A new duty on newsprint announced by US Department of Commerce on January 9 will hit Catalyst Paper Corporation's BC mills with a preliminary countervailing duty of 6.09 per cent.
According to a statement from Forest Products Association of Canada (FPAC), the duties could be in effect within a few days.
“This duty impacts a fairly substantive portion of our overall Canadian production,” said Catalyst spokesperson Eduarda Hodgins. “Anything that challenges our competitiveness is not good. It’s a problem.”
Canada is the largest exporter of newsprint in the world; Canadian newsprint paper exports to the United States totalled about $1.6 billion US in 2016, according to the US commerce department.
About 72 per cent of the newsprint produced in Canada is sold into the US, according to FPAC.
This isn’t the first time Catalyst has had a duty imposed. The last dispute, around supercalendared paper at the Powell River mill, ended with positive news, said Hodgins.
“In that case we were found in an investigation to have received no material subsidies," she said, "and we had our deposits refunded.”
City of Powell River mayor Dave Formosa said the local division of Catalyst has faced unfair duties previously and fought them successfully.
“We’ve already had this battle and it was won, by the province and the companies coming together and fighting it," said Formosa, "then the perpetrators came again in another direction.”
Duties imposed range from 0.65 per cent for White Birch Pulp and Paper Canada to 9.93 per cent levied against Kruger Inc, both from Quebec.
Formosa said given that the 6.09 per cent duty slapped on Catalyst’s BC mills was relatively high in comparison to some of those imposed in other provinces, he wants to know how it was assessed.
“I was under the opinion from my research that we would be the low percentage and not one of the highest,” said Formosa. “I know other provinces give huge amounts of money to the pulp and paper sector, and in comparison this province doesn’t give anything that I’m aware of, other than some grants on power generation.”
According to Hodgins, the effects of the duties are much farther reaching as the struggling US newspaper industry will be further hobbled by these levies.
“It’s important to see and understand the reaction that’s happening in the United States,” said Hodgins. “There has been a lot of backlash from US industry, particularly struggling US newspapers. It’s an unnecessary burden on Catalyst and our customers.”
In response to the new duty, Government of Canada announced it will take its fight against American duties to the World Trade Organization and ask it to examine the use of certain systemic trade practices that violate international trade law.