Chinese Paper Tariffs Rankle U.S. Printers —Michelson

ENDING A 23-year-old policy of not applying anti-subsidy laws to non-market economy (state-controlled) countries like China, the U.S. Department of Commerce (DOC) recently determined that two Chinese producers and exporters of coated free sheet paper received countervailable subsidies ranging from 10.9 to 20.35 percent from the Chinese government in the form of tax breaks, tax forgiveness and low-cost loans. In response, tariffs have been enacted for coated free sheet paper imported from China, as well as for the same glossy grade being imported (in lesser amounts) from Indonesia and South Korea.

The preliminary decision, which will likely be challenged by China in U.S. federal court and with the World Trade Organization, will culminate in a final determination by the DOC as early as mid-June. According to U.S. government estimates, imports of coated free sheet paper products from China increased by approximately 177 percent in volume from 2005 to 2006, and were valued at roughly $224 million last year. The investigation and ultimate ruling resulted from an October 2006 petition filed with the DOC by Dayton, OH-based NewPage Corp., reportedly the largest coated paper manufacturer in North America. (To better understand NewPage’s position on why it filed the petition in the first place, read its “Open Letter to Printers” advertisement appearing on page 33 in this issue.)

While putting tariffs on coated paper may, as NewPage sees it, help to “level the playing field” (with foreign competitors being improperly subsidized), this action has many U.S. commercial printers, print buyers and the PIA/GATF up in arms. Noting that paper purchases account for approximately 22 percent of printers’ revenues, on average (and, for some plants, as much as 40 percent), the national association, for one, believes that shortages or disruptions brought about by the ruling will have a serious negative impact on the U.S. printing industry. “It is critical that printers have purchase options and access to a variety of paper producers in order to remain cost-competitive in the global market,” wrote PIA/GATF President and CEO Michael Makin, in a position statement letter directed to the U.S. International Trade Commission.

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