Commerce Department rejects combination rate request

Decides not to assess duties on transshippers

Thomas Russell -- Furniture Today, August 28, 2008

WASHINGTON - the U.S. Department of Commerce has rejected a request to assign combination rates to Chinese wood bedroom producers shipping through lower-duty factories.

The request was filed in mid-July by King & Spalding, a Washington law firm representing a group of domestic bedroom producers that sought an antidumping investigation into Chinese factories. The investigation found that the factories were producing and shipping furniture at prices considered below normal value into the U.S. market.

Factories were assigned duties ranging from 0% to 216% based on a complex process that investigates materials, labor costs and other factors involved in furniture production.

King & Spalding has alleged that a number of high-duty factories are shipping through low-duty factories in order to remain competitive in the wood bedroom business. Furniture/Today verified this through conversations with high-duty factories that told the paper they are paying a commission to the low-duty factories that agree to ship their goods.

The petitioners argue that the DOC has authority to apply combination rates during administrative reviews of imports from non-market economies such as China. These rates would be higher rates that would apply to both the low-duty exporter and the higher-duty producer.

In its brief, it specifically cites Chinese wood producer the Dare Group as having shipped product made by unaffiliated producers. U.S. retailer American Signature argued to the DOC that the goods were merely semi-finished product that Dare completed and exported to its U.S. customers.

American Signature also said that the DOC already rejected the application of combination rates in new antidumping investigations and that it would be inappropriate for it to diverge from its current practices.

The DOC, which rejected a similar request by King & Spalding last year, agreed, saying that it had not exercised its discretion to apply a combination rate during the most recent administrative review process. That review allows petitioners to request more in-depth audits on specific producers.

The DOC also based its decision on the fact it has found no evidence that specific high-duty producers are shipping products to low-duty exporters.

"Petitioners have made no specific allegation and have provided no evidence that such shifting is occurring," the DOC said.

King & Spalding attorney Joe Dorn said "We are certainly disappointed with the DOC ruling on combination rates, but we are likely to appeal that issue."

He said any such appeal would likely be made in the U.S. Court of International Trade before next year's administrative review process, which begins next spring.