Ceasefire in paper war
Settlement agreement reached in cross-border dispute
A settlement agreement has been reached between producers of supercalendered paper engaged in a cross-border dispute over counterveiling duties on some Canadian paper exports, the largest of which has been levied against Port Hawkesbury Paper.
That could have important implications for the Point Tupper mill, the Strait of Canso area’s largest employer.
The American company Verso Corp. made a filing regarding the agreement in the long-running dispute with the U.S. Security and Exchange Commission this week. It indicated that under the terms of the settlement, it will file with the U.S. Department of Commerce a request for what it called a changed circumstances review of the counterveiling duty order that was issued Dec. 10, 2015, which imposed the duties on supercalendered paper imported from Canada since Aug. 3 of that year. If the Department of Commerce grants the request, all of the duties collected since August 2015 would be refunded to Port Hawkesbury Paper and Irving. Verso would be paid a percentage of the refunded duties over time, with the total capped at $42 million.
Port Hawkesbury Paper is currently subject to a 20.18 per cent duty. Since the tariff was applied it has been held in trust pending the outcome of the dispute.
Port Hawkesbury Paper development manager Marc Dube did not return a request for comment Thursday. In April 2017, Dube indicated that at that point a total of about $50 million in duties had been levied against the company.
The trade action came as the result of a petition filed by two American producers of supercalendered paper who argued that the Canadian paper is unfairly subsidized. In the case of Port Hawkesbury Paper, at issue was the aid package it received in 2012 valued at about $124.5 million from the province to reopen the mill after a year-long sales process, as well as a special electricity rate that it receives.
The mill has always maintained the tariffs were not justified.
Nova Scotia Business Minister Geoff MacLellan said he was aware that Port Hawkesbury Paper officials were working hard to resolve the dispute.
“This has been one that has been very sensitive and critical for Cape Breton and all of Nova Scotia, since my time with the Department of Trade,” MacLellan said. “It’s one that Marc Dube at Port Hawkesbury Paper has been incredible, not only in communications and information sharing but just in their leadership to ensure that they were doing all the right things to avoid any additional tariffs and charges levied to Port Hawkesbury Paper products.”
He called the potential settlement good news for the company, the region and the
province as a whole.
In its filing, Verso did note that there can be no assurance that the Department of Commerce will grant the request and revoke the counterveiling duties order retroactively, or at all.
The agreement states that, should the Department of Commerce not revoke the duty order retroactively to August 2015, the parties will consult and determine whether to file
an appeal seeking revocation of the order and the return of duties with interest.
Verso produces about 85 per cent of the supercalendered paper manufactured in the U.S. It would agree to not initiate any new court or North American Free Trade Agreement (NAFTA) appeals related to the supercalendered counterveiling duty proceeding.
Port Hawkesbury Paper
fought the duties and last April received some good news in the form of a NAFTA panel siding with it in directing the Department of Commerce to reconsider issues on which the department based imposing border duties, including the electricity rate paid by the mill.
Supercalendered paper is primarily used in magazines, catalogues, brochures and advertising inserts.
In October, the mill, located
just outside Port Hawkesbury in Richmond County, marked five years back in production after a year-long closure as the mill was sold to Ron Stern-owned Pacific West Commercial Corp. following the bankruptcy of NewPage.
It employs 330 at the mill and supports 400-500 jobs in trucking and harvesting of wood.