United States Department of Commerce has slapped a preliminary 22.16 per cent protectionist tariff on exports of Catalyst Paper Corporation's newsprint products made at its Powell River mill. This is on top of an average 6.53 per cent in countervailing duties levied in January, bringing the total to more than 26 per cent.
This is the second time the USA has slapped duties on Canada's forest industry.
Imports of uncoated groundwood paper, which is also used in book publishing and printing, was estimated at $1.27 billion in 2016, according to Commerce.
The decision follows a complaint filed by a U.S. firm, North Pacific Paper Company.
In his decision Wednesday, U.S. Commerce Secretary Wilbur Ross said his preliminary determination was based on "an open and transparent investigation" that determined the Canadian companies listed in the complaint were exporting paper at "less than fair value".
Norpac, owned by hedge fund One Rock Capital Partners LLC of NY, argues that subsidies in Canada include breaks on electricity rates and unfair financial assistance.
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Resolute FP Canada Inc and Donohue Malbaie Inc, both subsidiaries of Resolute Forest Products Inc, along with privately owned White Birch Paper Canada Co group and related companies Papier Masson WB LP, FF Soucy WB LP and Stadacona WB LP, were assigned a zero percent duty, Commerce said.
Directory paper was excluded from the action, Dwyer said, but "the remaining anti-dumping and countervailing duties are onerous and a critical cost challenge for Catalyst". According to the lawmakers and thousands of newspapers nationwide - including eight in New Mexico - the tariffs are dramatically increasing paper prices and additional cost increases would be unsustainable for many papers, especially small, local newspapers, and force some to shut down amid other ongoing financial pressures in the newspaper industry.
Resolute, Catalyst and Montreal-based Kruger Inc. are the mandatory respondents in the countervailing investigation.
Newfoundland and Labrador Premier Dwight Ball said the Corner Brook mill is "caught in the middle" of trade disputes between Canada and the United States. We will work closely with Catalyst and the federal government to fight this preliminary decision by the U.S. Department of Commerce, and demand that B.C.is treated fairly by its largest trading partner.
The US announcement came as Canada's Foreign Minister, Chrystia Freeland, was in Washington to discuss bilateral trade relations. "Any duties will have a direct and negative impact on US newspapers, especially those in small cities and towns, and result in job losses in the American printing sector", they said in a joint release.
President Donald Trump has forced a renegotiation of the North American Free Trade Agreement with Canada and Mexico, arguing that it is a bad deal for the United States.