By Chris Cook, Deputy Editor, PPI Pulp & Paper Week, RISI
SAN FRANCISCO,
Sept. 25, 2009
(PPI Pulp & Paper Week) -
In a virtual replay of its 2007 trade dispute with Asian coated papermakers, NewPage filed petitions with the US Dept of Commerce (DOC) and the US International Trade Commission (ITC) seeking antidumping protection and countervailing duties on coated sheet paper imports from China and Indonesia.
The petitions allege various subsidies are being provided to Chinese paper producers, including low interest loans, tax subsidies, input subsidies, land use programs, grants, export tax subsidies and "the pervasive undervaluation of China's currency." They also allege Indonesian paper companies benefit from cut-price timber from government-owned land as well as "government loans, debt forgiveness, and tax incentives for certain encouraged businesses."
Co-petitioners with NewPage, the largest coated papermaker in the USA with 39% of capacity, are Appleton Coated, Sappi Fine Papers North America and the United Steelworkers union (USW). Sappi is the third largest US producer with a 13% share of coated capacity, behind Verso with 16%. Sources said Verso is not a participant in the petition because of its focus on web products.
"It is important that we offset the dumping and subsidies which are benefiting the Chinese and Indonesian paper companies at the cost of American manufacturing jobs. The domestic paper industry cannot afford to continue to lose more market share, more profits and more jobs to unfair competition," said Appleton Coated pres/CEO John Cappy.
"They're trying to dust off the old dispute to see if they have more luck, but it's the pot calling the kettle black considering the advantage NewPage and others have been able to take with their monstrous black liquor subsidies that have made observers in a number of other countries furious," said an analyst in Canada.
Protectionism. The petitioners say they don't want special treatment, just a level playing field. But the complaint's filing on the heels of a widely-criticized 35% duty on tires imported from China, which the USW spearheaded, and on the eve of the G-20 economic summit in Pittsburgh, PA, puts a spotlight on the Obama administration's attitude towards trade protectionism. Leaders of the G-20 have promised to resist attempts to curb job losses at home by erecting obstacles to their markets.
"This case is not about protectionism--it's about fair trade," said NewPage pres/CEO Rick Willett.
The grades covered by the petitions include coated paper with a GE brightness rating of 80 or higher used for high-quality printing, writing, and other graphic applications using sheet-fed presses, whether in finished sheets or as semi-finished sheeter rolls.
Imports spike. According to the petitioners, US imports of coated papers covered by the complaint jumped nearly 40% year-over-year, from 131,687 tons in the first six months of 2008 to 185,422 tons in the first six months of 2009. At the same time they say coated paper shipments by domestic manufacturers declined by about 38%.
"China and Indonesia together are believed to account for nearly 30% of the US market for sheet-fed coated paper in the first six months of this year, almost double the share they had at the same time last year," they said in a statement.
That number could rise over the next year if Eagle Ridge Paper, the new US distribution channel for APP, is successful in meeting its 8,000 tons/month target for CFS imports in the US West and South.
Predatory pricing. NewPage Chmn. Mark Suwyn told the Wall Street Journal the rapid growth of Chinese paper imports showed that paper was being dumped. "It's a commodity business so the only way they could grow that big is by coming in with predatory pricing."
But with Asian imports estimated to account for as much as 80% of the sheet market in the West, buyers are not pleased by the prospect of having to pay higher prices.
"Shipments are down in absolute terms but what's happened is domestic shipments have fallen off and imports haven't fallen so much. It's absurd that they think this is unfair competition," said one buyer source.
"Whatever increase there has been in Asian imports has been more than compensated by the drop in European imports," said another buyer contact.
Duties subverted. In its determination two years ago the DOC found that Asian importers had engaged in subsidizing and dumping US imports of coated freesheet (CFS), and imposed preliminary duties. But the ITC subsequently decided that the US industry as a whole had not suffered damage.
Contacts said Asian suppliers had been able to subvert the duties by adding groundwood to their CFS furnish and qualifying their products as CM, which fell outside the scope to the DOC's penalties. By narrowing this complaint's definition to sheet fed paper, the petitioners hope the issues will become clearer, given the US industry's closures and job losses.
They also hope a successful outcome might head off some of the additional imports likely destined for the US from nearly 3.0 million tonnes of new CFS capacity scheduled to start in China in 2010-2011.
The ITC is expected to make a preliminary injury determination in November and the DOC is expected to issue preliminary determinations in the countervailing duty and antidumping duty cases in December and March 2010, respectively.