AAHP to HPVA: U.S. Manufacturers, employees and consumers lose in government investigation of Chinese hardwood plywood
As the federal government continues its investigation of the Chinese hardwood plywood market, The American Alliance for Hardwood Plywood (AAHP) takes strong exception to a recent statement made by the Hardwood Plywood Veneer Association (HPVA). AAHP Co-Chairmen Greg Simon and Gregg Wilkinson issued the following statement:
“It’s clear that the market realities of this protectionist campaign are taking hold. U.S. manufacturers that rely on a steady, competitive global supply of hardwood plywood are speaking out against the impact that a near 45 percent price hike on one of their vital raw materials will have on their production and their bottom line. The effects will be far reaching and the recent statement from HPVA is an act of desperation to rationalize this misguided investigation. HPVA and the petitioners continue to allege “unfair trade” and while they are entitled to their own opinions, they are not entitled to their own facts, which are as follows:
Dumping and Countervailing Preliminary Duties. In two separate investigations into the issue, the Department of Commerce determined that our trans-Pacific trading partners have not engaged in any unfair trade practices, either in the form of government subsidies or unfair pricing, aka, “dumping”. In other words, when Commerce conducted a full investigation, the charges were proven baseless. Despite this finding of innocence, Commerce refused to apply a zero percent penalty to the remaining exporters who were fully cooperative but not lucky enough to be examined by Commerce. Instead, Commerce used an average that included a penalty tariff normally reserved for non-cooperative companies and slapped a 22.63 percent countervailing duty, along with a 22.14 percent anti-dumping duty on imported hardwood plywood from China, a product that had a cost $615.5 million in 2011 alone.
Unfair Trade. If the petitioners and HPVA are so convinced that unfair trade practices are occurring in China, why is there no outrage from them over the Department of Commerce conclusions that not one of the three Chinese companies selected for intensive investigation received any illegal subsidies at all. The petitioners have remained silent and opted not to challenge Commerce’s zero-percent subsidy finding, which is very revealing about their true intentions—they are not interested in a fair tariff on Chinese imports. Rather, they are banking that the Department of Commerce will continue the voodoo math that resulted in a 22.63 percent subsidy tariff on the Chinese industry that fully cooperated in this case. China and our other trading partners are surely watching and it’s a sure bet that our U.S. exporters can expect to be treated with the same disregard for rule of law.
Illegal Logging. Contrary to illegal logging claims by HPVA and the petitioners, The Lacey Act of 2008 was created to stop products being produced from illegally harvested wood from all countries. It is highly effective; U.S. importers have vigilantly complied with all Lacey Act requirements no matter the foreign source.
“There are no hardwood plywood products, which are currently imported from China that cannot be manufactured by domestic producers.” – Not true. Chinese hardwood plywood fits specific niches that are complementary to domestic plywood sources. Many manufacturers rely on Chinese hardwood plywood for very specific applications that cannot be met by current domestic sources. It is an apples and oranges comparison. In fact, there are many hardwood plywood products imported from China that domestic producers cannot, or have elected not to, manufacture. This is nothing new either. It simply continues a trend that has gone on for many decades; long before Chinese developed high quality, renewable fiber sources for plywood production that are efficiently harvested from reputable plantations.
“Will U.S. cabinet producers lose market share in the new housing market?” Yes. Combined, the 45 percent duties are jolting critical supply chains, spiking the cost of imported hardwood plywood overnight and creating painful shortages. The nature of U.S. trade policies are not remedial, they are punitive. The end users of hardwood plywood in America will suffer from choked off supply, especially if retroactive measures are imposed. American jobs in the manufacturing and woodworking industries are set to suffer, which is why they are contacting their U.S. members of Congress to seek any assistance in reversing this decision or at least ensuring a fairer investigative process. Cabinets that were once manufactured from scratch in the U.S. will instead come in ready to assemble and duty-free, not just from China, but also Canada and Mexico.
Trade Retaliation. Over the last four years U.S. hardwood lumber exports have risen by more than 70 percent. While exporters are enjoying this growth and demand, China and other countries could counter any imposed severe tariffs on imported products due to U.S. trade laws with their own punitive tariffs on hardwood lumber, hardwood logs or even softwood lumber imported from the U.S.
“Despite complete lack of evidence that there are unfair trade practices occurring in the Chinese hardwood plywood market, a bias against imports continues. The excessive, harsh tariffs imposed may please the HPVA and a handful of petitioners who are trying to use trade law to monopolize the market rather than innovate. Unfortunately, the manufacturers and the thousands of employees that rely on this important material will be severely impacted for multiple decades to come. The HPVA dismisses contrary views about their filing with a smug, “Welcome to our World.” But if the U.S. market is denied access to Chinese hardwood plywood as a result of this case, one must strongly consider HPVA’s statement that “in any monopoly, without strict controls, prices increase dramatically” and decide if that is a world that would be very welcoming at all.”
The American Alliance for Hardwood Plywood (www.aa-hp.org) is an organization of American importers, distributors and manufacturers of hardwood
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