Coated Paper Controversy Nearing End

If you’ve been following the coated paper anti-dumping case, the final determination by the International Trade Commission (ITC) is due tomorrow, Oct. 19.

If you haven’t been following this case, here is some background.

In September, 2009, NewPage, Sappi, Appleton Coated and the United Steelworkers filed a petition with the U.S. Department of Commerce (DOC) and the ITC charging Indonesia and China with illegal subsidies and dumping of coated paper for sheetfed presses during 2008 and 2009. The petition charged that the illegal subsidies and dumping resulted in “material injury” to the U.S. paper industry. In an article in Printing Impressions, May 2010, I wrote about the case filed, and will summarize it here.

The U.S. petitioners argued that imports had benefited from illegal subsidies to take market share from the U.S. mills, and that jobs were lost. The respondents, led by Asia Pulp and Paper (APP), argued that there were no illegal subsidies, and if duties were imposed, paper prices would rise in the United States and printer jobs would be lost. Some printers supported this argument; some did not. APP also argued that the mills used black liquor tax credits to cut prices and take business from APP. All of these arguments were detailed in the May article.

The U.S mills aligned with various NGOs (non-governmental organizations) to make the case that APP’s environmental practices were poor. APP accused the U.S. mills and the NGOs of collusion.

To call this a “controversy” is an understatement. In September, the Consumers Alliance for Global Prosperity issued a report—“Empires of Collusion”—and launched a Website to fight for free and competitive trade. The petitioners argue that all they want is “fair trade.”

The process that leads to a ruling on the case is complex, but is nearing the end. On September 19, the DOC announced its final affirmative determinations regarding antidumping and countervailing duties. Simply put, dumping is defined as selling in the United States at less than “normal value,” essentially below the prices in the exporter’s home country. Countervailing duties apply to illegal subsidies. The DOC imposed anti-dumping duties of 20.13% and countervailing duties of 17.94% on imports from Indonesia, and anti-dumping duties of 7.60% and countervailing duties of 17.64% on most imports from China.

Now that the DOC confirmed that dumping and illegal subsidies occurred, and determined the amount of duties that apply, the final step is for the ITC to make a final determination as to whether the dumping and subsidies have “materially injured” the domestic market.

Unfortunately, material injury is not well defined. The statute defines it as “harm which is not inconsequential, immaterial or unimportant.” Thus, the ITC has considerable flexibility to interpret the law, but in November 2009, it did reach a preliminary finding that it was likely that material injury did occur.

Since March, duties ranging from 4% to 18% have been collected and placed in escrow based on a preliminary determination by the DOC. If the ITC finds that there was no injury, these duties will be returned. The ITC is scheduled to vote tomorrow, Tuesday, Oct. 19.

Is this the last word? Perhaps not. China and Indonesia may well dispute the finding with the World Trade Organization.