Numerous Canadian associations and businesses are speaking out after the U.S. Department of Commerce announced yesterday it will levy preliminary countervailing duties of 0.65 to 9.93 per cent on imported Canadian uncoated groundwood paper (newsprint).
They explained that they will continue to work with the industry, and with Canada's provinces and territories, "to defend this vital sector against unfair and unwarranted United States trade measures and practices". Those duties could then change in a final ruling, and the company involved would have to prove that it was harmed by the subsidies given to Canadian producers.
In 2016, imports of uncoated groundwood paper from Canada were valued at an estimated $1.27 billion.
The federal and provincial subsidies include government grants, tax breaks, subsidized loans, raw materials at below-market costs and cheap subsidized electricity, according to Norpac. All other Canadian producers weighted an average of 6.53 per cent.
West Fraser Timber (TSX:WFT) is not likely to be directly affected, a company spokesperson said. The countervailing rate could increase in mid-2018 and there will also be a determination by the department in March on whether to place anti-dumping duties on Canadian groundwood. It was not immediately clear Tuesday how much more a metric ton of groundwood Canadian paper will cost.
Many newspapers don't print in their own facilities, so an increase in newsprint prices would also affect the printing industry, which sent a letter last month to Secretary of Commerce Wilbur Ross urging him to reject a tariff on Canadian newsprint because it would further stress the financial viability of newspapers.
Meantime, the new duties will also put many local newspapers at risk of failing, according to US newspaper coalitions. The letter also noted that the American Forest and Paper Association, which represents the US paper industry, opposes the duties.
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"This is not really based on sound objective methods", said Neuheimer.
Norpac has been struggling to stay profitable in the face of shrinking newsprint and paper markets, and it is under pressure to cut costs from its new owners, One Rock Capital.
Neuheimer said about 5,000 jobs across Canada are directly linked to the newsprint business, and unlike softwood, where the industry had high prices to help offset the hurt of the U.S. duties, newsprint margins are already so low that the impact of this is going to be felt immediately.
The American government's imposition of duties on exports of Canadian newsprint will only accelerate the transition from print to digital and threaten thousands of U.S. jobs, says North America's largest newsprint producer.
The preceding press release was provided by a company unaffiliated with Printing Impressions.
"What the US uncoated groundwood papers industry wants is a level playing field, and this decision is an important step forward", company CEO Craig Anneberg said after Ross made his announcement. Since then, USA producers' share of the American market has plummeted from 60 percent to 36 percent, the company said. The Daily News is printed on paper manufactured at Norpac.
He predicted that this will result in more mill closures, and said the decision on duties benefits only Norpac.