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Furniture Makers Seek MOI Status

Furniture makers are seeking market oriented industry (MOI) status in response to an anti-dumping case initiated in the United States, according to Jia Qingwen, director of the China National Furniture Association. About US$1.2 billion in business is at stake, the largest amount involved in a case against Chinese companies.

"We expect them to investigate us for potential MOI status as soon as possible," Jia said.

Jia said that the issue has been discussed with James Jochum, the US Commerce Department's assistant secretary for import administration. Jochum visited China last month and promised to give an early response.

The nation's non-market economy status is the Achilles' heel once again for Chinese furniture manufacturers.

By defining China as a non-market economy, the United States uses the cost of production in a surrogate country, where material and labor costs are much higher than in China, to calculate the normal value of Chinese exports.

China has requested that the United States recognize it as a market economy and the two countries have set up a group to study the issue.

However, rejecting statistics provided by China, US officials said in June they will impose preliminary tariffs of as much as 198 percent on some imported wooden bedroom furniture.

"MOI is the most practical choice for now as market economy status will take years," said Jia.

The MOI test requires that there be virtually no government involvement in production or pricing. The industry must have private or collective ownership that behaves in a manner consistent with market considerations, and producers should pay market-determined prices for all major inputs and for all but an insignificant proportion of minor inputs.

Jia believes the Chinese furniture manufacturers will pass a fair test.

"China's furniture industry has been completely market oriented. Some 90 percent of the companies are private, shareholding and foreign-funded," he said.

Chinese TV makers have also requested MOI status, but the US Department of Commerce said the data provided by the respondents strongly suggested that the Chinese TV industry does not satisfy the second MOI requirement.

An investigation team sent by the US Department of Commerce has visited furniture makers in Shanghai, Tianjin and Guangdong Province.

A final ruling is expected by November 20 this year.

Liu Shande, a manager from Guangdong's Jixiang Wood Products Co., said that the firm will export to other countries if the US dumping tariff lowers its profit margin. Liu indicated that the average profit margin for exports is as much as 30 percent, significantly higher than for domestic sales.

Professor Li Zuoxin of the China Forestry University said, "Even with the high duties imposed, no jobs will be created for US industry." He stated that orders would simply shift from China to other countries like Indonesia, Malaysia, the Philippines and Vietnam.

Jia said that US furniture retailers have voiced their strong opposition to the anti-dumping cases and support the Chinese move.

On July 30, Hooker Furniture formally withdrew from the petition filed in October 2003 by the American Furniture Manufacturers Committee for Legal Trade. The petition sought duties as high as 440 percent on bedroom furniture from China.

Hooker representatives said that the petition was doing more harm than good in its relationship with customers. Three other major US furniture manufacturers -- Ashley Furniture, Furniture Brands International and Standard Furniture Manufacturing -- had already expressed their opposition to the petition.

In a press release issued by the US Furniture Retailers Association (FRA), spokesperson Mike Veitenheimer said, "There is still time for those manufacturers who blindly supported this petition, which blatantly distorts the market, to wake up and do something to stop the damage that is unfolding. American workers and American consumers should not have to bear the brunt of protectionist acts."

(China Daily, China.org.cn August 31, 2004)

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Furniture Makers Prepare for Possible US Anti-dumping Investigation
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