Catalyst hit by tariff in U.S. trade dispute over specialty paper

October 19, 2015

By: Vancouver Sun

B.C.-based Catalyst Paper has been hit with punishing duties on its U.S. exports of a specialty paper because American companies say Canadian producers are subsidized and dumping the product at below-market prices south of the border.

However, Catalyst argues the tariff has been unfairly slapped on its exports without having been given due process in the U.S. Department of Commerce investigation, which applies to four Canadian companies, although the inquiry only looked at evidence from two.

“We’re disappointed in the ruling and reject the allegation that we receive any subsidies,” said Catalyst executive Len Posyniak. “And we are very confident that upon review, that will be the ultimate ruling.”

Catalyst’s first step after the ruling was released Wednesday was to announce that it will seek an expedited review of the determination, which slaps an 19-per-cent import duty on the sales of Catalyst and New Brunswick based Irving Paper.

To date the company said it has paid $1.3 million on deposit with the U.S. Treasury Department on 17,000 tonnes of shipments, but that was based on an 11-per-cent duty levied by a preliminary ruling in the case by the Department of Commerce in July. Its next payments, however, will be more.

Catalyst produces 130,000 to 140,000 tonnes per year of the supercalendered paper, a specialty grade used in printing catalogues and magazines, Posyniak said, which is about 40 per cent of the production at its Powell River pulp and paper mill, which employs 350 people.

“It obviously makes it rather more difficult to sell into the U.S. market,” he said.

The two companies that were directly investigated, Nova-Scotia-based Hawkesbury Paper and Quebec-based Resolute Paper, were hit with individual penalties of 20 per cent and 18 per cent, respectively.

The U.S. Department of Commerce ruling was the result of an investigation into a complaint made last February by the U.S. Coalition for Fair Paper Imports, a trade association that represents two American companies, Madison Paper Industries of Maine and Verso Corporation, based in Ohio.

Their argument is that Canadian producers of supercalendered paper have been subsidized by government.

CBC news reported that the U.S. complaint was triggered by Nova Scotia’s 2012 $124-million bailout of Port Hawkesbury to help it revive its mill.

“Commerce determined that imports of supercalendered paper from Canada have received countervailable subsidies,” the department ruled in its findings.

However, Posyniak said the department hasn’t reviewed the information that Catalyst has submitted to the process and indicated to the company it won’t, citing a lack of resources.

He said Catalyst has a good case to get its review because the U.S. International Trade Court has made previous rulings that indicated reviewing the evidence of four companies “is not an unreasonable number.”

Posyniak, Catalyst’s senior vice-president for human resources and corporate services, said it has received support for its case to get an expedited review from U.S. politicians in addition to the strong backing of both Canadian and B.C. representatives.

While the federal government is the lead agency dealing with the file, B.C. Minister of Jobs, Tourism and Skills Training Shirley Bond said the province stands with Catalyst in its position.

“To basically assign a duty (against Catalyst) based on someone else’s company information seems patently unfair,” Bond said.

By: Vancouver Sun

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