the market-distorting effects caused by unfair subsidization of imports into the U.S. Unfair subsidies consist of financial assistance from a foreign government that benefit the production of goods by foreign companies. Foreign companies that price their products in the U.S. market below the cost of production, or below prices in their home markets, are subject to antidumping duties. Companies that receive unfair subsidies from their governments – such as grants, loans, equity infusions, tax breaks or production inputs – are subject to countervailing duties aimed at countering the subsidies.
Antidumping and countervailing duty investigations have been underway by the Commerce Dept. and the U.S. International Trade Commission (ITC), both of which address different aspects of the case. The ITC determines whether there is material injury or threat of injury to the U.S. industry by the imports. Commerce determines whether the alleged dumping and subsidization are occurring, and if so, at what levels. Both agencies must reach affirmative final determinations on the separate issues for Commerce to issue antidumping and countervailing duty orders.
The ITC had determined, prior to last week’s Commerce Dept. ruling, that there is “a reasonable indication” that the U.S. cabinet industry “is materially injured” by imports of Chinese cabinets and vanities allegedly sold in the U.S. at less-than-fair market value.
Last week’s Commerce Dept. determination “gives the American kitchen cabinet industry the hope it needs in our fight against China’s unfair trade practices,” said Stephen Wellborn, director of product and research development for Wellborn Cabinet. “Americans deserve to know that we are on their side, fighting for their right to a job that has spanned generations with a true American tradition of ‘Made in the USA’ cabinetry. With over 250,000 American jobs on the line, this is a positive determination for the American people.”
The Commerce Dept. is expected to issue a final countervailing duty determination on or about Dec. 17. If Commerce makes an affirmative final determination, the ITC will make its final injury determination on or about Jan. 30, 2020, trade officials said. While the preliminary margins indicate the level of subsidies likely to be found in the final determination, the duty rate to which the Chinese cabinet and vanity imports will be subject will not be finalized until final determination are made.
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