Nonpayment and Illegal Transshipments Alive and Well in The Mattress Industry

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Anti-Dumping, Exports, Imports

In March, The US International Trade Commission voted to leave in place anti-dumping duty orders on mattress spring units imported from China, South Africa and Vietnam, finding that revoking the orders would cause harm to US-based manufacturers.

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The duties were originally placed on the mattress springs in 2008 and in the 5-0 vote, the ITC determined that revoking the anti-dumping duty orders on uncovered innersprings imported from the three countries would be likely to lead to a continuation or recurrence of material injury to domestic companies “within a reasonably foreseeable time.”

How Do Import Duties Get Removed?

The Commerce Department is required to remove an anti-dumping or countervailing duty order, or terminate a suspension agreement, after five years unless the department and the USITC vote against it, according to the Uruguay Round Agreements Act. Still, it can be difficult for other nations to get duties removed once they have been imposed. They must prove to Commerce that removing the duties will no longer hurt domestic manufacturers.

The domestic manufacturers that originally petitioned Commerce in this case are a coalition that includes major bedding industry supplier Leggett & Platt, as well as American Spring Wire Co., Insteel Industries, M&B Metal Products, Mid Continent Nail and Vulcan Threaded Products. The companies manufacture steel wire products, including uncovered innerspring units.

In 2010, according to an article by trade publication BedTimes, Chinese companies began evading the duties through a variety of tactics including shipping products to the US via a third country and then falsely designating it as the country of origin, making “inconsequential modifications” to the product in a third country and placing false labels displaying a different country of origin on products actually made in China.

Ensuring Payment of Imported Goods

International trade is a business rife with risk, even before consideration of import duties. Our sister site, Trade Financing Matters, recently examined the dilemma faced by non-investment grade importers that have a long term trading relationship with suppliers in China and few issues with performance, quality or delivery risk, yet if they would like to extend their non-letter-of-credit payment terms, they generally don’t have the necessary leverage to do so.

As the article states, there are ways that an exporter can receive non-credit payment for imported items that have not yet been paid by the customer, but final payment by the importer is still needed in a timely fashion at the end of the transaction.  The lag between shipments and payments can be an exporter’s number one headache.

You are a non investment grade importer that has a long term trading relationship with suppliers in China and Hong Kong and few issues with performance, quality or delivery risk.  Yet you would like to extend your non letter of credit terms, but don’t necessarily have the leverage to do so.  What do you do? – See more at: http://spendmatters.com/tfmatters/capital-business-credit-helps-extend-terms-for-importers/#sthash.JtyUnUf2.dpuf

And, of course, non-payment remains a real risk. We are aware of at least one US bedding manufacturer, Sleepmaster of Syracuse, NY, that took delivery of nearly $30,000 worth of innerspring coil products from a Malaysian original equipment manufacturer and still has not paid the importer or the OEM. Delivery was taken in early April.

Duties and tariffs not withstanding, non-payment wreaks financial havoc on small exporters, particularly those in the mattress innerspring industry whose livelihoods depend upon prompt payment.

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