Port Hawkes­bury pa­per mill plans to fight sub­si­dies

No lay­offs planned in re­sponse to in­terim duty

Cape Breton Post - - FRONT PAGE - BY MICHAEL TUTTON

A Cana­dian pa­per mill that re­lies on ex­ports to the United States to main­tain more than 330 jobs at its Cape Bre­ton mill says it will fight hard against a de­ci­sion by the U. S. gov­ern­ment to slap large tar­iffs onto its coated pa­per prod­ucts.

Port Hawkes­bury Pa­per said Wed­nes­day the in­terim duty of 20.33 per cent an­nounced by the U.S. Depart­ment of Com­merce is un­fair and with­out merit.

“We are very con­fi­dent in our abil­ity to re­duce these in­terim du­ties sub­stan­tially, or elim­i­nate them en­tirely, as part of the process,’’ said Marc Dube, de­vel­op­ment man­ager of Port Hawkes­bury Pa­per.

The J.D. Irv­ing mill in New Brunswick and Cat­a­lyst Pa­per of Bri­tish Columbia are also fac­ing an 11.19 per cent duty un­der the U.S. de­ci­sion, while Res­o­lute pa­per is fac­ing a two per cent tar­iff.

The trade ac­tion is the re­sult of a pe­ti­tion filed by two Amer­i­can pro­duc­ers of su­per­cal­en­dered pa­per that say the Cana­dian pa­per goods are un­fairly sub­si­dized.

The Cape Bre­ton mill re­ceived a res­cue pack­age from the for­mer NDP gov­ern­ment in the fall of 2012 val­ued at about $124.5 mil­lion to help it re­open af­ter pri­vate in­vestor Ron Stern pur­chased its as­sets dur­ing bank­ruptcy pro­ceed­ings.

That as­sis­tance came on top of $ 36.8 mil­lion the province spent keep­ing the mill in us­able con­di­tion while a new buyer was sought.

Since then the fac­tory has re­turned to prof­itabil­ity as fall­ing fos­sil fuel costs and a plum­met­ing dol­lar have helped it achieve ris­ing sales in the United States, where it sends about 90 per cent of its pa­per for use in glossy mag­a­zines and cal­en­dars.

Dube says the res­cue pack­age shouldn’t be con­sid­ered a sub­sidy un­der free trade rules be­cause a por­tion was in loans that can still be re­paid, and about half of the funds came in re­turn for the com­pany’s sale of land to the province.

The U. S. Depart­ment of Com­merce web­site pro­vided lit­tle de­tail on why the de­ci­sion was made, but says of­fi­cials with the agency will visit the Cana­dian mill prior to a fi­nal de­ci­sion ex­pected in mid Oc­to­ber.

Dube said about three quar­ters of the 20 per cent duty is be­cause the Amer­i­cans de­ter­mined an elec­tric­ity deal struck be­tween Port Hawkes­bury Pa­per and Nova Sco­tia Power Inc. is a sub­sidy on power rates.

Nova Sco­tia Premier Stephen McNeil told re­porters his gov­ern­ment will do all it can to con­vince the Amer­i­cans that’s fac­tu­ally in­cor­rect.

He said the trade of­fi­cials don’t un­der­stand the mill’s power rates were ne­go­ti­ated be­tween two pri­vate com­pa­nies and ap­proved in­de­pen­dently by the Nova Sco­tia Util­ity and Re­view Board, a reg­u­la­tory agency, rather than the province it­self.

“It’s ironic they’re talk­ing about the power rates in the province of Nova Sco­tia con­sid­er­ing we have the high­est power rates in the coun­try,’’ he said.

McNeil said he hopes to have sup­port from the fed­eral gov­ern­ment in the ef­forts to have the tar­iffs re­duced.

In­ter­na­tional Trade Min­is­ter Ed Fast de­clined an in­ter­view.

He is­sued an email state­ment say­ing he is dis­ap­pointed by the rul­ing and con­sid­ers it un­war­ranted.

“Canada is also con­cerned that the U. S. Depart­ment of Com­merce is not con­duct­ing a thor­ough and com­plete re­view. We call on the U. S. Depart­ment of Com­merce to re­view all of the facts in this mat­ter,’’ said the email.

The Amer­i­can agency says it will an­nounce its de­ci­sion on the duty by Oct. 14. The mat­ter could then go to the U.S. In­ter­na­tional Trade Com­mis­sion for ad­di­tional hear­ings, with a de­ci­sion made by Dec. 10.

Dube said his com­pany doesn’t plan any lay­offs or changes in re­sponse to the in­terim duty, which is held in trust un­til the pro­ceed­ings are com­plete.

“It’s busi­ness as usual,’’ he said.

The man­ager es­ti­mated that the U. S. gov­ern­ment will be col­lect­ing about $ 4 mil­lion monthly in du­ties as the trade ac­tion con­tin­ues.

Dube

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