In a new counteroffensive, a coalition opposed to Norpac’s trade petition against Canadian papermakers is arguing that tariffs on imported newsprint will ultimately backfire on the Longview paper mill.
The aggressive campaign comes as the U.S. publishing industry begins to feel the bite of new fees on uncoated groundwood paper — the same product used in newspapers and books.
Norpac maintains that trade remedies are needed to level the playing field, but its trade petition filed last August with the U.S. Department of Commerce has pitted the mill against a broad swath of domestic publishers.
Formed earlier this year, the STOPP Coalition (Stop Tariffs On Printers & Publishers) said Monday that it has launched a formal website and is encouraging industry associations to join its ranks. The U.S. publishing industry employs about 600,000 people.
Members include the American Society of News Editors, National Newspaper Association, News Media Alliance, Association of American Publishers, Printing Industries of America, and several Canadian paper manufacturers that are feeling the sting of the new taxes.
With the newsprint market in turmoil, domestic consumers are searching for ways to cut back on consumption, said Paul Boyle, senior vice president with the News Media Alliance. The group represents nearly 2,000 different media organizations in the United States and Canada.
“Some newspapers have already taken measures to to belt-tighten,” Boyle told The Daily News.
Smaller newspapers in the South, for example, have cut back from seven-day distribution to three days, he said.
“Everybody is trying to do something to reduce their newsprint exposure,” Boyle said.
(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 Mowbray, is on the board of directors of the News Media Alliance.)
“Newsprint is the second largest expense for small newspapers after human resource costs,” Susan Rowell, president of the National Newspaper Association, noted Monday in a press release.
Norpac did not respond to requests for comment Monday.
Domestic publishers were already reeling from price increases tied to countervailing duties between 4 percent and 9 percent announced in January. The duties are the result of a preliminary Commerce investigation that found Canadian producers are benefiting from 34 different government subsidies.
Publishers were dealt another blow last week when Commerce announced last week that border officials will start collecting 22 percent antidumping duties on roughly 50 percent of all Canadian newsprint imports.
The antidumping duties are in response to a months-long preliminary investigation into Norpac’s claim that Canadian newsprint producers are dumping newsprint in the U.S. for below fair market value.
The cost of newsprint has steadily increased since Norpac filed its trade petition last summer. A metric ton of newsprint has jumped from $560 on average in August to $655 in February, according to a Pulp and Paper Weekly index. Prices increased $15 per ton in January and another $20 per ton in February.
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Norpac has followed announced price increases with price hikes of its own — no more and no less than the industrywide average, the data shows.
But with combined duties of more than 30 percent on some producers, price increases on Canadian newsprint over the next two months will range from $65 to $115 per ton — another 10 to 20 percent increase.
The new tariffs and resulting cost increases have raised questions about how U.S. newsprint pricing will settle out over the next few months.
Meanwhile, publishers are scrambling to adapt.
Tony Smithson, vice president of printing operations for Bliss Communications in Janesville, Wisc., said he expects the new tariffs to eventually have a perverse effect.
“The sad part is it’s (the mill’s) own jobs that they’re threatening, because everybody is going to use less paper,” he said in an interview, referring to Norpac’s roughly 300 employees.
Smithson said his family-owned company, which also has about 300 employees, handles printing operations for four daily newspapers and roughly 100 smaller community publications. Located near the Canadian border, Bliss has traditionally relied on imported newsprint.
“Long-term, you’re going to see a significant number of community publications go out of business,” he said. “And Google isn’t going to step in and start covering the school board. There will be small towns left with no media.”
The new border taxes could also cause the U.S. newsprint market to tighten further by reducing supply, creating situations in which publishers are unable to ship products due to delivery delays.
Kevin Mason, an analyst with British Columbia-based ERA Forest Products Research, said his firm is hearing that Asian prices for newsprint are now $700 per ton “at a minimum” for March and the second quarter of the year.
While Canadian producers satisfy about two-thirds of U.S. demand, many could now find overseas markets increasingly attractive.
After Commerce’s preliminary anti-dumping announcement last week, focus is shifting to the International Trade Commission.
The ITC has extended a deadline for its own investigation, and is expected to submit questionnaires to paper producers and consumers sometime next month. The commission will then accept public comments and hold a hearing before arriving at a final determination in September.
Meanwhile, Commerce is scheduled to announce a final determination in its anti-dumping investigation on or about Aug. 2.
Commerce will issue a final anti-dumping order if its own final investigation and the ITC find that Canadian imports of uncoated groundwood paper materially injure domestic industry. If either agency’s final determination is negative, no anti-dumping order will be issued.
“Our hope is that the International Trade Commission will determine these tariffs … will be passed on to consumers,” said Boyle, with the News Media Alliance. “And that’s going to have an impact on the consumption of newsprint and therefore hurt the U.S. newsprint industry.”