Illinois members of Congress have joined a growing list of critics who are blasting U.S. tariffs against Canadian newsprint, saying the duties are jeopardizing American newspapers already in weak health.
All 18 Illinois members of the U.S. House of Representatives signed a letter to oppose the tariffs. They are urging the U.S. International Trade Commission (ITC) to pay attention to the close ties between American newspapers and Canadian producers of uncoated groundwood paper, notably newsprint.
“We write to ask that you take into full consideration the negative impacts of these tariffs on the newspaper industry and other stakeholders in Illinois and throughout the United States,” read the bipartisan letter sent recently to ITC chairwoman Rhonda Schmidtlein.
The federal lawmakers from Illinois acknowledge that North American demand for newsprint has plummeted 75 per cent since 2000. But they blame this year’s surprising tariffs on newsprint for fresh decisions made this spring by many American newspapers to reduce staff and scale back publication dates.
“Tariffs will jeopardize the amount of news and local coverage that constituents rely on in both big and small communities,” the politicians, including Democrat Cheri Bustos and Republican Randy Hultgren, said in their letter to Ms. Schmidtlein.
In 2016, nearly 36 per cent of Canadian newsprint sold into the U.S. entered through the Midwest.
The ITC will hold a hearing in Washington on July 17 on Canadian shipments of groundwood. In a prehearing report dated June 22, the ITC said North American consumption of newsprint has been steadily dropping for many years, referring to the “long-term secular decline due to the digitization of media content.”
Last September, the ITC issued a preliminary ruling that the U.S. groundwood industry is being injured by Canadian shipments. Ms. Schmidtlein and other commission members will make their final determination in a vote scheduled for Aug. 28, followed by reasons behind their decision to be released publicly on Sept. 17.
The trade dispute stems from a complaint lodged last August by North Pacific Paper Co., also known as Norpac, a newsprint producer based in Longview, Wash.
Earlier this year, the U.S. Department of Commerce sided with Norpac and decided to impose preliminary duties averaging 28.69 per cent against most Canadian groundwood, including newsprint and book-grade paper. The Commerce Department is expected to publicly issue its final determination on the case on or about Aug. 2.
Norpac, which is owned by hedge fund One Rock Capital Partners LLC of New York, told the Commerce Department that its Longview mill accounts for 47 per cent of recent groundwood capacity within the United States.
Norpac believes the duties have resulted in increased newsprint costs as low as 1 cent US per copy, although a group of U.S. weekly publications argues that it is closer to 5 cents US per copy in extra costs. Many community newspapers say the net effect is their newsprint bills have nearly doubled.
A wide range of U.S. lawmakers, in addition to those from Illinois, have joined the chorus of opposition to the tariffs.
“While some newspapers have been successful in cultivating digital content, increasing digital subscriptions and procuring online advertising, small local print newspapers will be more exposed to the risk of shutting their doors,” according to a bipartisan letter to the ITC, signed by New York congressman Brian Higgins and four other members of the U.S. House of Representatives from his state.
An executive at New York-based News Corp. told the Commerce Department that even at pennies per copy, the damage has been “enormous” as newsprint prices jump for both U.S. and Canadian supplies. “Since the duties have been announced, the price for newsprint has gone up approximately 30 per cent,” wrote Toni Bush, global head of government affairs at News Corp. “That very substantial price hike cannot be easily absorbed by a newspaper industry that is already seriously challenged by advertising dollars being siphoned away by the big tech companies like Google and Facebook.”
In March, the Commerce Department imposed anti-dumping duties averaging 22.16 per cent against most Canadian producers of groundwood. The anti-dumping tariffs are on top of countervailing duties averaging 6.53 per cent levied in January, for a combined tariff of 28.69 per cent against most Canadian producers.
The tariff rate is 28.25 per cent for Richmond, B.C.-based Catalyst Paper Corp. and 32.09 per cent for Montreal-based Kruger Inc.
Montreal-based Resolute Forest Products Inc. got hit with a countervailing rate of 4.42 per cent in January, but in March, the Commerce Department did not include Resolute on the list of Canadian producers subject to anti-dumping tariffs.
Resolute, which is a major newsprint producer in both Canada and the United States, opposes the U.S. tariffs.
Brent Jang