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Fighting back

A coalition of U.S. hardwood plywood makers wants to stem the tide of Chinese plywood imports

   Trade relief in the form of antidumping duties against a tide of alleged underpriced imported hardwood plywood from China can’t come soon enough for a beleaguered U.S. industry that’s now struggling to stay afloat.
   In June, the U.S. Commerce Department determined that Chinese hardwood plywood is being dumped on the U.S. market at rates between 0 percent and 114.7 percent less than fair value. The department has since instructed U.S. Customs and Border Protection to collect cash deposits from importers of Chinese hardwood plywood at the preliminary dumping margins.
   Commerce is scheduled to make its final determination regarding this antidumping investigation by Aug. 31, unless the statutory deadline is extended.
   The U.S. International Trade Commission is conducting a parallel investigation to determine if American producers of hardwood plywood are harmed by these Chinese imports. If the ITC makes an affirmative final injury determination, which is expected by Oct. 13, then Commerce will issue an antidumping order. If the ITC does not find that U.S. producers have been harmed, then the investigation will end and no duties will be collected.
   This is the second time the U.S. hardwood plywood manufacturers petitioned Commerce and the ITC. With the first petition—filed in 2012 and 2013—the ITC could neither sufficiently determine the level of injury to the U.S. industry nor whether the U.S. and Chinese products were fully competitive and substitutable with each other.
   The Washington, D.C.-based Coalition for Fair Trade in Hardwood Plywood, which once again petitioned Commerce and the ITC to conduct the investigations Nov. 18, believes its case against the harmful effects of these Chinese imports on the U.S. industry is now indisputable.
   The coalition’s members include Columbia Forest Products of North Carolina; Commonwealth Plywood in New York; and Murphy Plywood, Roseburg Forest Products Co., States Industries, and Timber Products Co., all of Oregon.
   “This is the second bite at the apple,” said Joe Gonyea III, partner and CEO of Timber Products Co., referring to the latest petition. “This case is critical to us. . . We need to win to have a level playing field.”

This is the second bite at the apple. This case is critical to us. . . We need to win to have a level playing field.

   China has been steadily building its presence in hardwood plywood manufacturing since 2000 and there are now an estimated several hundred large and small Chinese firms engaged in this product. This industry’s presence in the U.S. market became increasingly pronounced starting in 2010.
   The coalition pointed out that during the past two years alone that U.S. imports of Chinese hardwood plywood have increased 35 to 40 percent. In 2016, Commerce noted that these imports from China were valued at $1.12 billion.
   “This is an example of a sector in which China identifies a market and then moves in to take over,” said Tim Brightbill, trade counsel for the coalition, in an interview.
   In addition to the dumped prices for its hardwood plywood, the coalition alleges that Chinese manufacturers receive an array of government subsidies for land and raw materials, as well as various tax breaks to encourage production and exports.
   The coalition said Chinese imports of hardwood plywood have already hammered U.S. producers. It estimates that 42 U.S. mills have recently closed their doors, and many others have reduced production capacity, resulting in the layoff of about 52,000 workers.
   “This case is crucially important to these companies for their survival,” Brightbill said.
   By removing China’s unfair trade advantage in hardwood plywood, Brightbill said there’s no reason why U.S. manufacturers of this product can’t thrive. Hardwood plywood is used to make many high-end wood items, such as kitchen cabinets and home and office furniture.
   “The United States has a huge comparative advantage in hardwood plywood,” Brightbill explained. “We have much more supply in hardwood than China ever will, state-of-the-art equipment, and productive labor. There’s no reason why this U.S. industry shouldn’t be growing.”
   U.S. producers are not alone in their fight against underpriced Chinese hardwood plywood imports. Colombia, Turkey, the European Union, South Korea and Argentina have imposed antidumping duties on such imports from China.
   But Chinese hardwood plywood manufacturers aren’t showing any sign of letting up, and the concern is that they will increasingly integrate this commodity into other finished products for export, such as kitchen cabinetry.
   “We do think the U.S. agencies are working hard on this investigation and are focused on it,” Brightbill said. “But we can’t take anything for granted due to the amount of industry damage, so far.”
   The United States is also embroiled in a longstanding trade dispute with Canada over Canadian exports of softwood lumber into the U.S. market. In late June, the Commerce Department issued an affirmative preliminary determination in its antidumping duty investigation of softwood lumber from Canada. It determined that Canadian companies have sold their softwood lumber products in the United States at 4.59 percent to 7.72 percent less than fair value.
   Gonyea, whose family-owned company will be celebrating its 100th anniversary next year, said at least the United States and Canada are working hard to minimize the market impacts of Canadian softwood lumber on both sides of the border.
   “Our case against Chinese hardwood plywood is more devastating than Canadian softwood lumber,” he added.
   The Coalition for Fair Trade in Hardwood Plywood is hopeful that its case against China will also lead to the Trump administration filing an official trade dispute in the World Trade Organization.