Newsletter december 2018 schoenfeld consulting

Newsletter DECEMBER 2018 Schoenfeld Consulting Volume-4 Issue-10
NEWSLETTER DECEMBER 2018
TARIFFS ON CHINESE FURNITURE
As reported in our November
newsletter with the 10% tariffs now in
effect some Chinese furniture export
companies and their US furniture
importers are exploring alternative
means to avoid the threat of more
stringent tariffs of 25% proposed by
the Trump administration in 2019.
The current shift of production of
furniture goods is now being
discussed by moving manufacturing

from China to Vietnam and Thailand
in particular is creating stiff
competition to secure new facilities in
these neighboring countries with
China now being responsible for
producing more than 20% of total
global manufacturing.Vietnam and
Thailand are emerging as the new
preferred destinations since there are
no tariffs on furniture goods from
these countries but there are limits on
how much of the shift in furniture
production they could adsorb
because of capacity limits, legal
entanglements,availability of skilled
labor and the current limited
infrastructure.Product

consistency,shipping
costs,relationships with current
retailers and existing contracts and
commitments to flow inventory are of
immediate concerns.However with
the savings now of 10% and avoiding
the proposed 25% the above
concerns can certainly be worked out
and in the long term diversifying
sources of supply will be an attractive
goal for these new countries and the
existing retailers of furniture items
worldwide.
Earlier this year Man Wah a producer
of upholstered furniture in China
purchased a factory in Vietnam for
$68 million with plans to triple its

current capacity to 373,000 square
meters by the beginning of 2020.A
Man Wah representative stated that
”The acquisition is to mitigate the
risks posed by tariffs”. In Vietnam BW
industries a real estate developer
stated that ”furniture manufacturers
exist from locations all over the world
but most all have production plants in
China and need to start alternative
production as soon as possible”. BW
says inquiries have surged since last
October and all of its Vietnam
factories are now leased out.
Export data from Chinese companies
today show little slow down and even
some increases but this is due to

factories rushing to get shipments out
before the current 10% tariffs are
possibly increased to 25% in January.
The meeting in Buenos Aires at the
G20 summit between President
Trump and Chinese President Xi
Jinping has had serious
consequences by reports in the news
media that have been interpreted as a
truce being reached and a 90 day
pause in new tariffs while
negotiations continue.President
Trump has agreed to delay an
increase from the current 10% to a
25% tariff scheduled for January 2019
on $200 billion worth of imports from
China, while the two countries

continue negotiations. China has
agreed to increase purchases from
the United States of
argricultural,energy,industrial and
other products.However these
measures are not yet clarified by
Chinese sources.So the actual facts
of the agreement remains
uncertain.Uncertainity has caused
the US stock market to react with high
volatility and huge sell offs while the
White House struggles to explain the
details of what the two countries
actually agreed .
For our furniture industry companies
at wholesale are dealing with the
current 10% tariffs by either raising

prices incrementally or absorbing the
10% for a time while retailers are
negotiating individually with their
Chinese sources and US distributors
to lessen the effect of these price
changes.In addition the exchange
rate changing as the dollar increases
in value will tend to offset the effects
of the 10% tariffs . In general prices for
furniture consumers are remaining
the same as inventories are being
exhausted and the future of new
tariffs seem to be on hold for 90 days.
STANDARD 16CFR 1632 / 16CFR 1633
FLAMMABILITY OF MATTRESSES

The CPSC(consumer product safety
commission) has issued two standards
for the flammability of mattresses.The
differences are listed below:
A)-16CFR 1632 Standard for
Flammability for mattresses and
mattress pads
(2006/2014).Requirements are testing by
smoldering cigarettes where the char
length must not exceed a specified
length of not more than 2 inches in any
direction.The definition of a mattress
pad(or topper) is a thin cushion ticking
material filled with resilient filling
material.
Upholstered furniture which does not
contain a detachable mattress is
excluded from this regulation but must

meet the regular flammability
regulations for upholstered
furniture(Cal-117-2013).Upholstered
furniture with a detachable mattress
must comply with 16CFR 1633 for the
detachable mattress and be labeled as
compliant to 16CFR 1633 by open flame
testing, even though it is not a set.
B)-16CFR 1633 Standard for
Flammability of mattress sets(mattress
and box spring or foundations) by Open
Flame testing(2008/2016).
The above two Federal Standards both
must be complied with for the specified
items,that is 16CFR 1632 for mattresses
and mattress pads or toppers ,and
16CFR 1633 for mattress sets.
The CPSC interim enforcement Period

In late November of 2018 the CPSC’s
office of compliance implemented an
interim enforcement policy for the
flammability of mattresses and mattress
pads,16CFR 1632.This unusual
temporary change is due to a shortage
of the availability of SRM(NIST standard
reference material)cigarettes used for
smolder testing.The requirement for
smolder testing of six mattress surfaces
reduced to only two mattress surfaces
will reduce the use of these special SRM
cigarettes.Also to clarify the complete
validity of the smolder testing exactly to
the written standard, now packages of
already opened cigarettes will be
allowed to be used for flammability test
compliance.

