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IKEA Causing Conflict in Korean Furniture Industry
Particle Board Tariff
IKEA Causing Conflict in Korean Furniture Industry
  • By matthew
  • October 15, 2014, 09:54
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Conflicts between the furniture and wood panel industries have ignited again regarding the tariff on particle board (PB). All these conflicts started when the furniture industry, threatened by IKEA's upcoming entry into the Korean market, requested the Ministry of Trade, Industry and Energy (MOTIE) to lift the tariff on PB. The two industries promised to figure out ways to coexist, as the Korea Wood Panel Association (KWPA) withdrew the extension of anti-dumping tariffs on imported PB. However, with IKEA imminent, the two industries are at war again.

According to the related industries on Oct. 14, both the furniture and wood panel industries are very persistent over lifting the tariff on PB. Currently, the MOTIE is discussing with the Ministry of Strategy and Finance whether to lift the tariff.

A representative from the furniture industry welcomed such an action and insisted, “The final products of furniture are imported without tariffs, but 8 percent of the tariff is reversely imposed on PB, raw materials for furniture. Korean companies that manufacture furniture using PB are inevitably hurt.”

However, the wood panel industry is maintaining its strong stance of never accepting tariffless PB. The wood panel industry also refuted the reverse-tariff claim of the furniture industry. KWPA argued, “Not only Korea, but also China, Southeast Asia, and Europe are maintaining tariffs on materials such as PB, and no tariffs on the final products of furniture, in order to support the material industry. As we gave up extending the anti-dumping tariff on imported PB, more and more PB is being imported. If the tariff is lifted at all, the foundation for domestic production will be lost.”

Some wood panel companies are even claiming to impose a tariff on furniture instead of lifting the tariff on PB. However, the MOTIE expressed strong disapproval of this idea by explaining, “After Korea joined the World Trade Organization, tariff on furniture has been lifted after a ten year grace period, and this cannot be revoked.”

As KWPA claimed, the market share of imported PBs actually increased a lot after the withdrawal of the extension of the anti-dumping tariff. The market share of imported PB was 48.1 percent in 2012, but hiked to 51.7 percent last year, and finally to 57.4 percent for the first half of this year. The wood panel industry is currently facing three major difficulties of an increasing market share of imported products, a lack of raw materials, and controversies over tariffs.