The veil of uncertainty for the hardwood flooring segment partially cleared with the release of the Department of Commerce’s (DOC) preliminary determination on March 22, in the countervailing duty (CVD) investigation of engineered (multilayer) wood flooring imported from China.

In this, the second step of the United States International Trade Commission(ITC)/DOC preliminary investigation, subsidies for production, manufacture and export of engineered wood flooring were reviewed.

The results of the DOC investigation were announced after the department received questionnaires from three mandatory respondents – Fine Furniture (Shanghai) Ltd., Zhejiang Layo Wood Industry Co. Ltd., and Zhejiang Yuhua Timber Co. Ltd. – and 67 additional Chinese multilayered wood flooring manufacturers. Fine Furniture (Shanghai) Ltd. received a preliminary net subsidy rate of 2.25 percent, while the two other mandatory respondents received preliminary net subsidy rates of zero.

The 67 other responding Chinese engineered wood flooring manufacturers/exporters received a 2.25 percent net subsidy tax rate on imported goods.

The Commerce Department assigned 127 Chinese engineered wood flooring manufacturers an adverse facts available (AFA) rate of 27.01 percent for taxes on imported goods, after they failed to respond to requests for information. The list does not take into account any company closures, consolidations or mergers.

Keep in mind that only engineered wood flooring products are impacted in this ruling, and do not include bamboo and cork flooring products from China.

The uncertainty of not knowing the pricing of engineered wood products imported from China had a definite effect at the recent Surfaces show in Las Vegas, slowing wood flooring sales and dampening interest. The March ruling should now provide traction for increased hardwood sales at this month’s NWFA show in San Diego and beyond.

Jonathan Train, president of the Alliance for Free Choice and Jobs in Flooring (AFCJF), representing American flooring importers, distributors, retailers and hardwood timber exporters, said of the ruling: “Although we hoped for a finding of zero subsidies across the board, consistent with the realities of the Chinese market, we are pleased that at least the Commerce Department determined a subsidy level of only 2.25% for the companies that responded to the Commerce Department’s questionnaire.

“We applaud the DOC for its diligence and careful review that allowed a preliminary finding of zero for two of the three mandatory respondents,” Train added.

“The 70 companies (with a zero to 2.25% subsidy rate) are estimated to represent at least 95% of the U.S. imports from China for 2011,” Train said.

Jeff Levin, counsel for the Coalition for American Hardwood Parity (CAHP), said this preliminary ruling is an important step for the U.S. market. “The subsidies portion of the investigation was not intended as the principal focus of the CAHP petition. Therefore, the fact that all but two manufacturers in China are now subject to deposit requirements and the attendant suspension of liquidation is, we believe, an important step forward in our overall aim to bring pricing parity and fair competition back to the U.S. market,” he noted.

“We also look forward to the preliminary determination in the antidumping segment of the investigation in mid-May - a completely separate component of this investigation - and anticipate that that will constitute another, significant step towards providing relief for this critical U.S. manufacturing industry in its efforts to combat unfair trade,” Levin added.

The U.S. Customs and Border Protection will be collect a cash deposit or bond, based upon the established CVD preliminary rates.

Wood flooring is an integral part of the flooring product mix, standing at number two in popularity behind carpet/area rugs, according to our just-completed Hardwood Market Study (See page 12).

Only when the Anti-Dumping portion of the review is completed will the entire industry (retailers/distributors, importers and manufacturers) have a clear picture on pricing and availability. Visit our website at www.ntlfloortrends.com for ongoing updates to this important issue.