A federal trade regulation agency agreed Friday to impose tariffs upon Chinese and Indonesian coated paper imports in a decision that Maine papermakers hope will improve sales and create more jobs.
The U.S. International Trade Commission voted 6-0 to impose the duties upon the imports and affirmed that the governments of China and Indonesia had illegally subsidized their paper industries and dumped coated paper products on the market to depress prices and increase their market share.
Though they could be subject to annual ITC or U.S. Department of Commerce review, the dumping and anti-subsidy tariffs will be imposed starting in mid-November and continue for five years.
Maine’s papermakers and federal delegates were jubilant at the ruling.
“We’ve waited a long time for this decision, which will help restore a competitive market,” said Mark Gardner, president and chief executive officer of Sappi Fine Paper North America, one of the ITC petitioners last year.
“This is a slam-dunk decision that undergirds the position of the industry and reinforces what we have been saying for years,” U.S. Sen. Olympia Snowe said Friday.
“Over the years, I have witnessed our state’s paper manufacturers and their workers going to great lengths to improve their competitiveness,” she added. “These are the types of companies that should thrive in our global economy — but they cannot if the foreign producers are playing with a proverbial stacked deck.”
U.S. Rep. Mike Michaud, D-East Millinocket, predicted the duties would have a positive impact upon the coated paper mills in Bucksport, Jay, Rumford and Skowhegan. A preliminary ITC ruling led to the rehiring of 100 laid-off paper mill workers in Rumford, he said.
“This is great news for the coated paper mills in Maine and Maine itself,” Michaud said. “It’s been an issue that I have worked on for a long time.”
One of the petition’s opponents, Asia Pulp & Paper, the leading exporter of coated paper from China and Indonesia, promised to appeal the decision.
“The evidence we presented strongly demonstrated that our imports have not harmed U.S. producers,” said Terry Hunley, acting president of APP Americas. “We believe there are very strong grounds for appeal, and we will begin pursuing our appeal options immediately.”
Occurring for more than a decade, the Asian governmental subsidies included preferential lending from state-owned banks, income and value added tax exemptions and privileged rates for standing timber, pulp, electricity, coal and other services to producers of coated paper.
The subsidies resulted in some imported papers being sold at more than 100 percent less than their fair-market value and were a key element in the dramatic rise in Chinese and Indonesian paper production and the massive downsizing of U.S. papermakers, the petitioners have argued.
“Without question there has been a cause and effect,” Snowe said.
Several U.S. paper suppliers, including Sappi and Newpage, and the United Steelworkers Union first petitioned the commission for relief last year, citing the imports being sold in this country below their manufacturing cost.
Michaud said the Indonesians and Chinese were selling at a loss to get themselves a dominant share of the world market. Once that happened, he said, they could have controlled the price of coated paper.
The coated paper products cited are used in catalogs, books, magazines, labels and wraps, greeting cards and other items requiring high-quality print graphics.
Republican Sens. Snowe and Susan Collins and Democratic U.S. Reps. Chellie Pingree and Michaud testified before the commission on the issue on Sept. 16 in Washington, D.C.
Commerce Department findings show that in 2009, imports of some Chinese and Indonesian coated papers were valued at an estimated $279.1 million and $61.5 million respectively, Snowe said.
This directly contributed to U.S. paper production employment dropping from roughly 557,000 to 398,000 from 2002 to 2009 with tens of thousands more workers adversely affected in logging, trucking and other paper-related industries, the petitioners argued.
George Martin, president and chief executive officer of NewPage, said the subsidies led directly to layoffs at Maine mills.
“Today’s victory will help Maine’s paper industry compete internationally,” Collins said in a statement. “Additional actions must be taken to achieve a truly fair marketplace, but this is a major step forward.”
The paper industry contributed nearly $900 million to Maine’s economy last year and accounts for 22 percent of all manufacturing wages in the state. In some communities, mills represent from 60 to 80 percent of total tax revenues, Collins said.
In a statement, Pingree said of the ruling, “This is a huge win for workers in Maine and at paper mills around the country. We knew that China and Indonesia were not following the rules, and this decision means they’ll have to pay.”
Michaud and Snowe said they hoped the ITC ruling would make restarting the dormant Millinocket coated paper mill more attractive to potential buyers.
“I am not sure if it will,” Michaud said. “Quite frankly, Brookfield is more interested in hydro power. They are not very interested in running mills as paper mills.”
Brookfield Asset Management of Toronto, which owns the mills in East Millinocket and Millinocket, has been in sales talks with investors for several months.
Snowe said the ITC decision will be followed by rigorous efforts to enforce the tariff collection and watch for import violations.
She also is interested in seeing whether some of the duty monies, which will be collected by the federal government, can be diverted to paper industries.