Via a tradelawnews tweet, I came across this WSJ article:
Some U.S. furniture makers and their lawyers have found a reliable way to extract cash from Chinese competitors deemed by U.S. officials to have "dumped" their products in the U.S., selling them at unfairly low prices.
Each year since 2006, they have asked the Commerce Department to review the U.S. duties paid by Chinese manufacturers on imports of wooden bedroom furniture. Many Chinese firms, fearing a steep rise in duties, agreed within months each time to pay cash to their U.S. competitors in return for being removed from the review list.
"Everybody in the industry in the U.S. and China understands that these payments are clever shakedowns," said William Silverman, a lawyer representing U.S. furniture retailers, big importers of Chinese products, at an October hearing of the U.S. International Trade Commission.
Representatives of the furniture makers, including La-Z-Boy Inc. and Vaughan-Bassett Furniture Co., say the payments are legal. Late last month, those two companies and about 15 other U.S. furniture makers sought the latest review, listing 110 Chinese firms.
About $13 million was paid to a group of 20 U.S. furniture makers from 2006 through 2009, according to a November ITC report. The U.S. firms told the ITC that a much larger, but unspecified, amount of money went to pay the U.S. firms' lawyers. The ITC report didn't include 2010 payments.
Two of six ITC commissioners expressed misgivings about the payments. Commissioner Charlotte Lane said at the October hearing that she was "very, very troubled" by the settlements, adding: "I cannot figure out for the life of me how they are actually legal."
In a note included in a December ITC report, Commissioner Daniel Pearson said the settlements create "additional costs and distortions" in furniture trade, "with little evidence that these distortions have yielded any benefits to the industry overall, the U.S. consumer, or the U.S. taxpayer."Since 2005, the Commerce Department has imposed antidumping duties on wooden bedroom furniture from China after determining those products were being dumped on the U.S. market at "less than fair value." The tariffs range from less than 1% to more than 200% of the import value.
U.S. trade law allows the companies hurt by dumping to submit to the department once a year a list of exporters for review. The department has up to 18 months to determine whether the listed companies should be subject to tougher duties.
A Commerce Department spokesman said it didn't approve of the private settlements but lacked "authority to investigate or police agreements between private parties." The normally secret settlements surfaced during that hearing, which was held to determine whether the U.S. should continue applying the duties. A November vote by the ITC kept the duties in force.
Even though this has a Byrd Amendment feel to it, with money going directly to the domestic industry, it's hard to imagine that the private settlements by themselves violate any WTO rules. But is there some obligation on domestic authorities to prevent the settlements? Could a failure to crack down on this practice make the U.S. government subject to a WTO claim of some sort? This is probably a stretch, but could there be a finding that the U.S. government's decision to allow the practice is a "specific action against dumping of exports from another Member" that is not "in accordance with the provisions of GATT 1994, as interpreted by [the AD] Agreement," under AD Agreement Article 18.1? It doesn't seem like a particularly strong argument.
There's also the issue of who would challenge the practice. Presumably the Chinese exporters feel they are better off with the cash payments, so why complain?
