The U.S. Department of Commerce has reduced tariffs it is imposing against most Canadian newsprint in its final ruling, a move that lessens the impact on American newspapers already struggling financially.
“This was a complicated and unique case. The department worked hard to address the arguments raised, and I am satisfied that the final determinations appropriately targets bad actors,” Commerce Secretary Wilbur Ross said in a statement on Thursday.
In its decision, the Commerce Department reduced the final tariffs to 20.26 per cent for Richmond, B.C.-based Catalyst Paper Corp. and 9.53 per cent for Montreal-based Kruger Inc. The preliminary duties on uncoated groundwood paper, including newsprint and book-grade paper, totalled 28.25 per cent for Catalyst and 32.09 per cent for Kruger.
Montreal-based Resolute Forest Products Inc. saw its final duties rise to 9.81 per cent, compared with 4.42 per cent.
Other Canadian groundwood producers face paying final tariffs of 8.54 per cent, compared with 28.69 per cent in the preliminary determination earlier this year, on shipments into the United States.
“Despite the slight reduction in some duties, Canada remains disappointed with the final duty rates announced by the U.S. Department of Commerce,” Foreign Affairs Minister Chrystia Freeland said in a statement in Ottawa.
The News Media Alliance, which changed its name in 2016 after being known as the Newspaper Association of America, said the underlying problem of extra newsprint costs due to continuing duties lingers for U.S. publishers. “Although this is a step in the right direction, the reduced rates only lessen the pace at which the tariffs are harming the industry,” alliance president David Chavern said.
The Commerce Department continued to exempt Connecticut-based White Birch Paper Co., which has three Quebec paper mills through its Canadian unit, from paying duties on its groundwood sales into the United States. White Birch isn’t on the hook for cash deposits because its tariff is under the threshold required for the United States to collect duties.
Resolute’s mills in Canada were hit with the 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 spokesman Seth Kursman said the company is disappointed by Thursday’s ruling. “Tariffs on uncoated groundwood paper are harming the very U.S. manufacturing sector they are supposed to protect, and are damaging to newspapers, printers, book publishers and a range of other customers of our industry," he said.
Canadian newsprint producers that paid 28.69 per cent in preliminary tariffs included Alberta Newsprint Co., New Brunswick-based J.D. Irving Ltd. and Rayonier Advanced Materials Inc.’s Canadian unit. They will receive partial refunds for amounts paid earlier this year since the final duties for them are lower at 8.54 per cent.
The impact of higher newsprint prices already has been felt in decreased demand. Canadian producers have been able to pass on most or all of the preliminary tariffs to U.S. customers.
In its two preliminary decisions earlier this year, the Commerce Department imposed anti-dumping tariffs averaging 22.16 per cent in March against most Canadian producers, on top of levying countervailing duties of 6.53 per cent in January. The final ruling results in the elimination of anti-dumping duties on most Canadian producers, but imposes a weighted average of 8.54 per cent in countervailing duties.
The case has its roots in Washington State, where North Pacific Paper Co., also known as Norpac, produces groundwood. Norpac, which is owned by hedge fund One Rock Capital Partners LLC of New York, first lodged its complaint with the Commerce Department in August, 2017.
Norpac said on Thursday that it had hoped the Commerce Department would have taken a tougher final position. “We are disappointed that the Department of Commerce did not impose anti-dumping duty deposits” on many Canadian producers that had paid preliminary tariffs, Norpac said in a news release.
Norpac claims that subsidies for Canadian groundwood producers include discounted electricity rates, unfair financial assistance and low “stumpage” rates charged by provincial governments for cutting down trees.
On or about Aug. 29, the U.S. International Trade Commission is to vote on whether to uphold its preliminary finding last year that Canadian groundwood shipments have injured the U.S. mills. The ITC’s reasons for its decision are set to be released on Sept. 17.
“We hope the International Trade Commission will reverse this tax on paper,” said Michael Makin, president of Printing Industries of America.
Canadian producers would benefit if the ITC overturns the tariffs, resulting in refunds. But, if the ITC upholds its preliminary decision to side with Norpac’s position, the Canadian government is expected to challenge the newsprint tariffs by taking the fight to the World Trade Organization.