In an ominous foreshadowing of what is to come for Canada’s softwood lumber producers, the United States Department of Commerce Thursday issued a preliminary ruling that Irving Paper’s Port Hawkesbury, NB, supercalendered paper exports into the US, along with those of several other Canadian companies, were being unfairly subsidized.
That followed a preliminary finding last spring by the US International Trade Commission — launched by the Coalition for Fair Paper Imports whose members are Madison Paper Industries and Verso Corporation — that the Canadian companies’ exports were materially hurting US paper producers.
US paper producers sought trade action at the beginning of February against Canadian rivals who they say are dumping their product south of the border and pricing them out of the market.
Canada – US Trade Dispute: Supercalendered Paper Producers
The US trade petition alleges that “Canadian [supercalendered] paper has gained market share by underselling the US market prices of U.S. producers,” according to the Globe and Mail March 10.
The US claims that the federal and provincial governments provide subsidies that include preferential loans, tax benefits, grant programs and cheap access to Crown land trees.
The Canadian companies named in the petition are Resolute Forest Products, Port Hawkesbury Paper, Irving Paper, and Catalyst Paper.
Port Hawkesbury Paper, which observers say was the main target in this complaint, faces the highest potential duties on its products entering the U.S. market, said the Chronical Herald Wednesday. The US Commerce Department set its subsidization rate at 20.33 per cent, almost double that of any other Canadian company named.
Those rulings are far from the final word in the matter. Both the U.S. Department of Commerce and ITC must confirm their findings this fall. The dispute could ultimately be heard before a NAFTA tribunal.
American officials, however, are expected to start collecting deposits at the border, based on the subsidization rates announced, from the named Canadian companies almost immediately. Even if those penalties are eventually lowered or removed, that’s a real cost in the short term, albeit one that could last years.
BC’s Minister of Forests, Lands and Natural Resource Operations Steve Thomson issued a statement Wednesday expressing “disappointment” at the preliminary decision to impose 11.19 per cent duties on Catalyst’s exports of supercalendered paper.
JD Irving said Thursday it will ask the US Department of Commerce for a prompt review of a preliminary ruling that could lead to countervailing duties being slapped on Irving paper imports.