High stakes

Chinese-made consumer goods worth more than $1.7 billion would be effectively excluded from the United States if American manufacturers win three major trade cases now before U.S. tribunals.

The high stakes are pitting retailers against producers, but also dividing industries and retailers, and adding tension to international trade relations.

The cases against wooden bedroom furniture, color TVs and farm-raised shrimp are a major concern for U.S. importers and the Chinese government, both big winners from international trade. The cases are a last hope for a small number of American manufacturers and producers that employ thousands of workers.

“If nothing is done to stem the tide of illegal imports, our company will be out of business by the end of the year,” Tom Hopson, president and chief executive of Five Rivers Electronic Innovations, a color TV manufacturer based in Greeneville, Tenn., said at a hearing of the U.S. International Trade Commission (ITC) this month.

China and some U.S. importers argue that rulings favoring manufacturers would not bring any jobs back to the United States, as other countries with low-cost labor, unaffected by duties, replace China. Instead, they see a short-term trade disruption caused by unwarranted protectionism and an unfair system.

So the U.S. importers — retailers and wholesalers — are trying to fight back.

Wal-Mart and Best Buy, two of the biggest color TV retailers, testified against Five Rivers and allied labor unions at the ITC hearing.

American restaurants, grocers, seafood distributors and processors have banded together to make a case that shrimp imports help support 250,000 jobs in the United States.

And the Furniture Retailers of America last week at the International Home Furnishings Market in High Point, N.C., promised a bare-knuckles fight to defeat the anti-import petition.

“The furniture case is the biggest ever against China. And, for the first time, this is really starting to hit consumer goods,” said Erik Autor, vice president and international trade counsel at the National Retail Federation, a group that represents department, discount and other stores.

Chinese wooden bedroom furniture imports in 2003 were valued at roughly $1.2 billion, color televisions at $276 million in 2003 and shrimp at $285 million in 2002, according to ITC documents.

But even retailers and manufacturers are divided.

“You need to support the country and the people. What reason do I have to support China?” said Harold Hewitt, owner of Superior Furniture and Carpets, a Beckley, W.Va., furniture store.

Small retailers like Mr. Hewitt cannot afford to import large containers of furniture from China and prefer to maintain long-standing relationships with domestic manufacturers. If the domestic companies go out of business, Mr. Hewitt said small shops like his probably would fail.

On the manufacturing front, several big companies also import from China and act as distributors. So businesses like Hooker Furniture in Martinsville, Va., bowed out of the coalition that petitioned for anti-dumping duties.

The cases, which can take more than a year to resolve, involve U.S. trade laws set by Congress and enforced by the ITC and the Commerce Department.

The laws make it illegal for another country’s companies to make products and sell them in the United States below the cost of production, a practice called dumping. If found guilty, heavy duties, paid by importers, are slapped on the goods, likely making them more costly for consumers.

The major cases are not exclusively against China. The shrimp petition, for example, extends to five other nations.

In the shrimp case, the Commerce Department made a preliminary determination that China, Brazil, Ecuador, India, Thailand and Vietnam were dumping in the U.S. market. The duties against China were the highest — 112.81 percent to 263.68 percent.

If ultimately confirmed by the ITC, U.S. importers would have to look to other sources or pay the duties. The penalties are collected by U.S. Customs and disbursed to the U.S. producers that filed the complaint. The Commerce Department has not set duties in the other cases.

Dozens of cases have been filed every year for decades, most often on steel but also on a range of industrial materials and occasionally against consumer goods, like Vietnamese fish fillets worth $34 million in 2002 and Brazilian frozen orange juice imports worth almost $670 million in 1986. A case on Canadian lumber used in home building was the biggest so far.

The number of cases filed by U.S. companies, which tend to rise as the economy falls, is down the past two years but the dollar value of Chinese consumer goods targeted in complaints is breaking records.

For many American manufacturers, the record value reflects a wave of Chinese-made products and the high stakes for their industries. For China, the trend is disturbing.

“Trade protectionism has been on the rise recently in the U.S. and some other places and many Chinese products are unfairly treated. I’m gravely worried about that,” Wu Yi, China’s vice premier, said last week in Washington.

China has repeatedly asked that it be treated as a market economy. Its current nonmarket designation makes it more difficult for it to prove that it isn’t dumping goods.

Dumping investigations are not the only way to block Chinese goods from the market. Clothing and fabric companies have effectively used special safeguards on a narrow range of products, and another China-specific mechanism judges whether an imported product threatens to cause market disruption for domestic producers.