So what happened to the U.S. hardwood plywood industry?

China grew its industrial base in hardwood plywood under a 5 year plan by 255% from 2002-2006 to over 600 producers compared to two dozen in America. Government industrial policies and programs provided subsidies to support that explosive growth. To this day, Chinese producers enjoy a reduced raw material cost advantage by using illegal logs which their government is lax to enforce. Tax rebates and other subsidies support aggressive programs to increase exports to the mature industrial economies in the United States and Europe.

When the domestic market in China cannot absorb all that is produced, and then the excess production is “dumped” into the global market. It’s a classic case. The EU put into place countervailing duties on Chinese produced hardwood plywood imported into their market. The U.S. industry seeks the same remedy.

Ironically, when the U.S. housing bubble was developing, this new U.S. demand coincided with China’s explosive capacity growth. The U.S. industry could not compete with the cheaper Chinese imports that captured the “bubble” demand and then held onto and increased their market share after the bubble burst.

The U.S. does not have an “industrial policy” to promote and protect its industry. We rely on the free market and legal trade remedies which are the only tools available to the industry. Hence, the filing of the anti-dumping and countervailing duty case against Chinese hardwood plywood producers.