An editorial by Rich Christianson.

The recent repeal of the controversial Byrd Amendment will phase out a lucrative revenue stream for two dozen U.S. furniture companies that successfully petitioned for antidumping duties against Chinese wood bedroom furniture in 2004 — just as they have begun to profit from it.

According to information posted on the U.S. Customs and Border Protection’s Web site, a total of $116.9 million in initial assessed duties was collected in 2012 from the importers of record of wood bedroom furniture made by any of the approximately 130 Chinese manufacturers identified in the U.S. Dept. of Commerce’s Dec. 28, 2004 final ruling.

Each of the 24 domestic manufacturers, all members of the American Furniture Manufacturers Committee for Legal Trade, recently received checks of varying amounts totaling $144,159.96. These initial disbursements ranged from $627.35 for TSF LLC to $28,712.66 for Stanley Furniture.

Much bigger payouts are in the offering, however, pending the outcome of administrative audits and an appeal filed by a group of importers. Based on the initial assessment, Stanley Furniture stands to receive about $23.2 million; followed by Vaughan-Bassett Furniture, $19.3 million; Bassett Furniture Ind., $10 million; and Kincaid Furniture, $8.4 million.

Byrd Amendment Bites Dust

The Byrd Amendment, the common name for the Continued Dumping and Subsidy Offset Act of 2000, was repealed when President Bush signed the Deficit Reduction Act of 2012 into law on Feb. 8. Although it was repealed, the Byrd Amendment remains in effect until Sept. 30, 2014.

In essence, the Byrd Amendment allows U.S. companies that filed successful antidumping and countervailing duty petitions to receive the duties collected by the U.S. government from foreign competitors instead of earmarking those proceeds for the general treasury. Nearly $2.6 billion in initial assessed duties tied to the Byrd Amendment were collected last year, for a wide range of industries. Included in that amount was nearly $1.3 billion on Canadian softwood.

The Byrd Amendment has been at the heart of heated disputes pitting nations around the globe against the U.S. policy, as well as U.S. retailers against U.S. manufacturers. Many critics allege the Byrd Amendment is nothing short of “corporate welfare.” In 2003, the World Trade Organization ruled that the Byrd Amendment violated global trade law, sparking the imposition of retaliatory tariffs on a wide variety of U.S. goods by Canada, the European Union, Japan and other countries.

Point-Counterpoint

In a letter dated Aug. 26, 2012 to the Trade Subcommittee of the House Committee on Ways and Means, Michael Veitenheimer, vice president and general counsel of The Bombay Co., and spokesman for the Furniture Retailers of America, wrote, “We believe that these petitioners were primarily motivated by the prospects of Byrd Amendment funds…(T)he furniture manufacturers who filed the trade petition will not be required to use the Byrd money they receive for job retraining or to improve their competitiveness. Instead, these companies can sit back and receive a government handout on every wood bedroom product imported into this country from China, and it goes right to their bottom-line.”

In a December 2004 interview with W&WP, Doug Bassett, vice president of sales for Vaughan-Bassett Furniture Co. and a spokesman for the Committee for Legal Trade, asserted that saving U.S. manufacturing and jobs, not profiting from the Byrd Amendment, was what drove the petitioners to act. “The Byrd Amendment has been ruled illegal by the World Trade Organization,” he said. “We don’t expect, nor ever have expected, to see a dime from it.”

Did Bassett Speak too Soon?

Several representatives of the Committee for Legal Trade, including Bassett’s father, John Bassett III, president and CEO of Vaughan-Bassett, sent variations of the same letter to the trade subcommittee last August to “strongly oppose” elimination of the Byrd Amendment. Each of the letters noted, “China contributed to the closing of over 65 U.S. wooden bedroom furniture factories during 2001-2004.

“We need CDSOA to ensure that our antidumping order has its intended effect. CDSOA discourages foreign exporters from continuing to dump, because they know their U.S. competitors are the ones that receive the duties they pay…CDSOA distributions will enable our company to preserve U.S. manufacturing jobs.”

That remains to be seen, as some of the anti- dumping petitioners continue to announce plant closings and layoffs, including Bassett Furniture’s decision last September to shut down its 540,000-square-foot Mount Airy, NC, factory; Webb Furniture’s November announcement to close its bedroom furniture plant in Galax, VA; and Vaughan Furniture’s January announcement to consolidate its two remaining factories in Galax into one.

In the meantime, despite facing duties ranging from less than 1% to more than 198%, U.S. imports of Chinese-made wood bedroom furniture increased by about 15% to more than $1.7 billion last year.

Depending on your perspective, and your amount of vested interest in the antidumping proceedings, that might be a good thing or a bad thing.