Last October, an association of U.S. manufacturers of wooden bedroom furniture and some unions representing workers in the industry filed an antidumping petition with the U.S. International Trade Commission and the U.S. Department of Commerce seeking relief from injury allegedly caused by unfairly priced import competition from China.
After an extended evaluation as to whether there was sufficient support for the petition within the domestic industry, an investigation into the allegations was initiated in December 2003. In January 2004, the ITC rendered a preliminary determination that there is a reasonable indication that less‐than‐fair‐value imports from China are causing material injury to the domestic industry. The DOC is expected to announce its preliminary findings regarding the levels of dumping and the application of antidumping duties by June 17, 2004.
Whether the DOC will calculate affirmative antidumping duties is not much of a mystery. It almost always does–particularly in cases involving China, where it utilizes a calculation methodology that has no foundation in logic or fairness. What remains a mystery is whether policymakers will continue to sit idly by as the antidumping law is misused once again to impose trade restrictions under false pretenses.
The case of Wooden Bedroom Furniture from China has nothing to do with unfair trade and is a perfect example of the need for antidumping reform. The filing of this case was a tactical maneuver by one group of domestic producers that seeks to exploit the gaping loopholes of the antidumping law to get a leg up on its domestic competition. Domestic producers realize that the only way to compete and offer their customers variety is to source at least some production from abroad. Instead of preserving or returning domestic jobs (which is the public justification for the petition) import restrictions will cause a shift in sourcing from China to places like the Philippines, Indonesia, Brazil, and Vietnam–places from which many of the petitioners have begun or are poised to begin importing themselves.
This case demonstrates the ease of access to a commercially disruptive weapon that is presumed naively to be reserved for cases of unfair trade. In reality, the antidumping law as written and applied is incapable of identifying unfair trade and is used with increasing frequency to hamper legitimate competition, both foreign and domestic. The unfortunate end result is a greater cost burden for import‐using industries and higher prices for consumers.
An Industry Divided
From the outset, the furniture case has involved extraordinary circumstances. Domestic furniture producers were closely split on the issue of bringing and supporting the initiation of this case. The law requires that the petition be filed on behalf of the domestic industry, which means that domestic producers or workers who support the petition must account for at least 25 percent of domestic production, and they must account for more than 50 percent of the production of all those expressing support for or opposition to the petition. In this case, the 25 percent threshold was met, but the 50 percent threshold was not. Under the law, the DOC can poll the industry to gauge whether sufficient support exists–presumably by attempting to ascertain the positions of those producers and workers who had not registered an opinion one way or the other.
After polling and reviewing the data, the DOC concluded that producers supporting the petition accounted for more than 57 percent of the value of production by that portion of the industry expressing support for, or opposition to, the petition. Hence, industry support requirements were met and the case was initiated.
One can only wonder how much influence the Byrd Amendment and its potential to reward only supporters of the petition affected the level of industry support. Quite conceivably, if the prospect of Byrd Amendment money persuaded even one of the estimated 125 domestic producers of wooden bedroom furniture to support the petition, the provision’s existence–despite its being ruled a violation of WTO rules–might have tipped the balance in favor of initiating this case. This situation might provide one possible basis for a WTO challenge should definitive duties be imposed eventually.
Irrespective of the influence of the Byrd Amendment, since initiation, Hooker Furniture, an original supporter of the petition, changed its position of support to neutral. Under the law, however, there is no revisiting the question of industry support once a case has been initiated. Whether the value of Hooker’s sales was significant enough to have prevented initiation had it been neutral at the outset is unknown, but the evidence is compelling that the domestic industry is deeply divided on this case.
Underlying Market Distortions
Defenders of the antidumping status quo argue that the law is necessary to restore a “level playing field” in cases where foreign producers have an unfair competitive advantage as a result of some market‐distorting policy or policies of their government. High tariffs or other trade barriers, regulations that restrict competition, nonexistent or inadequate regulations to punish anti‐competitive behavior, price controls, and other forms of intervention are often identified as the types of market‐distorting policies that could give rise to dumping. By operating in a protected or sanctuary market, foreign producers can reap supernormal profits on their home market sales and then use the proceeds to cross‐subsidize low‐priced export sales.
But even if imposing duties is a proper response to this type of foreign market distortion, serious problems remain. Most fundamentally, antidumping petitions are not even required to contain allegations of the underlying market distortions the sought remedy is intended to address. Likewise, the administering authorities never even investigate–much less confirm–the existence of any market‐distorting policies that could give rise to dumping. In other words, the existence of such policies (i.e., the predominant justification for the antidumping law) is simply assumed by evidence of price discrimination or sales below cost. As a result, the antidumping law usually misses its target: companies engaging in normal commercial conduct are penalized for selling products at different prices or at prices below the cost of production even though such pricing strategies are commonplace, rational, often profit‐maximizing, and perfectly legitimate in a purely domestic context. 
The furniture case has absolutely nothing to do with market‐distorting policies or any competitive advantages they could bestow on foreign producers. It is simply a complaint about the legitimate advantages of producing wooden bedroom furniture in China by some U.S. producers who have been less successful in capitalizing on those advantages. Consider the dubious logic of the petitioners’ own argument for antidumping relief: