Newspapers gird for higher newsprint costs after Department of Commerce decision

Ignoring strong opposition from the newspaper industry and members of Congress, the U.S. Department of Commerce last week issued a determination that imposes duties on newsprint imported into the U.S. from Canada that will increase the cost of that newsprint for U.S. newspapers.

Commerce released a preliminary determination assessing “countervailing” duties on Canadian imports of uncoated groundwood paper, which includes newsprint, book and directory papers. The duties correspond with Commerce’s preliminary findings of subsidies provided by the Canadian government to Canadian manufacturers.

U.S. Customs and Border Protection will begin collecting estimated countervailing duties for Canadian newsprint imported on or after Jan. 16. Importers of record will be the parties responsible for paying the duties. If either Commerce or the U.S. International Trade Commission (ITC) reverses their preliminary rulings in their final determinations later this year, collected duties will be refunded to these importers.

The News Media Alliance (NMA) has spearheaded the opposition effort to the action by Commerce, and CNPA sent letters to each member of California’s Congressional delegation asking them to oppose Commerce’s imposition of the duties.

NMA expected there to be some level of duties and it seems that opponents made a significant difference in minimizing the levels of duties in this first round. The next round in the “preliminary” stage is for the Department of Commerce to assess “antidumping” duties, which will be announced on or around March 8. These duties will be in addition to the countervailing duties announced last week.

The petitioner requesting that Commerce impose the countervailing and antidumping duties is NORPAC which operates a single mill in Washington State. NORPAC is an outlier that is owned by a New York hedge fund operator, with no additional pulp or paper operations in the United States or globally.

NORPAC’s owners are now seeking government protection through trade sanctions. In contrast, the majority of the U.S. newsprint manufacturers, and even the national trade association for the U.S. paper industry – the American Forest and Paper Association – as well as their U.S. customers, oppose this move.

After Commerce completes its preliminary decisions, the ITC will conduct its final investigation in this case later in the Spring and is expected to reach a final determination regarding any injury to the domestic industry by September 2018. The investigation will include surveys of newsprint customers, filing of briefs and holding of a public hearing. The Alliance will help newspapers navigate this process.

Here are links to NMA’s statement on Commerce’s determination and a primer on newspaper tariffs.