Canada 'deeply disappointed' by USA groundwood paper duty

Canada 'deeply disappointed' by USA groundwood paper duty

The Canadian Government has described the US Government's preliminary countervailing duty ruling on imports of Canadian uncoated groundwood paper as "unjustified".

"Our North Country economy relies on strong trade with our Canadian neighbors and these proposed duties would harm the many businesses that rely on these paper products", she said. The Montreal-based company expects to pay $185 million in duties from trade disputes over softwood lumber and supercalendered paper.

Commerce Secretary Wilbur Ross says government subsidies given to Canadian paper companies give them an unfair advantage over US competitors. Unlike some trade disputes, this decision came in the face of opposition not only by USA newspapers and publishers, but by other US paper mills, the American Forest and Paper Association and dozens of members of Congress - all of whom said the move will be injurious to USA business interests.

The federal and provincial subsidies include government grants, tax breaks, subsidized loans, raw materials at below-market costs and cheap subsidized electricity, according to Norpac.

Catalyst, another Canadian paper firm, called the tariffs an "unwarranted trade action".

Officials at both One Rock Capital Partners and NORCO did not respond to requests for interviews or statements about the case.

The Canadian complaint alleges that American use of anti-dumping and countervailing duties violate global trade rules.

Meantime, the new duties will also put many local newspapers at risk of failing, according to US newspaper coalitions.

Many newspapers don't print in their own facilities, so an increase in newsprint prices would also affect the printing industry, which sent a letter last month to Secretary of Commerce Wilbur Ross urging him to reject a tariff on Canadian newsprint because it would further stress the financial viability of newspapers.

Prior to this week's decision, Higgins wrote to Ross pointing out, "While there are many legitimate instances where USA industry needs to be protected from foreign producers - this is not one of them".

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.

Neuheimer said about 5,000 jobs across Canada are directly linked to the newsprint business, and unlike softwood, where the industry had high prices to help offset the hurt of the U.S. duties, newsprint margins are already so low that the impact of this is going to be felt immediately.

Anneberg also addressed local newspapers' concerns in Tuesday's press release.

"If Canadian imports of uncoated groundwood paper are subject to duties, prices in the whole newsprint market will be shocked and our supply chains will suffer", the letter said. All other Canadian producers weighted an average of 6.53 per cent.

In some instances, taking a strong stand against countries dumping underpriced products on the USA market to undercut American companies is warranted.

Groundwood from Canada is subsidized and being dumped at less than fair value, according to complaints filed to the Commerce Department in August by US producer North Pacific Paper Co., also known as Norpac.

With almost 400 non-union employees, Norpac is one of Cowlitz County's largest employers.