Last August, the Department of Commerce (Commerce) announced the initiation of anti-dumping duty and countervailing duty (i.e. anti-subsidy) investigations of Canadian imports of uncoated groundwood paper. The trade case was brought by one mill, North Pacific Paper Company (NORPAC), located in Longview, Washington. NORPAC was recently acquired by One Rock Capital Partners, a New York-based hedge fund.
NORPAC is essentially claiming that subsidies provided by the Canadian Government are giving Canadian producers an unfair advantage in the marketplace and that Canadian producers are dumping newsprint in the U.S. market at prices below the cost of production.
The case is currently before Commerce, where the agency is expected to issue “preliminary” duties in January. The case will then move to the International Trade Commission (ITC) for a full investigation.
So why do these duties matter?
These duties, if implemented, have the potential to run many small-town newspapers out of existence.
Let’s break this down: Uncoated groundwood paper is primarily used for newsprint and book publishing. NORPAC’s petitions requests import fees that range as high as 50 percent – on this type of paper. If implemented, this will result in a disrupted newsprint market and steep increases in the price of newsprint, which would cause small newspapers – already operating under thin margins – to hemorrhage revenue at the worst possible time.
The NORPAC petitions draw false conclusions.
NORPAC is incorrectly claiming that the steady decline in the newsprint market is a result of a trade matter, instead of acknowledging that the downward market for newsprint has been caused by many factors including disruption in the retail sector and a decade long the shift toward digital media – not only by readers, but also advertisers. To illustrate this point, in the last 10 years, there has been a 30 percent decline in print newspaper subscriptions.
These duties would hurt everyone – except NORPAC.
These petitions are an attempt by NORPAC’s owners, One Rock Capital Partners, to use the trade laws – and the protectionist environment in our nation’s Capital – to increase the short-term value of one mill. If these duties go through, newspapers may have to reduce the number of days they deliver printed newspapers; be forced to raise subscriptions prices (which will likely cause readers to switch from print to digital); or they may be forced to shut down operations altogether. All three scenarios would accelerate the decline of the newsprint market and most likely result in the loss of thousands of jobs in both the paper manufacturing and publishing industries.
While Commerce is constrained by trade laws in coming up with preliminary duties that are expected in January – and those duties will start being assessed on importers of newsprint – both the Department of Commerce and the International Trade Commission (ITC) could ultimately reach a “negative” determination in the case in late summer or early fall next year.
As the process moves forward, every newspaper in the country can play a role by engaging with Commerce, the ITC and policymakers on Capitol Hill and explaining the negative impacts of the proposed newsprint duties on news publishers and their readers
Earlier this month, more than 1,100 newspapers signed a letter calling on Commerce Secretary Wilbur Ross to heavily scrutinize these trade protectionist petitions. Other newspapers have weighed in on the trade case through editorials. The Alliance has also received tremendous support on our legislative and administrative outreach from individual newspapers around the country, state press associations, the National Newspaper Association and PAGE Cooperative.
As the case moves forward in the coming months, 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.
David Chavern is former President & CEO of the News/Media Alliance. Chavern has 30 years of experience in executive strategic and operational roles. Prior to the Alliance, he completed a decade-long tenure at the U.S. Chamber of Commerce.