By BRENT JANG
Friday, July 13, 2018
VANCOUVER -- A newsprint mill in Washington state is urging the U.S. International Trade Commission to uphold tariffs against Canadian producers, but critics say economic integration means both countries are suffering in the trade war.
The ITC issued a preliminary ruling last September that the U.S. industry for uncoated groundwood paper, including newsprint, has been injured by Canadian shipments south of the border. The ITC made its decision after reviewing arguments presented by North Pacific Paper Co.
(Norpac), a newsprint producer based in Longview, Wash.
The ITC will hold a hearing on Tuesday in Washington, where Norpac executives will press their case to keep the tariffs in place while critics - notably U.S. publishers and numerous members of Congress - line up to make their arguments to scrap the duties.
In a prehearing filing to the ITC, Norpac said Canadian newsprint shipments have damaged the U.S. groundwood industry.
"Without relief, subject imports will continue to undercut and depress U.S. prices, disproportionately take volume and market share, and cause injury to the domestic industry," Norpac said in its 158-page submission.
Earlier this year, the U.S. Department of Commerce imposed tariffs averaging 28.69 per cent against most Canadian newsprint exporters.
Since March, American publishers and a bipartisan group of members of Congress have mounted campaigns to oppose the tariffs. They say affordable supplies of Canadian newsprint are crucial to the health of U.S. newspapers, underscoring the importance of economic integration between Canadian producers and end-users in the United States.
Norpac first lodged its complaint to the ITC in August, 2017, and in its new submission for Tuesday's hearing, the U.S. newsprint producer said Canadian mills enjoy unfair advantages.
"Subject imports were able to maintain their significant share of the U.S. market by reason of the benefits they received from massive subsidies," Norpac said.
The Commerce Department is slated to render its final ruling on or about Aug. 2. The ITC is scheduled to make its final determination in a vote on Aug. 28, followed by reasons behind the decision to be released publicly on Sept. 17.
Norpac believes the duties have led to increased newsprint costs of only 2 US cents a copy for larger newspapers. But Virginiabased Gannett Co. Inc., which publishes nearly 110 U.S. newspapers, said Norpac is vastly underestimating the impact of the tariffs because pennies per copy add up to thousands of dollars of extra expenses each week for even community newspapers.
"The decline in demand for printed news is not new," Gannett said in a 77-page prehearing submission. "Publishers have already cut costs to the bone in order to stay in business. Norpac's 'pennies' will now require cutting the bone, meaning production personnel as well as journalists who are vital to ensuring a vibrant and free press."
In March, the U.S. Department of Commerce imposed antidumping duties averaging 22.16 per cent against most Canadian producers of groundwood. The anti-dumping tariffs are on top of countervailing duties averaging 6.53 per cent levied in January.
"If the commission ratifies these duties in the final determination, the harm to the newspaper industry will be extreme," Gannett said.
Montreal-based Resolute Forest Products Inc. got hit with a countervailing rate of 4.42 per cent in January, but in March, the Commerce Department did not include Resolute on the list of Canadian producers subject to anti-dumping tariffs.
Resolute, which is a major newsprint producer in both Canada and the United States, opposes the U.S. tariffs.
Norpac estimates that it recently held 47 per cent of groundwood capacity in the United States, Resolute had 42 per cent and Inland Empire Paper Co. of Spokane, Wash., held 11 per cent.
The News Media Alliance said Norpac's views don't reflect those of the broader newsprint industry in the United States.
The owner of Norpac is seeking to artificially increase the value of the Longview plant and flip it for a profit, the alliance said in its 438-page prehearing submission to the ITC.
Hedge fund One Rock Capital Partners LLC of New York bought Norpac in late 2016 from Weyerhaeuser Co.
"This New York private-equity firm - which does not own any other pulp or paper operations in the United States or globally - is now attempting to maximize the short-term value of Norpac," the alliance said.