The United States will investigate the government aid package that helped a Nova Scotia paper mill reopen last week, prompted by “troubling questions about potential injurious and/or WTO-inconsistent subsidies.”
Pacific West Commercial Corp. last week reopened the Port Hawkesbury paper mill in Point Tupper, N.S., thanks to a $124.5 million aid package from the provincial government. Paper started rolling off the mill’s production line yesterday, according to the Chronicle Herald.
Those in Maine’s paper industry say the Nova Scotia mill, with the help of government assistance, will have a negative effect on Maine mills that produce similar types of paper.
U.S. Trade Representative Ron Kirk wrote in a Oct. 1 letter to Rep. Mike Michaud that his office would, “on an expedited basis,” confirm information provided in news reports about the paper mill deal and would request details from the Canadian and Nova Scotian governments on the type of assistance they “have agreed to provide or plan to provide.”
“I can assure you that we will work speedily to obtain the facts of this matter,” Kirk wrote in response to a Sept. 26 letter from Michaud requesting such an investigation. “Based on what we find, we will consider all feasible and effective options — doing so aware that this is a time sensitive matter.”
Kirk added that the United States also would raise the matter of the Port Hawkesbury mill deal later this month at meetings of the World Trade Organization’s Committee on Subsidies.
Michaud, who once worked at Great Northern Paper’s mill in East Millinocket, thanked Kirk for his prompt response to the issue.
“We need to get to the bottom of this deal to ensure that no current trade laws have been violated,” Michaud said in a statement. “This deal could have a significant impact on our paper mills and the critical jobs and small businesses they support.”
The Maine mill that could be most affected by the newly reopened Port Hawkesbury mill is UPM’s paper mill in Madison, which employs about 240 people and produces 220,000 tons of the same grade of supercalendered paper a year. Supercalendered paper is the type used in magazines, catalogs and newspaper inserts.
Russ Drechsel, manager of the Madison paper mill, told the Bangor Daily News he was “very pleased” with Rep. Michaud’s efforts in pursuing the matter, “and with the response he has received.”
“It is reassuring that we’re well represented in Washington with this case,” Drechsel said, “and that the Congressman is looking out for the jobs at Maine’s pulp and paper mills.”
There had been talk about a potential trade dispute if the Port Hawkesbury mill reopened. Separate from any formal federal investigation, U.S. paper manufacturers could petition the U.S. International Trade Commission to impose tariffs on the Canadian paper imports, as some companies successfully did in 2010 in regards to cheap paper imports from China and Indonesia.
But the process of arguing for tariffs on subsidized imports is slow and often comes too late for manufacturers, Drechsel said. “Usually in those cases you have to wait until the damage is done before you can file, so there’s very little preparation to be done until you can demonstrate the damages.”
As far as Drechsel knows, this is the first trade dispute the United States has had with Canada over paper imports.
These issues should have been brought forward during the preliminary process of providing the aid to begin with. What is wrong with this world today? Anyone engaged in this process should be looking for whatever impact they may present if awarded. This should hold true throughout the world trade markets not just isolated incidents. Wake up folks look beyond your boarders to see who is out there competing against you and our trade.
But the process of arguing for tariffs on subsidized imports is slow and
often comes too late for manufacturers, Drechsel said. “Usually in
those cases you have to wait until the damage is done before you can
file, so there’s very little preparation to be done until you can
demonstrate the damages.”
That’s a big problem with all of our trade agreements. We suffer permanent job losses as a result.
Funny how issues like this are brought to a boil within a few months of the election.
If there is a product made or can be made in this country, should not have to be in competition from same made product out of the country in my view. get back to allowing our own products to be produced here in america to employ americans. if we can make a product here in america, then there is no reason to be shipping that same product here from out of the country in direct competition. let the other country sell on the world market in competition with america is fine, but when america needs jobs to sustain itself the whole picture to me should be self survival. now if another country has a product we dont have or cant make, then so be it. Also if we have american companys who stop producing here in america and go offshore to get cheaper workforce and hid money, then make them stay offshore and pay a penalty for doing so. The first priority in washington should be for america first and foremost, period.
King Spruce ain’t gonna be much longer, we are totally disarmed when it comes to dealing business with Canada, they have our last sardine plant, believe me, I do not want to see this, but facts must be faced, they are ruthless, smart and they do business something like we used to.
And it doesn’t help the Maine economy much when we have a governor who works to open the door for Canadian loggers to take Maine jobs. Don’t believe me? Check with Senator Troy Jackson, who’s been working tirelessly to put a stop to it.
Peter wants to build a road for them to market their products and compete against Maine Mills.
One government which offers back-door subsidies through tax credits and breaks of all kinds fusses at another which does practically the same thing straight-up. Please, spare us the whining.
You hit the nail on the heda, hpmcg
Absolutely. The black liquor tax credit of the early aughts is the only thing that kept Maine paper mills afloat through the recession.
That U.S. paper mills benefitted from the black liquor tax credit is a valid argument the Canadian paper industry uses. However, for the record, Russ Drechsel, manager at the UPM Madison mill, said his mill never benefitted from black liquor tax credit because it uses a different production process.
“US to investigate Nova Scotia paper mill deal for ‘possible subsidies’”
I would say that a $124.5 million aid package from the government would be considered a subsidy.