The Wall Street Journal reported on the 15th that since 2006, some American furniture manufacturers have asked the US Department of Commerce to review the tariffs paid by Chinese manufacturers on wooden bedroom furniture. Many Chinese companies have agreed to pay cash to US competitors in just a few months for fear of a sharp increase in tariffs, in order to remove them from the review list.
Cash dredge, in order to "tax avoidance"
Since 2005, after the US Department of Commerce ruled that Chinese wooden furniture for the United States was dumped to the US market at a price lower than the fair value, it has been levying anti-dumping duties on such products, ranging from less than 1% to 200% of the import price. % or more.
US trade law allows US companies that are subject to dumping damage to submit a list of Chinese exporters to be reviewed annually to the Ministry of Commerce. The US Department of Commerce has up to 18 months to decide whether a higher tax rate should be imposed on companies on the list.
Most of the furniture produced by a manufacturer of high-end Italian furniture in Guangdong is sold to the United States. According to the person in charge, once responding to the lawsuit, the company must submit a large number of responding materials and provide relevant evidence, including: the company's business license, the company's articles of association, the company's organizational chart, the balance sheet and profit and loss statement of the past two years and The production capacity, output, sales volume (including domestic sales) and export volume of the products in the past 3-5 years.
Therefore, in order to avoid cumbersome response procedures and possible high tariffs, Chinese furniture manufacturers are generally willing to choose to pay cash settlements to US competitors.
"smart extortion"
The US International Trade Commission’s November report showed that in order to avoid annual re-examination, from 2006 to 2009, Chinese companies paid about $13 million to 20 US producers; The Trade Commission said that these payments were legal and that a larger sum of money had been used to pay their lawyers.
William Silverman, an attorney for US furniture retailers, said at a hearing at the US International Trade Commission in October last year that people in the US and Chinese furniture industry understand that the money is a smart blackmail.
According to Peter Koenig, a Washington lawyer representing Chinese manufacturers, many companies have to settle privately because the tariff levels they face will be uncertain if they are reconsidered. The setting of tariffs goes back to the past, which means that the tariffs that the exporters have not paid within one to two years after the export of furniture may increase sharply.
Two of the six US International Trade Commission commissioners expressed concern about the money. Commissioner Charlotte Lane said at a hearing last October that she was very worried about such a settlement and said that she could not figure out how it would be legal for a lifetime. Another commissioner, Daniel Pearson, said the reconciliation caused additional costs and distortions in the furniture trade, and there is no evidence that these distortions have any benefit to the industry, US consumers and US taxpayers.
A US Department of Commerce spokesman said that the Ministry of Commerce does not agree to private reconciliation, but lacks the power to investigate and supervise the agreements reached by the parties. Former US Commerce Secretary Frank Lavin suggested that the US government make rules to prevent such gray behavior.
In fact, anti-dumping tariffs did not prevent furniture imports. The US International Trade Commission found that imported furniture accounted for 78% of the $3.4 billion worth of wooden bedroom furniture sold in the United States in 2009. In 2001, this proportion was only 44%. However, the implementation of tariffs has promoted the transfer of most furniture production from China to Vietnam. Currently, the United States has not imposed anti-dumping duties on Vietnam.
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