Catalyst Paper gets slight duties reprieve, calls them ‘punitive and without merit’
The United States government gave B.C.-based Catalyst Paper and most Canadian newsprint producers a reprieve on Thursday, lowering final anti-dumping and countervailing duties in its final determination.
The move comes after several American businesses and politicians from both major parties complained the tax on Canadian newsprint would threaten the already-struggling newspaper industry.
Catalyst Paper, which has mills in Crofton, Port Alberni and Powell River, was disappointed with the U.S. Department of Commerce final determination, which reduced Catalyst’s countervailing duty rate to 3.38 per cent (from 6.09) and anti-dumping duty rate to 16.88 per cent (from 22.16) on exports of uncoated groundwood paper.
While the duties were reduced from the preliminary rates, the combined duties on Catalyst’s exports total a “significant 20.26 per cent,” said Ned Dwyer, Catalyst president and CEO.
“We are disappointed with the U.S. Department of Commerce’s decision to keep these unwarranted duties in place, albeit at a lower rate,” Dwyer said in a statement.
“These duties are punitive and without merit. The allegation that we are subsidized and engage in dumping activities is wrong and does not adhere to the facts.”
Dwyer said the “onerous” U.S. trade action directly affects the competitiveness of the business.
“While our mills have provided newsprint to the U.S. for more than 100 years, we’re now changing our customer base to minimize the impact of these duties because of one U.S. mill, but this isn’t sustainable over the long term.”
The U.S. International Trade Commission is slated to decide in mid-September whether the complainant, Washington-based North Pacific Paper Co., suffered harm.
Dwyer urged the trade commission to “pursue an objective evaluation of the facts and eliminate these egregious duties before they do further harm to our U.S. customers.”
Resolute Forest Products CEO Yves Laflamme said he hopes the commission will reject the Commerce Department’s determination, just as it did in January when the panel sided with Bombardier against U.S. aerospace giant Boeing over the C Series commercial jet that Airbus now controls and has renamed.
Scores of politicians have pressed the independent agency to quash the duties to save newsprint mills and industry jobs, Laflamme said. “It’s not about helping the Canadian industry, it’s about saving the newspaper industry,” he said, noting that the duties are passed along to publishers through higher prices.
“It’s just going to kill that business faster than it is right now.”
Commerce Secretary Wilbur Ross said in a statement that no other Canadian uncoated groundwood producer will have to pay anti-dumping tariffs because of the unique facts of the department’s investigation and arguments made by interested parties.
Montreal-based Kruger’s countervailing duty rate was lowered slightly to 9.53 per cent, but the final rates for Resolute, White Birch Paper and other Canadian producers increased.
Resolute’s countervailing tariff increased to 9.81 per cent from 4.42 per cent, White Birch was 0.82 from 0.65 per cent and all others has risen to 8.54 per cent from 6.53 per cent.
The U.S. said $1.21 billion US worth of uncoated groundwood paper was imported from Canada last year. Uncoated groundwood paper is a printing and writing grade of paper used in the production of paper products such as newspapers, directories, flyers, catalogues and books.
The Trump administration began investigating Canada’s newsprint industry after North Pacific complained Canada was dumping newsprint into the American market and unfairly subsidizing its industry at home.
It is the same argument made against Canada’s softwood industry, which led to the imposition of both countervailing and antidumping duties on most lumber imports from Canada.
Unlike the softwood lumber trade dispute backed by a powerful U.S. coalition, the newsprint complaint is led by a small producer co-owned by hedge funds that received little support during recent public hearings.
The U.S. recently ended countervailing duties on supercalendered paper from Canada that have been in place since 2015 a day after the World Trade Organization ruled in favour of Canada in the dispute over perceived subsidies on supercalendered paper, which is mainly used in magazines, catalogues, corporate brochures and advertising inserts.
The B.C. government moved last week to to protect pension benefits of salaried retirees and workers at Catalyst mills in case the company is forced to take drastic action in the face of steep U.S. tariffs.
The province has changed pension-relief regulations so Catalyst would be required to cover any pension shortfall if the company closes or sells any of its mills.