Tariffs on Imported Paper May Be Back

Once again, China and Indonesia are under investigation by the U.S. International Trade Commission (ITC) because of accusations of “dumping” coated paper products in the United States at prices that are not only below market rates, but are even below what it would cost to produce the paper here.

Filing the petition are NewPage Corp., based in Miamisburg, Ohio; Appleton Coated LLC, in Kimberly, Wis.; Sappi Fine Papers North America, Boston; and the U.S. Steelworkers Union (USW), representing many of the employees (and former employees) in the paper industry. The petition includes a request for a countervailing duty, or a tariff, on these imports.

NewPage, Appleton, Sappi and USW filed their petition to the ITC in September; hearings on the matter were held on Oct. 14, and the ITC’s preliminary decision is expected Nov. 6. The whole process, whether or not it results in tariffs on coated papers, will take about one year to complete.

In addition, the complaints are very specific, naming only coated papers of 80 brightness or higher used for printing and writing in the United States. And the fact that the labor union has joined in the filing only strengthens the argument that these paper imports are damaging domestic producers.

Second Time Around

A similar charge of dumping was brought against China, Indonesia, and North Korea two years ago. In that case, the ITC agreed that China and Indonesia had an unfair advantage in the market because of their governments’ subsidization of their industries among other causes.

However, tariffs are levied only if and when a complaining company or industry can show that the imports have caused material damage to the domestic industry. In the earlier case, printers and even the The American Forest & Paper Association (AF&PA), the national trade association of the forest, pulp, paper, paperboard, and wood products industry, argued against tariffs, and the tariffs were dropped.

The concern is that if the United States puts a tariff on Chinese and Indonesian products, those nations will retaliate with tariffs on products the U.S. exports to their countries.

Material Damage

The petition states that imports of coated papers have increased by 40 percent this year over last year—131,687 short tons in the first six months of 2008 compared to 185,422 short tons in the first six months of 2009. Also, over the same period, U.S.-made coated paper shipments fell by approximately 38 percent. The combined paper imports from China and Indonesia made up 30 percent of the domestic market for the coated paper during the first six months of this year, almost double the market share they had last year.

The central question behind all this may be: How important is it for the United States to support a domestic paper industry?

Are printers and print buyers willing to pay a bit more for “Made in the USA”?

The U.S. Steelworkers Union emphasizes that the domestic mills’ declining market share has dire human consequences, such as last year’s closure of the NewPage’s mill in Kimberly, which meant the loss of 475 jobs in a community where there are few other jobs offering comparable pay and benefits.

The union represents about 130,000 workers in the paper and forestry products industry, and says that more than 60,000 jobs have been lost since 2002.

“Our plants are not closing because they are run-down or inefficient,” according to Jon T. Geenen, international vice president of USW. “They are closing because even the most advanced technology and most productive workers cannot compete against imports sold below the cost of production.”