Coated Paper Trade Cases
NPES continues its longstanding support of free, fair international trade policy that enforces existing trade laws, and provides a level playing field for Association members’ products in global markets. In that light, NPES is monitoring the unfair trade practice cases filed by three U.S. paper manufacturers and a workers’ union, which allege that China and Indonesia are harming the U.S. paper industry by providing unfair support to their domestic paper manufacturers that export to the United States. Opponents of the cases fear the repercussions of increased paper prices that could result from the imposition of duties on coated paper from China and Indonesia.
In September 2009, U.S. paper producers Appleton Coated, LLC; NewPage Corporation; and S.D. Warren Company, dba Sappi Fine Paper North America, along with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union filed a petition seeking the imposition of tariffs on certain categories of coated paper suitable for high quality graphics using sheetfed presses manufactured by paper producers in China and Indonesia. The paper under investigation is typically used for printing multicolored graphics for catalogues, books, magazines, labels and wraps, greeting cards and other high quality items.
Petitioners have sought relief under two of the most frequently applied U.S. trade statutes, Antidumping (AD) and Countervailing Duty (CVD) trade laws. Antidumping laws provide relief to domestic industries that have been, or are, threatened with the adverse impact of imports sold in the U.S. market at prices that are shown to be less than fair market value. Additional import duties can be imposed on dumped imports.
Countervailing Duty laws give similar relief to domestic industries that are jeopardized by imported goods that have been subsidized by a foreign government or public entity and therefore have a competitive advantage over similar goods produced in the United States. Like dumped goods, additional duties can be placed on subsidized imports.
AD and CVD cases are conducted jointly by the U.S. Commerce Department’s International Trade Administration (ITA) and the International Trade Commission (ITC). Following an initial finding by the ITC that there is enough information to arguably support the imposition of AD and/or CVD duties, the ITA conducts an investigation and issues a preliminary determination.
In the coated paper cases at hand, the ITA issued its preliminary CVD determination against coated paper imports from China and Indonesia in March 2010, and imposed immediate tariffs averaging 8.38 %, which will be held pending a final resolution of the case. According to petitioner NewPage, the ITA found that Chinese producers were benefiting from preferential lending, income tax programs, tax credits for equipment purchases and research and development, import duty and VAT exemptions on capital equipment and preferential provision of electric. Indonesian producers were found to have received timber for less than adequate remuneration, and government debt forgiveness.
Although not part of the ITA’s basis for its preliminary determination, petitioners have also asserted that the undervaluation of China’s currency provides an additional unfair subsidy that should be considered by the ITA. This assertion has been further bolstered by a recent letter from U.S. Senators Sherrod Brown (D-OH) and Charles Schumer (D-NY) to Commerce Secretary Gary Locke calling for the Department to include the currency issue in its final CVD analysis and determination.
In response to petitioners’ claims and the ITA’s preliminary CVD determination, Chinese and Indonesian paper producers point to U.S. paper companies’ use of “black liquor” bio-fuels tax credits as a form of U.S. government subsidy of their own.
Following its March CVD determination, in April the ITA announced its preliminary determination that certain coated paper from China and Indonesia had been dumped—sold at less than fair value—in the U.S. market, with additional duties assessed against paper exporters from those countries.
The Commerce Department’s final rulings on both the CVD and AD cases are expected in September. Following that, the last phase in the process will occur in October or November when the ITC makes its final determination of whether the U.S. paper industry has been harmed, which will determine whether import duties will actually be imposed.
Although faced with preliminary CVD and AD findings against them, Chinese and Indonesian producers continue to argue that U.S. domestic shipments of coated paper are down because of the overall bad economy, not because of any unfair practices of theirs, and believe that the petitioners’ cases will ultimately fail as did similar petitions in 2007.
For more information, contact NPES Government Affairs Director Mark J. Nuzzaco at 703/264-7235, or e-mail: mnuzzaco@npes.org
