APP Americas Previews Testimony for Hearing on the Coated Paper Trade Case
September 16, 2010
Overview: The facts revealed through investigation in this case prove that certain coated paper sheets imported from China and Indonesia have not caused any material harm to the domestic industry and no additional duties are warranted.
• The volume of imported paper involved in this case (subject imports) did not change significantly between 2007 and 2009, increasing only 1 percent.
• Domestic producers increased their share of the U.S. market by 5.4 percent from 2007 to 2009.
– Domestic industry production and shipments closely tracked domestic consumption and actually fell less than the decline in overall consumption.
• The subject imports in this case largely compete with other imports, not domestically produced products.
-The facts show a one-to-one substitution. Subject imports simply replace imports from other sources.
• Imports from China and Indonesia did not cause paper prices to decline in 2009. Prices declined because of the following economic reasons:
– Demand for coated paper collapsed during the recession.
– Purchasers relied more on existing inventory, further reducing new orders.
– Raw materials costs for coated paper fell sharply.
– Domestic producers passed the benefits of “black liquor” tax subsidies on to customers through lower prices.
– Domestic producers lowered prices in a fierce competition to win a larger share of the shrinking market.
• The domestic industry strategically restructured during the investigation period (2007-2009), shutting down some older, less efficient mills.
– These closures were driven by trends in the much larger coated paper web roll market, which account for most of the production at these mills.
– Small declines in domestic coated sheet industry employment were the result of these closures, not any effect of subject imports.
– Domestic industry claims that these closures are good for the industry. Domestic producers claim they can produce as much or more coated paper at existing facilities and production capacity actually increased during the investigation period.