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China Quartz Surfaces to Face New Tariffs

Updated: 2018/6/23

WASHINGTON - Imports of Chinese quartz-surface products will be subject to punitive duties later this year as part of a federal panel's decision on unfair international-trade practices.

The U.S. International Trade Commission (USITC) voted 5-0 yesterday that U.S.-based manufacturers of quartz-surface products are “materially injured” by products from China “that are allegedly subsidized and sold in the United States at less than fair value.”

The U.S. Commerce Department, after official notification today from the USITC, will continue investigations, with decisions on import-duty amounts in July and September.

The USITC decision comes after an April complaint filed by U.S. quartz-surface manufacturer Cambria Company LLC that claimed below-market sales of Chinese-made material made possible by subsidies by various government agencies and programs in China.

USITC Chairman Rhonda K. Schmidtlein, Vice Chairman David S. Johanson, and commissioners Irving A. Williamson, Meredith M. Broadbent and Jason E. Kearns voted for the action.

“We are encouraged by the actions taken thus far by both the Department of Commerce and the ITC to stop this unfair trading and restore a level playing field where we can compete fairly in a free market economy,” said Marty Davis, Cambria president/CEO, in a media statement. “The unfairly traded Chinese imports have disrupted healthy competition and threaten to gravely injure the quartz surfaces product industry at all levels of trade in the U.S.”

With its vote, the USITC rejected testimony from several U.S. quartz-surface importers, including Arizona Tile and M S International, that the Chinese surfaces didn't harm Cambria's market position as a seller of premium-priced products, and that U.S. surface fabricators should be considered as part of the domestic manufacturing base.

The commission also rejected an argument by several importers that Cambria's request reached beyond its own product base of slabs to include Chinese quartz-surface goods such as blanks and fabricated parts for onsite U.S. installation.

The USITC's factual highlights in its decision notes:

Quartz surface products consist of slabs and other surfaces created from a mixture of materials that includes predominately silica (e.g., quartz, quartz powder, cristobalite) as well as a resin binder (e.g., an unsaturated polyester). The incorporation of other materials, including, but not limited to, pigments, cement, or other additives does not remove the merchandise from the scope of the investigations.

The highlights also offer a broad definition of product types facing import duties:

In addition to slabs, the scope of these investigations includes, but is not limited to, other surfaces such as countertops, backsplashes, vanity tops, bar tops, work tops, tabletops, flooring, wall facing, shower surrounds, fire place surrounds, mantels, and tiles. Quartz surface products are covered by these investigations whether or not polished, cut, fabricated, cured, edged, finished, thermalformed, packaged, and regardless of the type of surface finish.

The factual highlights also noted that there are three U.S. producers of quartz-surface materials. while the document doesn't name them, Cambria's petition noted Caesarstone's plant in Richmond Hill, Ga., and LG Hausys America's facility in Adairsville, Ga.

Neither Caesarstone or LG Hausys joined Cambria in the action. In early May, Caesarstone interim CEO Yair Averbuch told Wall Street analysts that he preferred not to cite any specific cases, but that “we support first-rate practices in our markets.

“More specifically, this petition was not initiated or submitted by us,” he said. “However, of course if regulatory agencies will approach us, we will provide any relevant information.”

The USITC's highlights noted producer plants in five states California, Georgia, Indiana, Minnesota, and Ohio - but offered no details on specific locations.

The Commerce Department will now determine two separate duties. Investigation of the first - countervailing (or anti-subsidy) duties - has a tentative July 11 deadline. The second “antidumping” duty should be determined by Sept. 24.

The USITC's full report on the action Quartz Surface Products from China, Inv. Nos. 701-TA-606 and 731-TA-1416 (Preliminary), USITC Publication 4794 will be available to the public after June 29.

The USITC decision is not part of the ongoing tariff and duty actions on Chinese goods initiated by the Office of the U.S. Trade Representative under the Trump administration.

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