APP Americas

Duties on imported coated paper from China and Indonesia are unwarranted

By Terry Hunley Tue, Apr 13, 2010

ARLINGTON, VA , April 14, 2010 (APP Americas) -Asia Pulp & Paper (APP) is the leading importer of coated free sheet (CFS) paper from China and Indonesia to the United States. Because of where our paper is made, we are caught in the middle of an international trade dispute initiated by three U.S. paper makers, who are accusing those two Asian countries of providing companies that operate there with unfair support.

If this sounds familiar, it is. A similar complaint was rejected by the U.S. International Trade Commission (ITC) in December 2007, when it rightfully concluded that the domestic paper industry had not been harmed.

Little has changed since that ruling, but the accusations are weaker and less justified today. Quarterly data analysis from the ITC indicates that coated paper import volumes from 2006 through the second quarter of 2009 did not change significantly and reflect recent historical levels. This undermines the argument that the U.S. market is being flooded with imported coated paper. Domestic shipments of coated paper are down only because overall demand is down in this bad economy - not because of any alleged unfair practices of Chinese and Indonesian producers and importers.

Unfortunately, the U.S. Department of Commerce issued a preliminary ruling in the case on March 2 in favor of countervailing duties, and the duty margins applicable to APP are 12.83 percent on products from China and 17.48 percent on products from Indonesia.

As this is a preliminary ruling and Commerce is still collecting information and conducting analysis, we are confident the final decision will be much different and improved, as subsidy cases involve complex issues that require extended research. In addition, when all facts have been considered, we expect ITC will find that the U.S. industry has not been injured and is not entitled to any special protection.

It is worth noting that Commerce estimates the total value of coated paper imports from China and Indonesia in 2008 relevant to this case was $273 million. Compare that to the "black liquor" subsidies U.S. paper makers received in 2009 from the federal government. NewPage and Sappi alone, two of the three paper mill petitioners in this case, received more than $400 million in black liquor subsidies last year. Complete data is not available, but the entire U.S. paper industry may have earned up to $9 billion of these tax credits last year. It is hypocritical for U.S. paper makers to accuse foreign producers of receiving unfair subsidies.

The next milestone in the case is a scheduled April 22 preliminary ruling by Commerce on dumping charges. We continue to vigorously defend our position because the United States and our customers here are an important and valued market for us.

Some have argued that the impact of duties would be small because the scope of the case is narrow in terms of product and country of origin. Make no mistake, if duties are imposed by the ITC, it will negatively and artificially restrict competition in the U.S. paper market. Paper supplies will be disrupted. The delivery of paper products will be delayed and the range of available supplier options will be reduced. The ripple effects will be felt by every consumer of coated paper products, especially those in the printing industry, which has lost 73,000 jobs since mid-2008. Duties in this case are unwarranted and, given the current economic climate, they would delay recovery in this sector. APP has established a Web site to let printers know about the case and its potential to negatively affect their business:

As for the scope of the case, the petitioners are only targeting China and Indonesia right now for strategic reasons. I fully expect them to go after other importing nations if they succeed in this case. It is an unpleasant reality we face as importers, and everyone pays the price. It hurts the fairness and balance of the market we all want, but we will not be deterred. We continue our work to have this case rejected on the merits and remain confident the Commerce Department and ITC will issue correct and fair final decisions that dismiss duties.

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