The U.S. Department of Commerce is opening three investigations into claims that Mexican, Malaysian, and Polish exporters are dodging antidumping duties on mattresses following complaints by domestic companies such as Serta Simmons Bedding and Tempur Sealy International, the agency said Monday.
The inquiries will probe claims the foreign companies are importing components such as foam, inner bed springs, and mattress covers to the U.S. where they are then processed into completed mattresses in order to avoid the antidumping duties, Commerce said in its three notices. While each investigation request named individual companies as part of the evidence of alleged circumvention, the inquiries will be countrywide, Commerce said.
The domestic producers also include the International Brotherhood of Teamsters and the United Steelworkers, along with other mattress companies such as Brooklyn Bedding LLC.
In all three investigation requests, the domestic producers accused the foreign companies — and their U.S. importers and subsidiaries — of having "rejiggered" their operations by shipping the individual components to the U.S. instead of completed mattresses. "Rather than compete fairly," these companies are evading the orders, the domestic producers said, wrongfully dodging duty rates on foreign mattresses that stretch into the triple digits in some cases. These rates were established in a third wave of such actions against imports from around the world.
The domestic producers believe the final assembly of these mattresses in the U.S. should be considered a "minor or insignificant" process under section 781(a) of the Tariff Act of 1930. If Commerce agrees and finds there is circumvention, which requires it to take into account factors including whether the value of the U.S. processing represents a small proportion of the total value, it is empowered to expand the duty order to include these components under the act.
The completion of the mattresses in the U.S. after shipping over the components "is a relatively simple operation that requires significantly less investment and research and development ("R&D"), smaller production facilities, and less sophisticated equipment" when compared to the overall development and manufacturing of a mattress, the companies said in their requests. "Consequently, the assembly of mattress components accounts for a relatively small proportion of the total value of the finished mattress."
For example, the domestic producers accused two Polish companies of circumventing the duties through U.S. subsidiaries including EBI LLC, as part of an overall conglomerate referred to as the COM40 Group. They accused EBI of having "significantly increased" imports of components from Poland after the initial antidumping duty investigation began. They pointed to the costs of the renovations for EBI's manufacturing facility, as well as the fact that the facility also handles other types of furniture, as proof of lower costs and overall smaller production needs that are, in their view, hallmarks of circumvention.
EBI's counsel, George William Thompson of Thompson and Associates, pointed Law360 to a news release where it refuted the circumvention claims.
"The request is premised on a fundamental factual error: EBI did not shift from importing finished mattresses to importing components in order to evade antidumping duties," the company said in the release. "EBI has not been a commercial importer of finished mattresses."
The company said it has been importing mattress components since its establishment in 2008 and the import data relied on by the producers to show this alleged increase is based on an "improperly" conflation of mattress covers — "now expressly ruled outside the scope of the order by the Department of Commerce" — with finished mattresses, it said.
"This petition is a deliberate misuse of the trade remedy process by certain U.S. producers seeking protection from lawful competition rather than relief from unfair trade," EBI said. It also filed comments to Commerce to this effect.
Representatives of other implicated companies did not respond to requests for comment.
Commerce intends to issue preliminary determinations on these investigations by July 9, it said.
Counsel for the domestic producers declined to comment.
The domestic producers and unions are represented by Yohai Baisburd and Chase J. Dunn of Cassidy Levy Kent LLP.
EBI and Polish company Correct-K Blaszczyk i Wspolnicy Spolka are represented by George William Thompson of Thompson and Associates.
Kuka Sleep is represented by Shanshan Liang and Johnathan William Foege of Liang & Mooney PLLC.
Ureblock S.A. de C.V. is represented by Andrew B. Schroth of Grunfeld Desiderio Lebowitz Silverman Klestadt LLP.
Lester, SA de CV is represented by Jonathan M. Freed of Trade Pacific PLLC.
Representation information for other companies implicated in the domestic producers' claims was not readily available.
The cases are Mattresses from Malaysia, case number A-557-818, Mattresses from Mexico, case number A-201-859, and Mattresses from Poland, case number A-455-807, at the U.S. International Trade Administration.
Feb 9
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