Canadian newsprint producers hit with initial countervailing duties by U.S.

North Pacific Paper Co. complained Canada was dumping newsprint into the American market and unfairly subsidizing its industry at home (Pixabay photo)

TORONTO — Newsprint is the latest Canadian product to be hit with preliminary countervailing duties from the United States.

The U.S. Department of Commerce slapped an overall tariff of 6.53 per cent on about 25 Canadian plants, mostly in Quebec and Ontario, following an investigation that began in August 2017.

Canada is the largest exporter of newsprint in the world, with a market dominated by Resolute Forest Products (TSX: RFP), Kruger and Catalyst Paper Corp. of British Columbia.

Resolute faces a preliminary duty of 4.42 per cent while the Catalyst Paper duty is 6.09 per cent, Kruger’s is 9.93 per cent and the White Birch duty is 0.65 per cent.

The U.S. Department of Commerce will make another decision on anti-dumping duties in March and the U.S. International Trade Commission will be asked to rule on the two measures in August.

The U.S. government began investigating Canada’s newsprint industry after Washington-based North Pacific Paper Co., complained Canada was dumping newsprint into the American market and unfairly subsidizing its industry at home.

It is the same argument made regarding Canada’s softwood industry, which led to the imposition of both countervailing and anti-dumping duties on most Canadian softwood exports to the United States.

Resolute Forest Products spokesman Karl Blackburn calls the duties “completely unfair and unjustified” and Denis Lebel, the president and CEO of the Quebec Forest Industry Council, calls them “absolutely unfounded.”

The U.S. Department of Commerce says Canada exported about $ 1.6 billion worth of newsprint to the U.S. in 2016.

The new duties comes as Canada and the U.S. continue to try to negotiate a trade settlement on softwood to replace the deal which expired in 2015. Canada is also seeking relief from the softwood duties in appeals through the North American Free Trade Agreement and the World Trade Organization.