So now we have an example of our
government agencies in
action…hopefully all the other required
testing regulations imposed on our
industry will be as exacting and so
careful to not invalidate any section of
the exact testing protocols as shown
very clearly by this example of the
actions of the CPSC.
California Prop 65 Responsibilities
There have been many questions asked
by furniture retailers about their
responsibility to name the exact
chemical from the list of over 900
dangerous chemicals on the list posted
by OEHHA,that may exist in the furniture
items offered for sale in retail stores.The
proper labeling on the furniture item

naming the chemical has been a burden
and many retailers have not been able
to obtain this information and check if it
is in fact valid.This has caused some
retailers to do separate costly testing of
their furniture inventories.
The California agency OEHHA has
recognized the difficulty in fulfilling this
responsibility and in 2017 shifted the
responsibility of naming the exact
chemical from the retailer to the
manufacturer.Manufacturers have
direct access to their suppliers
upstream and can demand by use of
MSDS sheets or similar valid documents
to verify the chemical substances
contained in their finished furniture
goods.

In November OEHHA announced that it
will hold a public hearing to meet with
stakeholders for comments on the
amendments adopted to the “clear and
reasonable warning notices” it issued
on November 20,2017, by proposing
additional clarifications to these rulings.
Some of the clarifications suggested are
as follows:
A)-The MANUFACTURER
(producer,packager,importer,supplier or
distributor is responsible for:
1)-Provide a warning notice on the
product label
2)-States that the product may result
in an exposure to one or more listed
chemicals
3)-Indicates the exact name or

description of the item of furniture or
specific information such as UPC code
or other identifyer.
4)-Provides all necessary warning
material such as,labels on the product
itself plus;Store signage,shelf signs,tags
and the warning language for products
sold on the internet for posting on the
appropriate page where consumers
purchase the item of furniture.
5)-Has proof that the required
information above has been sent to the
retail store and has received
confirmation that the retail store has
received this notice of information.
6)-Confirmation that the above notice
has been received by February 28,2019.
7)-If there is a change to the chemical

name or to one of the endpoints(cancer
or reproductive harm) then an
additional notice is required within 90
days.
8)-THE RETAIL STORE is responsible for
the placement and maintenance of
warning materials inside the retail store
including the warnings for products sold
over the internet on their website page.
Public comments to the proposed
changes to the “clear and reasonable”
notices processes will be accepted by
OEHHA until December 31,2018.
For more specific legal information
please contact us for a more detailed
discussion of each section of the
proposed clarifications issued by
OEHHA(The California Office of

Environmental Health Hazard
Assessment).
After any amendment is adopted in
early 2019 we will report the results in
our next newsletters.
FURNITURE COMPLIANCE to US EPA
Title VI for FORMALDEHYDE EMISSIONS
U.S.Customs has issued a notification
that as of March 22,2019 items of
furniture containing composite
wood(plywood,MDF or particle board)
will be required to be compliant for
emissions of formaldehyde by the US
EPA standard and must be certified and
labeled as compliant to “TSCA Title VI
40CFR 770”.Labeling these items as
compliant to CARB ATCM #93120 Phase

two standards will no longer be
sufficient.
Cetrtification includes documentation
by the system of third party certifyers
established and approved by CARB and
recognized by the US EPA.After March
22,2019 importers will be responsible for
providing a TSCA Section 13 import
certification in the form of a positive
certification through the “Automated
Commercial Environment”.
US Customs noted that upon request
from the EPA importers must make
available certain records that document
compliance within 30 days.
The US EPA has also published a
proposed rule that would clarify that
regulated composite wood products

and finished furniture goods must be
labeled at the point of manufacture or
fabrication.If the product is imported the
label would have to be affixed to the
product by the date of importation.
For California the CARB Phase two
requirements will continue beyond the
March 22,2019 date for furniture items
offered for sale in California.
So for California only it will be required
to have both the US EPA TSCA Title VI
label and the CARB ATCM #93120 Phase
Two label for formaldehyde emissions
from furniture containing composite
wood products.
As we approach the effective date in
March of 2019 we will elaborate on
these new requirements in more detail.

Best Regards, Robert Schoenfeld
Schoenfeld Consulting is available
for advice and personal discussions
of all laws and regulations affecting
our furniture industry.For more
information about the monthly fee for
advice and research with 24/7
availability please contact us at:
Schoenfeld Consulting
Furniture Laws & Regulations
20 Owl Ridge Ct.Novato,Ca.94945
schoenfeldrobert@comcast.net
415-290-4144

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Newsletter december 2018 schoenfeld consulting

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Newsletter december 2018 schoenfeld consulting