Norpac, owned by hedge fund One Rock Capital Partners LLC of NY, said subsidies in Canada include breaks on electricity rates and unfair financial assistance.
Following a period of tension over possibly having more taxes imposed by Canada's neighbours to the south, the U.S. Department of Commerce slapped on preliminary countervailing duties up to 9.93 per cent on Tuesday for uncoated groundwood paper (newsprint) imported from Canada. The companies being hit hardest by the new preliminary duties are based in Eastern Canada. A final decision is expected in May.
The decision dealt a blow to domestic newspaper industry giants who'd argued that countervailing duties against the paper importers could decimate their already hobbled industry.
The letter didn't include publishers of larger papers, but concerns there are similar. Even if the tariff was only 10 percent, he said, it would represent a seven-figure cost for the company that was unbudgeted and unanticipated.
Norpac is targeting products such as newsprint, directory paper, bookgrade paper and groundwood printing and writing paper.
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All sales of newsprint into the US will cost American newspapers 6% to 6.5% more. But industry officials said that's due primarily to the shift from print to digital media consumption, not to unfair trade practices.
The Canadian government has since filed a complaint to the World Trade Organization (WTO) over US trade remedy measures, requesting WTO consultations with the United States with respect to anti-dumping and countervailing duty proceedings.
Also weighing in are more than 1,100 small- and medium-sized newspapers that sent a letter to Ross last month urging denial of the petition because it could result in "very severe" impacts on the industry.
The complaint was filed last month but was released today, with some coincidental timing: the USA has just announced duties as high as nine per cent on Canadian paper.
"While we understand the concerns recently surfaced by some newspaper publishers, we strongly disagree with the notion that their industry requires low-cost, government-subsidized, imported newsprint from Canada to sustain its business model", he said.
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"Any duties will have a direct and negative impact on U.S. newspapers, especially those in small cities and towns, and result in job losses in the American printing sector", the statement said.
Officials at both One Rock Capital Partners and NORCO did not respond to requests for interviews or statements about the case.
Craig Anneberg, CEO of North Pacific Paper Co.
With almost 400 non-union employees, Norpac is one of Cowlitz County's largest employers. A week after filing the petitions in August, the company announced that it would shut down one of its three paper machines in October, resulting in an undetermined number of layoffs and reducing the plant's capacity by almost one-third to 540,000 tons per year.
The CVD law provides US businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of foreign government unfair subsidization of imports into the United States.
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