Catalyst struck by second salvo of duties in U.S. paper trade war

Richmond-headquartered Catalyst Paper has been hit with a second round of punitive duties on U.S.-bound exports in a trade dispute launched by a single American mill.

On Wednesday, the U.S. Department of Commerce slapped antidumping duties of 22 per cent on exports by Resolute Forest Products and Kruger Inc. ( both based in Quebec) as well as Catalyst on top of countervailing duties of 4.4 per cent, 10 per cent, and six per cent, respectively, levelled against the companies when the initial complaint was launched in January.

That leaves Catalyst paying duties of 28 per cent on its exports to the U.S., which company CEO Ned Dwyer characterized as “a threat to our competitiveness and the sustainability of our business.”

Longview, Wash.-based North Pacific Paper Co. filed the complaint with the commerce department in January arguing that the Canadian producers receive unfair subsidies in the form of access to cheap fibre and preferential electricity rates.

In his decision Wednesday, U.S. Commerce Secretary Wilbur Ross said his preliminary determination was based on “an open and transparent investigation” that determined the Canadian companies listed in the complaint were exporting paper at “less than fair value.”

A final determination on duties is expected by Aug. 2.

Uncoated groundwood paper is used in printing newspapers, flyers, catalogues and books and in 2016, U.S. Commerce estimated that American customers imported US$1.27 billion worth of the product.

North of the border, Dwyer characterized the trade action as “unwarranted and without merit,” which the company will continue to fight. Directory paper was excluded from the action, Dwyer said, but “the remaining antidumping and countervailing duties are onerous and a critical cost challenge for Catalyst.”

The paper dispute is a second front of an apparent U.S. trade war over forest products, in addition to the Canada-U.S. softwood lumber dispute that has Canadian lumber producers paying between 10 and 24 per cent in duties on American exports.

B.C.’s Minister of Jobs, Trade and Technology Bruce Ralston said the province will join in the fight.

“We will not be bullied,” Ralston said in a statement.

“We will not be pushed around. We will work closely with Catalyst and the federal government to fight this preliminary decision by the U.S. Department of Commerce and demand that B.C. is treated fairly by its largest trading partner.”