PORTLAND, Maine — The U.S. Department of Commerce has approved placing tariffs on certain paper imports from Canada, nudging the tariffs sought by a Maine mill closer to final approval.
Madison Paper Industries and Verso Corp. sought the tariffs particularly against a Port Hawkesbury, Nova Scotia, mill that received government subsidies to restart. The tariffs include other producers as well, which the affected companies and public officials in Maine and Canada have argued is unfair.
The decision issued Wednesday by the U.S. International Trade Administration places a tariff of 20.18 percent on imports of supercalendered paper from Port Hawkesbury; 17.87 percent for Resolute Paper Industries; and 18.85 percent on other producers, including Irving Pulp and Paper and Catalyst Paper Corp.
Those tariff amounts are higher than the preliminary rates recommended in July for Resolute, Irving and Catalyst, a Canadian company that last year bought a Rumford paper mill from NewPage.
In a statement Thursday, Catalyst President and CEO Joe Nemeth said the company will seek an expedited review of the final tariff ruling.
“Catalyst rejects the allegation that we’ve received government subsidies, and we’re confident that a full and fair investigation by the U.S. Department of Commerce would confirm this,” Nemeth said in a news release.
The Canadian Broadcasting Corp. reported Wednesday that the owner of the Port Hawkesbury mill intends to dispute the tariff ruling as well. Trade officials based the bulk of the tariff determination for the mill on discounted electricity it receives, which the mill owners argue is not a government subsidy.
Altogether, the tariff rates approved Wednesday amount to around $150 million a year, based on a reported $868.4 million value of Canadian supercalendered paper imports to the United States in 2014.
Canada’s ambassador, Gov. Paul LePage, Maine’s U.S. senators and others have objected to lumping companies together in that duty assessment, arguing they should have had an opportunity in preliminary hearings to argue for company-specific preliminary tariff rates for supercalendered paper, which is used in color printing applications, including magazines, retail inserts, directories and coupons.
In a July 17 letter to White House economic adviser Jeffrey Zients, LePage expressed concern about the impact the tariffs could have on the jobs of 1,200 Maine employees of Catalyst and Irving Paper.
For Irving and Catalyst, trade officials used an “all others” rate that was the average of the rates assessed on Port Hawkesbury and Resolute Paper, which were investigated individually.
U.S. Sens. Susan Collins and Angus King echoed LePage’s concern in a statement Thursday, both praising the decision for taking a step toward “leveling the playing field for Madison Paper” and criticizing it for tariffs on Catalyst and Irving.
“Rather than conduct a careful assessment of the actual subsidies, if any, received by J.D. Irving and Catalyst Paper as we advocated strongly, the ITA relied on Port Hawkesbury’s and Resolute’s subsidies to determine an arbitrary and unfair duty rate for Irving and Catalyst,” the senators said in a news release. “That’s not right, and we will continue to do all that we can to fight for a fair and fact-based investigation of Irving and Catalyst.”
The Madison mill — a joint venture between Northern SC Paper Corp. and the U.S. subsidiary of Finland-based UPM-Kymmene Oyj — and Memphis-based Verso Paper Corp. formed The Coalition for Fair Paper Imports to file their petition in February for the imposition of duties on Canadian producers.
In the petition, Verso and Madison alleged prices for Canadian imports were as much as 5.2 percent lower in the last half of 2014 and that subsidies have depressed U.S. prices and reduced their revenue.
The two companies together own all U.S. capacity for making that grade of paper, according to the Commerce Department’s initial review.
Since the July ruling, trade officials have collected tariffs at the preliminary amounts on the relevant imports. They will start collecting those tariffs at a higher rate, pending a final vote on by the U.S. International Trade Commission Nov. 18, according to Christopher Cassise, with the commission’s Office of Investigations.
The commission is expected to write and file its official determination of whether the Canadian imports materially injure U.S. supercalendered paper production by Dec. 4.
In the meantime, the tariff amounts will be held by U.S. Customs and Border Protection in a cash deposit account. If trade officials vote down the final tariffs, the deposits paid would be given back to the Canadian companies.
If made permanent, the tariff money would flow into the U.S. Treasury’s general fund.