irreverent, thought-provoking analysis of the industry.
The Canvas "Dumping" Issue: Another
What IS dumping? And is it necessarily bad?
by Frank Stapleton, MacPherson's (May23, 2005)
(Note: Is there any industry-related issue more
complicated than international trade? CLN hasn't found it. In
the May 2 edition CLN reported on Tara filing an anti-dumping
petition with the U.S. Department of Commerce and the International
Trade Commission against Chinese exporters of pre-stretched artist
canvas, canvas panels, rolls, archival boards, and canvas pads. The
following is reprinted from the #195 edition of ArtiFax, the fax
newsletter published for its customers by MacPherson's, the art
material distributor and importer.)
One of the big topics of discussion at the recent Chicago NAMTA
show was the anti-dumping case filed by the U.S. Commerce Department
related to the importation of stretched canvas to the United States
from China. Everyone I talked to seemed familiar with the basic
facts that led to the action. Nearly everyone, for instance, knew
that this action was initiated and sponsored by Tara Materials, Inc.
and that Tara alleges that China is illegally selling (dumping)
product into the U.S. below cost to the detriment of U.S.
What these conversations also uncovered was that there isn’t a
clear understanding of some key details and possible consequences if
Tara’s action is successful. Many people weren’t aware, for
example, that if Tara’s action is upheld during an investigative
process, the Commerce Department could impose significant tariffs
that would raise the price of imported stretched canvas, such as Art
Alternatives, to our customers. With this in mind, I felt it
would be helpful to devote some space in the Big Idea to foster a
greater understanding of the facts, as well as to explore what we
may soon be facing.
Dumping laws were enacted in the United States to prevent
manufacturers in any given country from selling products in the
United States either at a) prices below their cost; or b)
prices below those at which the products are being sold
domestically. In principle, we should all be against an unfair
practice that undermines the economic strength of our country. But
the fact is that China is not dumping canvas into the United States.
A little known loophole in the law allows petitions filed against
China to ignore the actual costs paid for labor and raw materials,
and to look instead to a different, higher cost country for the
data. Although painting a completely false picture, it becomes
possible on paper to show that products are sold below this
hypothetical, inflated cost. Using this biased reasoning, it
suddenly becomes highly possible that Tara’s complaint could
result in tariffs being imposed.
Tara is asking that import tariffs be set at levels as high as
277% to, in their words, "level the playing field"! And
what happens to the revenues these tariffs generate going forward?
Congress passed a law four years ago that mandates tariffs be paid
to the plaintiffs. Because Tara is essentially the only U.S. company
taking part in the petition, 95% or more of future tariffs could be
paid to Tara. [Editor's note: Duro Art Industries has joined
Tara in the petition.] The altruistic idea behind the law is that
the money will be used to help displaced factory workers. On recent
visits to several stores in the Western U.S., we were unable to find
a single Fredrix stretched canvas that was not made in
Mexico. Which begs the question, which country’s workers, if any,
will see the money?
If Tara wins, do we all win? Or does Tara win while the industry
loses? If the anti-dumping petition is left unchallenged, retailers
who have benefited from our imported canvas program as well as from
other brands could face an end to the programs, programs that have
increased both retail sales and the usage of a key component in any
painter’s creative process. A 277% tariff would probably force a
significant increase in MSRPs in addition to a rollback to the
discount levels of five years ago. Back would be the days when you
needed to place $2,000 orders to get a discount of 60% off and, as
in the past, the retailer buying direct could, once again, have to
pay the freight. Forget about the case-at-a-time, turn-and-earn
buying that keeps the product always in stock at a deal that allows
business-building promotions. These programs, along with our Art
Alternatives merchandising plans, have stimulated explosive
sales of canvas over the last five years. And these same canvas
sales have increased the turnover of all the materials needed to
make art on canvas.
As sympathetic as you might be to the idea of helping an ailing
U.S. business with a high-labor product, is forcing out competition
through government action the best solution for everyone? When we
think of all the retailers who have benefitted from imported canvas
programs, we don’t think so. We think this solution has many
drawbacks, and we will do everything in our power to keep Tara’s
action from ending a phenomenon that has done so much good for our
We would also like to point out that the tried-and-tested tools
of our free enterprise system have allowed Masterpiece, a
domestically produced canvas company with some of the highest costs
in the nation, to thrive against low-cost imports. We only wish that
Tara shared Masterpiece’s optimism, ingenuity and belief in the
power of strong business relationships.
We expect a tariff determination to take approximately five
months. Given the possibility that Tara’s efforts may be
successful, we are considering options that could insure that our
valued retailers will continue to benefit from this truly phenomenal
merchandising concept. There is no guarantee that we will be
successful, but be assured that our company’s considerable
resources are dedicated to trying.
(Note: To comment on this or any other industry issue,
email your thoughts to CLN at firstname.lastname@example.org.
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