GENEVA, Switzerland — Canada found itself lumped together with China and India on Tuesday as a country the United States believes is using illegal subsidies to distort trade, with $163 million of aid to a Nova Scotia paper mill under scrutiny.
The United States said Canada should withdraw payments to the Port Hawkesbury paper mill, which competes with U.S. producers, including several paper mills in Maine.
The Port Hawkesbury mill has received tax breaks, grants, energy cost reductions and timber subsidies that could be challenged under WTO rules, a U.S. official told the WTO subsidies committee.
U.S. Rep. Mike Michaud in late September called for an investigation of the subsidies Nova Scotia granted the paper mill. U.S. Trade Representative Ron Kirk confirmed in an Oct. 1 letter that his office would pursue the matter with the Canadian government and bring the issue up at the World Trade Organization’s Committee on Subsidies.
A European Union official said the EU also was concerned about the subsidies and asked for more information.
A Canadian official told the meeting that Canada was already working with the provincial authorities to answer U.S. questions and had started a dialogue with the United States, which the EU was welcome to join.
The Port Hawkesbury mill reopened last month after it had idled for more than a year, following a deal between the provincial power company and the mill’s owner Pacific West Commercial Corp.
Pacific West, which is owned by Stern Partners of Vancouver, bought the mill from NewPage Corp. of Ohio, which had filed for Chapter 11 bankruptcy and began restructuring in September 2011.
Nova Scotia Premier Darrell Dexter has said reopening the mill would bring more than 1,400 jobs to the province.
The Maine mill that will be most affected by the Port Hawkesbury paper mill is UPM’s mill in Madison, which produces 220,000 tons of paper a year and employs about 240 people, mill manager Russ Drechsel told the Bangor Daily News. Both mills produce the same grade of supercalendered paper used for glossy magazines and catalogs.