A federal ruling favoring U.S. paper mills means a tariff on paper coming from the Port Hawkesbury Paper mill in Nova Scotia could begin next week, a move officials say will help protect jobs at Madison Paper Industries.
On Tuesday the U.S. Department of Commerce issued a preliminary ruling in response to a complaint from the Coalition for Fair Paper Imports, made up of Madison Paper Industries and Verso Corp.
The complaint alleged that Nova Scotia’s provincial government has been providing illegal subsidies to Port Hawkesbury Paper in Nova Scotia. The subsidies have created unfair market conditions and are in violation of international trade law, the two companies say.
Tuesday’s ruling means the Canadian mill will have to pay a 20 percent tariff on shipments of the paper entering the U.S. and that future duties could be imposed if the decision is upheld this fall. The tariff could be imposed as early as next week, according to a news release from U.S. Rep. Bruce Poliquin, R-2nd District.
The Madison mill employs about 220 people, many of whom were laid off temporarilyin January. The layoffs were an effect of competition from the Port Hawkesbury mill and rising energy costs, Russ Drechsel, president and CEO of Madison Paper Industries, said at the time. All of the roughly 110 workers who experienced the temporary layoffs returned to work in February.
The decision is “critical for the workers at the Madison mill and other paper mills in the United States,” said Michael Croteau, president of the United Steel Workers Local 36, the union at Madison Paper, in Wednesday’s release. “We don’t want to see more lost jobs in this country caused by unfair imports, and this preliminary decision is a good step in preventing that.”
Drechsel said the ruling is “an important decision for the U.S. paper industry” in a separate release Wednesday.
“We believe the Department of Commerce conducted a responsible, thorough preliminary investigation and correctly concluded that certain Canadian producers of supercalendered paper — principally Port Hawkesbury Paper in Nova Scotia — have received unlawful subsidies,” he said.
Maine’s U.S. Sens. Susan Collins and Angus King, in a joint news release, called the ruling “an important step toward protecting Maine workers at the Madison mill” and “the right decision.”
Madison Paper produces about 200,000 tons of supercalendered paper each year, according to the Maine Pulp and Paper Association, while Port Hawkesbury produces about 360,000 tons. Supercalendered paper is an uncoated paper that provides a smooth, glossy printing surface often used for magazines.
Only eight mills in North America produce supercalendered paper. Madison and Verso’s Duluth, Minnesota, mill are the only two in the U.S.
Drechsel said in an email that he was confident the Department of Commerce would uphold the preliminary decision in the fall. The department is expected to reach a final decision around Oct. 14.
The U.S. International Trade Commission also would need to affirm the decision before countervailing duties can be placed on the imports from Canada. Poliquin also said in his release that he plans to testify before the trade commission in October in support of Madison Paper.
Marc Dube, development manager for Port Hawkesbury Paper, didn’t respond to a request for comment Wednesday but was quoted in the Chronicle Herald newspaper, of Halifax, Nova Scotia, as saying that the company plans to fight the ruling. Dube said the decision is “without merit and is unfair to other Canadian mills in addition to ours.”
Canadian International Trade Minister Ed Fast also responded to the ruling with a statement on the country’s Foreign Affairs, Trade and Development website.
“We are disappointed that the U.S. Department of Commerce will impose tariffs on Canadian supercalendered paper due to an unwarranted complaint,” Fast said. He said the country is concerned that the U.S. Department of Commerce did not conduct a thorough review and called on the department to re-review the complaint.
The subsidies to Port Hawkesbury Paper have affected the U.S. producers since Port Hawkesbury re-opened following bankruptcy in 2012, Drechsel said.
At that time, Nova Scotia’s provincial government and the Port Hawkesbury mill, which is owned by Vancouver, British Columbia-based Pacific West Commercial Corp., entered into an agreement that provided $125 million in aid to the mill through Nova Scotia’s Jobs Fund and the province’s Department of Natural Resources. The mill previously was owned by Ohio-based NewPage Corp.
The province also invested $36.8 million to keep the mill in a “hot idle” state — open but not producing paper — during the transition to new ownership and to set up a Forest Infrastructure Fund to keep employees working in the forestry industry.
Rachel Ohm — 612-2368
Twitter: @rachel_ohm
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