New Study Said to Detail Chinese Subsidies to Paper Sector

• “China has no inherent cost advantage in the capital-intensive paper industry. Indeed, labor makes up about 4% of the costs in this industry; in contrast, imported recycled paper and pulp comprise over 35% of the costs. Raw materials, which make up three-fourths of the costs of producing paper, as well as electricity, coal, and transportation, have nearly doubled in price over the last decade. Yet, Chinese paper sells at a substantial discount compared to U.S. or European paper.”

“This study shows that Chinese subsidies are pervasive and have fueled the development of their industry. Their policies have damaged production here in the U.S., and cost jobs. Our case seeks to address only a portion of their subsidies that have affected the coated paper sector. But, something must be done to address China’s overall subsidies so that other sectors, producers and workers do not become victims as well,” said Sandra Van Ert, president and chief executive officer of Appleton Coated LLC.

“EPI’s study strengthens our case and shows that China’s actions are part of a larger strategy to grow their industry regardless of the cost to others. China is a non-market economy that simply doesn’t play by the rules. All we’re seeking is the restoration of a level playing field where we’re allowed to compete and continue to invest in plant, equipment and people,” stated Mike Marziale, senior vice president, marketing, strategy and general management of NewPage Corporation.

Mark Gardner, president and chief executive officer of Sappi Fine Paper North America said, “This study clearly demonstrates the need for a competitive market in coated paper. Our trade case is meant to restore a level playing field. Until something is done about China’s overall predatory policies, we and other industries will continue to have to pursue such trade cases.”

The companies and the United Steelworkers filed unfair trade cases on September 23, 2009 with the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission alleging that certain coated paper from China and Indonesia had been dumped and subsidized resulting in injury to the domestic industry and its employees. The paper products covered by the petitions include coated paper in sheet form used in high-quality writing, printing and other graphic applications, with a GE brightness rating of 80 or higher and weighing up to 340 grams per square meter.

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