Uncoated groundwood paper is used in printing newspapers, flyers, catalogues and books and in 2016, U.S. Commerce estimated that American customers imported $1.27 billion United States worth of the product.
Canada is contesting USA duties on softwood lumber, as it has successfully done in the past. Commerce determined that Canadian exporters have sold the paper between zero and 22.16 percent less than fair value, lower than the margins alleged by the petitioner - the Washington State-based North Pacific Paper Company - of between 23.45 and 54.97 percent.
"President Trump made it clear from the beginning that we will vigorously administer our trade laws to provide USA industry with relief from unfair trade practices", Commerce Secretary Wilbur Ross said in a statement.
For now, Resolute FP Canada Inc. and the White Birch Paper Canada Company will not pay any new duties, but a 22.16 percent antidumping duty will be levied on Catalyst Pulp and Paper Sales and all other Canadian producers.
Uncoated groundwood paper includes newsprint, as well as book publishing, printing and writing papers.
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The Powell River mill is worth approximately $125 million to Powell River's economy per year, including $40 million in direct payroll, more than $5 million in taxes and another $80 million in indirect expenditures, according to City of Powell River councillor and finance committee chair Russell Brewer.
The duties are preliminary pending more investigation and a final decision in August. "Even with the exemption of directory paper, the remaining anti-dumping and countervailing duties are onerous and a critical cost challenge for Catalyst", he said in a statement.
That comes on the heels of a 9.93 per cent countervailing duty that was imposed on the company in January.
The paper dispute is a second front of an apparent U.S. trade war over forest products, in addition to the Canada U.S. softwood lumber dispute that has Canadian lumber producers paying between 10 and 24 per cent in duties on American exports. The Commerce Department hit Resolute with countervailing rate of 4.42 per cent in January, but did not impose an anti-dumping tariff.
In a news release, Kruger called the duties "unfounded", and denied dumping its products. And Bruce Ralston, B.C.'s Jobs and Trade Minister, said he will work with Catalyst and Ottawa to help combat the "unfair tariffs".
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Canada issued a statement saying the duties "will have a direct and negative impact on US newspapers, especially those in small cities and towns, and result in job losses in the American printing sector".
Foreign Affairs Minister Chrystia Freeland and Natural Resources Minister Jim Carr warned of severe consequences.
In December 2017, a US trade commission upheld tariffs on Canadian softwood lumber saying the product was subsidized.
Bryan Yu, deputy chief economist at Central 1 Credit Union, said the decision on newsprint tariffs underscores the confrontational position of the Trump administration.
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