American Alliance for

Hardwood Plywood

Impact of 2016 Antidumping (“AD”) and Countervailing Duty (“CVD”)

Petition against Chinese Hardwood Plywood

IWPA Convention San Francisco, CA

April 6, 2017

AAHP BACKGROUND

• Formed in late 2012 - An organization of leading American importers, distributors & manufacturers of hardwood plywood

• Members include both IWPA members and non-members

• The AAHP successfully defeated the 2012 petition

• Has remained strong and unified for 4+ Years

• Once again acting as lead voice defending against a flawed petition

• Presentation will show why IWPA members, and at-risk parties, need to get more actively involved

AAHP Members Include

PRACTICALLY SPEAKING

• Imports arriving after April 17th will very likely incur (currently unknown) Preliminary CVD rates paid in cash deposits

• The DOC deadline to sign the Preliminary AD determination is June 16

• ITC Final Phase hearing date not yet set - Estimated Late October/ Early November 2017 with Final Determination expected 30 days after

• Historically CVD lower than AD rates but we are in a TRUMPIAN world now

• Initial duties may be retroactive by 90 days if “Critical Circumstances” are found

• Exposure to additional duties on both CVD and AD begins the date final ruling is posted in the Federal Register thru the ANNUAL “Administrative Review” process

Net effect of the petition and future retroactive liability is to DETER subject imports immediately - if not indefinitely

Retroactivity • AD/CVD law retroactive in nature, rather than prospective

• Duties set by DOC but what CBP collects are estimated “deposits” only

• System works with an Investigation (now) followed by a series of annual “Administrative Reviews” that recalculate duties / retroactively adjust

• Petitioning industries like the uncertainty of the US retroactive system because it discourages all imports, whether or not unfair

• Reviews can basically go on….. and on…… indefinitely

• Importers’ ultimate liability cannot be known

• How would one go about selling????

PRODUCTS WITHIN THE SCOPE • List is too long/wide for this presentation

• Carve-outs that existed in 2012 case have largely been removed

• Scope has not been finalized, can change over time

• Scope Clarifications – Best discussed with professional DOC counsel

• Generally/Cynically

Hardwood Plywood products the Petitioners historically haven’t produce

Don’t currently produce

Don’t want to focus their operations on and/or

Cannot make in sufficient quantity to support US demand

SCOPE COMPLEXITY

Scope language so wide

If not tightened up, will make CBP’s tasks more challenging

Will potentially lead to heightened scrutiny

Scope Challenges –

Major Retailers Ikea, Target, Others filed motions related to crossover of HTS codes for HWPW vs finished goods (RTA furnishing and cabinetry)

Major US Furniture industry – Raised objections to define scope

Hardwood Plywood vs Component parts vs RTA Furniture vs RTA Cabinets

What can we expect?

• Costs & Risk - To become increasing unknown now & going forward

• Market Volatility & Uncertainty - Highly probable, almost certain

• Transition Period

Markets will adjust but process takes time

Cannot immediately replace the total volume supplied to the US market

• Ports / steamship lines / transport companies - adversely effected at least temporarily

• Opportunity & Loss - There will be winners and losers

• Scrutiny – CBP / Enforce and Protect

Plywood Version 1.0 vs 2.0

• Scope is much wider now

• Petitioners counsel has changed

• Political climate has changed considerably (TRUMP + Anti-China)

• 2016 case will be the first DOC/ITC case litigated during the Trump Admin

• Success before the ITC in 2013, while certainly encouraging, does not mean history will repeat nor does 2016 Prelim defeat = Final defeat

• AAHP remains strong and unified with same Legal/Economic Defense Team

• 3 out of the 5 current commissioners voted negative in the 2012 case

The Bottom Line

• Disruptions- Dramatic disruptions in supply and increased cost on both imported and domestic plywood products

• Long Lasting - If the AAHP is unsuccessful in our ITC Defense efforts, there will be long lasting, negative effects on many businesses

• Made in America? – More American Jobs at risk in downstream industries

• Finished Kitchen Cabinet Imports Positive FD will push some U.S. cabinet MFGS to move production

offshore - eliminating US jobs - to ensure they retain market share, and remain competitive against non-dutiable RTA cabinets

• Consequences – If we lose, case could help further grow a potentially dominant kitchen cabinet industry……..IN CHINA

• Take a leadership position in public opposition

• Have a key downstream customer quoted in a PR position piece

• Post our PR pieces on your websites

• Confidential affidavits from you or your largest customers

• Help us expand the Alliance make up

• Get actively involved and further educate & inform your customer base

• Donate financially to the AAHP

• Join the AAHP as a fully active member, or as an associate member, publicly or anonymously

IWPA Members Active Participation Needed

What can interested companies do to

help fight this case?

• Educate your congressmen & senators to stand up to the petitioners

• ITC Questionnaires - Your professional response to the questionnaires is nothing short of vital

• Remember

At the ITC, it’s ONE for all, all for ONE

The ITC has the final word

Professional, Intelligent, Academics, Non-Partisan

Represent our one chance to win this case……Again

• CARPE DIEM

AAHP Informational Meetings

Current AAHP Members will hold a meeting tomorrow from 12-1 PM

Immediately following, the AAHP BOD welcomes non-members to attend an informational meeting w/ Lead Counsel, Jeff Grimson

This meeting is designed to address specific questions about the case and discuss methods of involvement and support

Both meeting will take place in the Bay View Room

www.aahp-org.com

Questions and Answers