U.S. Furniture Industry Applauds China Trade Agreement

Furniture World Magazine

Leaders of the U.S. furniture industry applauded progress on a landmark trade agreement between the United States and China. American companies view the agreement's phase-out of Chinese trade barriers as a key step in opening an enormous new market for U.S. - made furniture. The agreement on a detailed framework for a trade pact was recently announced, but further negotiations will take place during 1999 to fill in remaining gaps. The furniture-related provisions however, appear complete and quite favorable for U.S. manufacturers. The American Furniture Manufacturers Association (AFMA) has strongly supported the worldwide removal of furniture tariff and non-tariff barriers through multi-lateral and bilateral negotiations. Fred Preddy, president of AFMA, stated, "AFMA members produce the world's finest furniture products, and do so across a wide range of styles and prices. They have demonstrated their ability to compete across the globe as long as the playing field is level." With its 1.2 billion-person market - 22 percent of the world's population - China has great potential for U.S. furniture producers. Preddy predicted, "As a larger middle class emerges in China, I believe they will seek out the quality, style and prestige of American furniture." U.S. furniture manufacturers have developed extensive trading relationships with their counterparts in China. However, the flow of manufactured goods has been almost exclusively one way. Demonstrating the adverse impact of trade barriers, AFMA's Executive Vice President, Douglas L. Brackett, noted, "Over the last five years, annual Chinese furniture imports have quickly approached the $2 billion level, while shipments of U.S. furniture into China have remained negligible." U.S. companies point to significant trade barriers that have so far kept U.S. products and investment out. These include requirements that foreign companies trade through licensed brokers, local sourcing mandates (which force foreign manufacturers to purchase as much as 80 percent of their raw materials from Chinese firms) and requirements that foreign firms export a specified percentage of goods they produce in China. Trade experts believe the Chinese made significant market-opening concessions in their quest for admission into the World Trade Organization (WTO), the international body that deals with the rules of trade between nations. The WTO was established to promote fair and consistent trading rules, and to resolve trade disputes between nations. Reflecting on the unfinished WTO negotiations, Preddy said, "It would indeed be a tragedy, if after years of difficult negotiations, U.S. businesses were denied the opportunity to freely trade with China. I encourage the Administration and the Congress to do everything they can to bring these negotiations to a successful conclusion."