Tariff Decision On Canadian Newsprint Could Have ‘Severe’ Impact On Newspaper Industry

A single paper mill in Washington state has started a process that could rock the newspaper industry in 2018.

The mill, North Pacific Paper Company, or NORPAC, has asked the government for import duties on groundwood paper from Canada.

NORPAC claims that the Canadian government has subsidized the paper companies, creating an unfair arrangement that injured NORPAC’s business.

Groundwood paper is a kind of newsprint. It is used to print and publish newspapers, large and small, across America. If the tariffs are imposed, costs will go way up on an already stressed industry. Other users include book publishers and paper merchants.

The Commerce Department is expected to make a preliminary determination on Jan. 8.

And except for NORPAC, which is owned by a hedge fund, most of the stakeholders are against the petitions, which, if approved, would add duties of as much as 50 percent.

NORPAC filed its petition in late August. Almost immediately, a bipartisan group in Congress announced its opposition.

Led by Reps. Chuck Fleishmann, R-Tenn., and Jamie Raskin, D-Md., the group sent a letter to the International Trade Commission, urging denial of NORPAC’s petitions.

In the letter, the legislators said, “Duties on imported newsprint would further damage the printed news industry in the United States, which has seen a more than 50 percent decline in advertising revenue over the last 10 years.”

They added, “The irony is that this trade dispute – brought by only one company with 400 employees – could accelerate the decline for an entire industry and may put small-market newspapers out of business.”

There are 175,000 jobs in the industry at stake, they said. The ITC commissioners voted unanimously, 4-0, to let the investigation go forward.

Newspaper trade groups have mobilized. The News Media Alliance sent a letter to Commerce Secretary Wilbur Ross earlier this month that was signed by more than 1,100 newspapers nationwide, urging denial based on the “very severe” impact on the industry.

The NMA letter also called into question the motives of NORPAC’s owners: “It appears that North Pacific’s petitions may be driven by the economic strategies of the company’s hedge fund owners, One Rock Capital Partners, which purchased NORPAC in November 2016.

“NORPAC’s petitions do not reflect the views of the paper industry in the United States. In fact, the antidumping and countervailing duty petitions are opposed by other U.S. producers of newsprint and the American Forest and Paper Association, which represents the broader U.S. paper industry,” the NMA letter said.

“Given the outlier status of NORPAC, it appears that One Rock Capital Partners may be using the petitions as a means of increasing the short-term value of this one mill, without any regard for the dramatic negative implications for U.S. newspapers in thousands of small cities and towns,” the letter concluded.

The National Newspaper Association also got involved with an organized effort, sending a letter this month to Ross from printers and other companies that own presses.

The printers took a look at economic reality. The letter said, “There is no doubt in our minds that a substantial tariff on newsprint would lead to an accelerated reduction in demand. Domestic producers would not find themselves rewarded by increased market share and pricing power. Rather they would find fewer and smaller orders as an ill-advised tariff decision sharpened a tipping point that many of us struggle to avoid.

“As for our customers, many can barely pay their printing bills now. An escalation in paper prices would push some over the edge, and cost their communities not only the newspaper jobs but the news and advertising support that drives other local jobs,” they said.

But the printers’ letter offered some hope: “Our customers are adapting, and we are adapting. In time, we will find our markets back in balance, as we find new efficiencies and more stable customer markets. That is, we will find our balance if the Department does not stun our industry with dramatically higher prices.”

For now, the newspaper industry is watching and waiting to see what happens. If Commerce issues preliminary duties next month, the NORPAC petitions will get a full hearing before the ITC.

In the meantime, newspapers still will be fighting.

David Chavern, president of the NMA, urged newspaper publishers to continue the drumbeat.

In a column this month, he called on newspapers and publishers to get involved. “I encourage you to add your voice to theirs, calling out this gross misappropriation of trade laws and highlighting what it would mean to your community if access to your local newspaper were diminished or eliminated,” he said.

By Paul Fletcher
Published December 29, 2017

From Forbes:
http://bit.ly/2CH9iZS

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