North Carolina furniture manufacturers are owed more than $150 million in uncollected duties from importers of cheap wooden bedroom furniture from China.
The money has gone uncollected for years by U.S. Customs and Border Protection, but Sens. Richard Burr, R-N.C., and Charles Schumer, D-N.Y., along with colleagues in other states, have recently tried to pressure the Obama administration to do something about the lost revenue. The senators have asked the agency to explain how it’s going to collect the money owed U.S. manufacturers.
The answer, so far, is that it could take years.
Stanley Furniture Company, a High Point, N.C.-based manufacturer, is owed more than $71 million and Hickory, N.C.-based Century Furniture is due more than $5.3 million in uncollected duties assessed against overseas furniture manufacturers who “dump” products into the U.S. market at artificially low prices, based on estimates of past payouts of collected duties.
The flood of cheap goods from China has devastated furniture manufacturing industry in North Carolina. Since the 1990s, tens of thousands of N.C. furniture jobs moved to Asia, where it costs less to produce furniture. The industry also suffered from predatory practices used by China, such as subsidies and currency manipulation. The N.C. Commerce Department estimates the state now has 33,684 workers in the industry, compared with 80,765 furniture jobs in 1993.
In 2003, a small group of American manufacturers in North Carolina, Virginia and other furniture centers banded together to fight back. They filed an anti-dumping petition with the U.S. Department of Commerce charging that the dumping practice helped force the closure of hundreds of factories in North Carolina and other furniture communities. They won.
Two years later, in 2005, the Commerce Department began imposing anti-dumping duties, which don’t account for currency manipulation, on wooden bedroom furniture from China after determining those products were being dumped on the U.S. market at “less than fair value.”
While millions of dollars in duties have been collected and paid out, much of it has not.
CBP has failed to collect $369 million in anti-dumping duties from 2001 to 2012, including $216 million that would have been distributed to the group of U.S. manufacturers who filed the petition, according to a CBP breakdown sent to Burr and other senators in response to their queries.
CBP officials told McClatchy Friday night they had to review the inquiry before answer questions, but officials said in a 2013 letter to Burr that the agency is aggressively pursuing unpaid duties, but acknowledged the challenges. Some of the companies in China have gone out of business or may have left no assets. Michael Yeager, assistant commissioner of the Office of Congressional Affairs with CBP, said in the letter the agency would consider litigation if duties continued to go unpaid, but he warned Burr that the process could take several years to get any kind of judgment.
Burr cited the unpaid duties as another reason why he opposes the special trade-promotion authority that Congress is considering. The authority would make it easier to pass President Obama’s proposed Trans-Pacific Partnership, a 12-nation trade pact.
“The federal government’s inability to enforce the rules on the books is hurting North Carolina’s most revered industries,” Burr said in a statement. “Before we consider new trade deals, we need to make sure our bureaucracy is enforcing the existing laws to protect American workers. In this case, we know they aren’t.”
More than half of the money, $156 million, is owed to five companies based in North Carolina or that have operations in the Tarheel state, according to estimates of CBP data by Schumer’s office.
“Customs and Border Protection officials have been asleep at the wheel when it comes to collecting the mandated duties on imports from China,” said Schumer, whose district includes several furniture manufacturers owed unpaid duties.
The senators have the support of a bipartisan group of colleagues, including Sens. Thom Tillis, R-N.C., Patrick Leahy, D-Vt., and Rep. Virginia Foxx, R-N.C.
Industry expert Andy Counts, CEO of the American Home Furnishings Alliance in High Point, whose membership includes domestic manufacturers – some of whom are among those hit by the Chinese dumping – as well as importers, felt Burr and other members’ concerns were less about money being paid to the petitioners than ensuring the importers were being properly scrutinized and duties paid.
“The petitioners felt strongly that they needed to level the playing field and that the Chinese government was subsidizing these plants,” Counts said.
The duties have stirred up controversy within the industry. Other furniture manufacturers have complained to the U.S. government that they too should benefit from the duties even though they didn’t participate in the 2003 petition.
Glenn Prillaman, CEO of Stanley Furniture Company, has grown frustrated with what he sees as the lack of action by the federal government. He did not respond to a request for an interview, but wrote to CBP last year questioning why CBP officials were not more forthcoming with progress.
“This silence leads me to believe that, contrary to your statements at our meeting, CBP is not taking our issue seriously,” he wrote.