Published: Sat, January 13, 2018
World | By Paul Elliott

Canadian government calls new United States duties on newsprint 'unjustified'

Canadian government calls new United States duties on newsprint 'unjustified'

Punitive duties on newsprint sales to the USA pose a threat to B.C.'s biggest papermaker, though its mills have other export options to mitigate the impact.

It is the same argument made regarding Canada's softwood industry, which led to the imposition of both countervailing and anti-dumping duties on most Canadian softwood exports to the United States.

In a preliminary determination released on January 9, the US Commerce Department stated that exporters of uncoated groundwood paper from Canada had received countervailable subsidies ranging from 4.42 percent to 9.93 percent.

The Canadian government has since filed a complaint to the World Trade Organization (WTO) over USA trade remedy measures, requesting WTO consultations with the United States with respect to anti-dumping and countervailing duty proceedings. Quebec's Resolute and Kruger face duties of 4.4 per cent and 10 per cent, respectively, and all other producers in Canada face duties of 6.5 per cent.

"What the U.S. uncoated groundwood papers industry wants is a level playing field, and this decision is an important step forward for American producers, workers and their families that have been the victims of unfair Canadian trade practices for too long", stated Norpac chief executive Craig Anneberg. Norpac claimed that Canadian paper companies benefit from 65 different subsidies that add up to hundreds of millions of dollars.

Anneberg said that's a "small price to pay to preserve American manufacturing jobs" in Washington, Mississippi and Georgia.

In August, Norpac announced plans to idle one of its three paper machines, framing the production cuts as a response to competition from subsidized Canadian manufacturers.

By contrast, Norpac has just one mill and is owned by a NY private equity firm. "This is about lining their own pockets with cash at the expense of hundreds of thousands of American jobs".

In a joint statement, Chrystia Freeland, Minister of Foreign Affairs, and Jim Carr, Minister of Natural Resources, said they are "deeply disappointed" with the decision.

Given its "outlier status", the letter said, "it appears that One Rock Capital Partners may be using the petitions as a means of increasing the short-term value of this one mill, without any regard for the dramatic negative implications for USA newspapers in thousands of small cities and towns".

The government said it has launched a wide-ranging complaint against the United States over its trade practices.

The CVD law provides USA businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of foreign government unfair subsidization of imports into the United States.

Joel Neuheimer, vice-president of global trade and transportation for the Forest Products Association of Canada, said the United States trade remedy system is a politically-motivated mess.

Norpac's petitions "are based on incorrect assessments of a changing market and appear to be driven by short-term investment strategies of the company's hedge fund owners", the letter said.

In response to the December 4 letter, Norpac sent another letter to Commerce last month accusing the News Media Alliance of supporting Canadian paper producers at the expense of American jobs and industry. "Maybe we are going to experience plant shutdowns for a few weeks".

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