In response to a trade petition filed by Norpac last summer, the U.S. Department of Commerce announced Tuesday that it will impose anti-dumping duties on uncoated groundwood paper from Canada.
The preliminary decision comes as part of a Commerce investigation into Norpac’s claim that Canadian papermakers are selling uncoated groundwood paper — the same paper used for newsprint — at less than fair value.
A coalition of media organizations, including one that owns The Daily News, has warned that slapping tariffs on Canadian newsprint will threaten thousands of jobs in the publishing industry. And at least one Canadian paper analyst bashed the tariffs, calling the Commerce decision “shocking” and “bizarre.”
However, Norpac maintains that trade remedies are needed to level the playing field.
Norpac alleged in a petition filed on Aug. 9 that Canadian papermakers were dumping newsprint in the U.S. for between 23 and 55 percent below fair market value. The Longview mill, which employs about 300 workers, is one of just five mills in the United States that still makes newsprint and is only one of two with U.S.-based ownership.
Commerce said Tuesday that it has found some Canadian producers are selling newsprint for up to 22 percent less than fair value.
“As we indicated in our petition, we have suspected that some Canadian producers were dumping uncoated groundwood papers in the U.S. markets — this has now been confirmed,” Norpac CEO Craig Anneberg said in a prepared statement.
Norpac idled one of its three paper machines around the same time it filed its trade petition, citing unfair competition. The machine will likely remain in a “warm idle” state until after Commerce makes a final decision in early August and the market responds, Norpac spokesman David Richey told The Daily News Wednesday.
As a result of its findings, Commerce will instruct customs officials to start requiring cash deposits from Canadian paper producers at the border. The deposits would be refunded later if no final anti-dumping order is issued.
For now, Resolute FP Canada Inc. and the White Birch Paper Canada Company will not pay any new duties, but a 22.16 percent antidumping duty will be levied on Catalyst Pulp and Paper Sales and all other Canadian producers.
“President Trump made it clear from the beginning that we will vigorously administer our trade laws to provide U.S. industry with relief from unfair trade practices,” Commerce Secretary Wilbur Ross said Tuesday in a press release. “Today’s decision follows an open and transparent investigation in accordance with the applicable laws, regulations, and administrative practices that ensured a full and fair review of the facts.”
But Kevin Mason, an analyst with British Columbia-based ERA Forest Products Research, called the numbers Commerce arrived at “pure fiction.” Mason noted that Catalyst was found to be “de minimis,” or too trivial to merit consideration, in a Commerce review of countervailing duties on Canadian magazine-grade paper in April 2016.
“How you turn around and hit them with 22 percent … that just makes no sense at all,” he said.
Mason also criticized Commerce for applying a top-end rate of 22 percent to all non-investigated companies such as Kruger Inc., which will now be paying more than 30 percent in combined duties to import newsprint.
“Who lives and who dies?” he said. “It’s all determined by Department of Commerce numbers. The marketplace is no longer deciding who survives and who fails.”
The new duties were announced two months after another Commerce investigation concluded that Canadian provincial governments are also unfairly subsidizing newsprint. The investigation found Canadian producers benefited from 34 different subsidy programs ranging from cheap power deals to raw materials such as wood chips sold at below-market costs. In response, Commerce announced on Jan. 9 that it will impose countervailing duties, intended to counter export subsidies, of up to nearly 10 percent.
Imports of uncoated groundwood paper, which is also used in book publishing and printing, was estimated at $1.27 billion in 2016, according to Commerce. Canadian newsprint producers now satisfy about two-thirds of U.S. demand.
The News Media Alliance, a coalition of media organizations that includes about 2,000 newspapers in the U.S. and Canada, denounced the Commerce decision in a statement Tuesday.
“Publishers and printers across the country are already feeling the negative consequences of a tighter newsprint market and higher prices resulting from the duties announced in January,” said President and CEO David Chavern. “The announcement today means that publishers and commercial printers will feel more pain in the months ahead, and more than 600,000 jobs across the printing and publishing industry will be threatened.”
Chavern said increased costs will force most newspapers to reduce page counts, cut days of distribution and move more information that appears in print to digital media.
“Some small-market or rural newspapers, with slim margins, will close,” he said.
Chavern also noted that the American Forest and Paper Association, which represents the broader domestic paper industry, opposes Norpac’s petition.
(Full disclosure: The Daily News buys its newsprint from Norpac. The newspaper is owned by Lee Enterprises, whose vice president and chief operating officer, Kevin Mobray, is on the board of directors of the News Media Alliance.)
Commerce is scheduled to announce its final determination in its antidumping investigation on or about Aug. 2. The International Trade Commission also is expected to conclude its own final investigation in the coming months.
Commerce will issue a final antidumping order if both Commerce and the ITC find that Canadian imports of uncoated groundwood paper materially injure domestic industry. If either agency’s final determination is negative, no antidumping order will be issued.
“We’re hoping when we get to the final determinations some common sense will prevail, but in the interim these are absolutely crippling numbers” to newspapers and publishers, said Mason, the paper analyst.