The Perfect Storm: Recession, Postal Changes and Now Paper?

As a veteran of the paper industry, I am concerned for the U.S. printing industry regarding the international trade dispute initiated by three paper makers. Since mid-2008, more than 73,000 printing and graphics communications jobs have been lost, according to the Printing Industries of America, and if these few domestic paper producers get their way, it’s only going to get worse.

Because of where our paper is made, we (Asia Pulp & Paper) are caught in the middle of an international trade dispute. These three paper manufacturers are accusing two Asian countries—China and Indonesia—of providing companies that operate there with unfair support.

If this feels like déjà vu, we’ve been here before. A similar complaint was rejected by the U.S. International Trade Commission (ITC) in December 2007, when it rightfully concluded that the domestic paper industry had not been harmed.

Over the past 20 years the printing industry has weathered many challenging situations, but this could lead to a considerable pull back for those who teeter on the edge of existence. So what has changed since the last ruling two years and four months ago?

Quarterly data analysis from the ITC indicates that coated paper import volumes from 2006 to 2009 did not change significantly and reflect recent historical levels. The argument that the U.S. market is being flooded with imported coated paper just does not have merit. Domestic paper shipments are down because overall demand is down in this deep recession—not because of any alleged unfair practices.

Unfortunately, the U.S. Department of Commerce issued a preliminary ruling in the case on March 2, 2010, in favor of countervailing duties, and the duty margins applicable to APP are 12.83% on products from China and 17.48% on products from Indonesia. This action, in addition to the impending postal changes, will be damaging to many quality printers. From increasing postage rates to the impending elimination of Saturday postal delivery service, direct mail opportunities for printers are shrinking.