A preliminary determination on Jan. 9 by the U.S. Department of Commerce to impose countervailing duties (CVD) ranging from 4.43% to 9.93% has U.S. newspaper, book and commercial printers that buy imported Canadian uncoated groundwood paper seeing red.
That’s because it will deliver a severe blow to their bottom lines due to what amounts to an average countervailing duty of 6.53%. In its investigation, the Commerce Department calculated a preliminary subsidy rate of 6.09% for Catalyst Paper, 9.93% for Kruger Trois-Rivieres, and 4.42% for Resolute Forest Products Canada.
Impacted Canadian uncoated groundwood paper includes standard newsprint, high bright newsprint, book publishing, directory, and printing and writing grades. The scope includes paper that is white, off-white, cream, or colored. Papers that otherwise meet this definition, but which have undergone a supercalendering process, are said to be excluded. Click HERE for a more complete fact sheet on the Department of Commerce ruling.
“This preliminary decision allows U.S. producers to receive relief from the market-distorting effects of potential government subsidies, while taking into account the need to keep groundwood paper prices affordable for domestic consumers,” announced U.S. Secretary of Commerce Wilbur Ross. In 2016, imports of uncoated groundwood paper from Canada were valued at an estimated $1.27 billion.
As a result of the ruling, U.S. Customs and Border Protection agents will now collect cash deposits from importers of uncoated groundwood paper from Canada based on these preliminary rates.
North Pacific Paper (NORPAC), an independent paper mill based in Longview, Wash., filed a complaint last year that these grades were being unfairly subsidized by the Canadian government, reportedly alleging that the papers were being sold from between 23.5% and 55% below then-current market prices.
In response to the Department of Commerce ruling, David Chavern, president and CEO of the News Media Alliance, wrote in a blog, “NORPAC petitions do not reflect the views of the domestic paper industry and demonstrate a lack of understanding of the market. The well-documented decline in the U.S. newsprint market is not due to unfair trade, but to a decade-long shift from print to digital distribution of news and information.
“Now, we will all literally pay for one manufacturer’s manipulation of our country’s trade laws. These tariffs will saddle publishers with additional costs that will hasten the newspaper industry’s shift to digital and, consequentially, accelerate the decline in both the printed newspaper and newsprint industries. There will be no winners.”
The U.S. Department of Commerce is slated to announce its final CVD determination on May 22. If it makes an affirmative final determination and the U.S. International Trade Commission (ITC) makes an affirmative final injury determination, the Department of Commerce will issue a CVD order. If it makes a negative final determination or the ITC makes a negative final determination of injury, the investigation will be terminated and no order will be issued.
Enforcement of U.S. trade law is a prime focus of the Trump administration’s “America First” initiative. From January 20, 2017, through January 9, 2018, the Commerce Department has initiated 82 antidumping and countervailing duty investigations – a 58% increase from 52 in the previous year. It currently maintains 418 antidumping and countervailing duty orders to protect American companies and industries that are deemed to be impacted by unfair trade.