Canadian newsprint producer hopes U.S. trade commission will overturn duties

North America's largest newsprint producer hopes rare bipartisan political support in the United States will convince the U.S. International Trade Commission to overturn final import duties announced Thursday.

The United States government gave most Canadian newsprint producers a reprieve by lowering final anti-dumping and countervailing duties on uncoated groundwood, a category that includes newsprint and book grade paper, 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.

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."

The U.S. International Trade Commission is slated to decide in mid-September whether the complainant, Washington-based North Pacific Paper Co., suffered harm.

Under the Commerce Department's final determination, British Columbia-based Catalyst Paper Corp. still faces a sizable total 20.26 per cent tariff, but that's down from 28.25 per cent imposed earlier in the year during the preliminary phase.

The company's anti-dumping rate was decreased to 16.88 per cent from 22.16, and its countervailing duty (CVD) rate was lowered to 3.38 per cent from 6.09 per cent.

In a statement, Catalyst president Ned Dwyer said the company was not suprised by the announcement.

"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," he said.

"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."

He 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."

Commerce Secretary Wilbur Ross said in a release 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 CVD 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.

Foreign Affairs Minister Chrystia Freeland said the government would continue to defend the industry, and work to diversify its trade in the face of the duties.

"Despite the slight reduction in some duties, Canada remains disappointed with the final duty rates announced by the U.S. Department of Commerce," she said in a statement.

The U.S. says US$1.21 billion worth of uncoated groundwood paper was imported from Canada last year.

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.

North Pacific issued a statement commending the decision to keep some duties in place.

"As established by the Department's final determination, Canadian producers have been engaged in unfair trade practices, which harm American workers," the company said.

It is the same argument made against Canada's softwood industry, which led to the imposition of both countervailing and anti-dumping 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.

A coalition of U.S. printers, publishers, retailers, paper suppliers and distributors expressed disappointment in the latest decision on duties.

"These import duties on newsprint have already caused job losses in the printing and publishing sectors and have resulted in decreased news coverage in local communities,” said David Chavern, CEO of the News Media Alliance in a statement.

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 largely 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.