SKOWHEGAN – The U.S. Department of Commerce last week imposed preliminary tariffs on imported coated paper from China and Indonesia.

The move is designed to offset government subsidies in those countries and to save jobs here at home.

An estimated 1,200 jobs would be affected at Sappi mills in Skowhegan and Westbrook and about 700 to 800 at the NewPage mill in Rumford, according to Daniel Lawson, field coordinator with the Alliance for American Manufacturing.

Lawson told officials in various Maine communities earlier this year that labor unions and mill owners were standing together against the so-called “dumping” of imported paper on U.S. markets at prices that are lower than the costs to produce it.

Last week’s decision is intended to discourage and ultimately reverse that dumping from Asia.

“This is an issue that I have been following very closely because of the significant impact it will have on Maine’s economy and the companies and the workers here in Maine,” U.S. Rep. Michael Michaud, D-Maine, said in an interview Friday.

“The Chinese and Indonesian coated paper has been dumped on our market at a rate that makes it almost impossible for our domestic paper makers to compete with. If you look in the paper mill community all around the state of Maine, there have been layoffs and closures, and it’s been really devastating.”

Michaud said he worked for Great Northern Paper Co. for more than 29 years and has seen firsthand the effects of trade deals, dumping policies and foreign currency manipulation.

The manipulation lowers the value of currency on the international market and makes products more attractive to foreign buyers.

Sappi Fine Paper North America, with a mill in Skowhegan, along with NewPage Corp. of Rumford and Appleton Coated LLC of Wisconsin, joined forces with the United Steelworkers union in September, filing unfair-trade cases with the Commerce Department and the U.S. International Trade Commission, hoping to level the playing field on paper imports.

Temporary tariffs or taxes are now assessed on Chinese coated paper products, ranging from about 30 percent to 135.8 percent, according to a fact sheet released by Michaud’s office.

Indonesian exporters were hit with a 10.62 percent tariff.

In plain language, Michaud said, if a Chinese company assessed at 30 percent wants to export $1 million worth of paper to the United States, it would have to pay $300,000 in import fees or tariffs to the U.S. Treasury. For the companies assessed at 135 percent, the import fee would be $1.35 million for every $1 million in imports, in effect derailing the deal.

Duty collections are set to begin immediately at U.S. import stations, Michaud said.

Chinese and Indonesian producers already have almost 30 percent of the domestic market for coated paper, according to the Alliance for American Manufacturing, a trade coalition of steel producers and the United Steelworkers union.

Since 2002, roughly 60,000 American jobs have been lost in the paper sector and 6,000 more jobs are threatened if unfair trade competition continues, the organization said.

Products covered by the petitions include coated paper used in high-quality writing, printing and other graphic applications.

The department’s ruling last week was music to the ears of paper makers across Maine.

“The decision validates our allegations of subsidies that have injured the industry,” Mark Gardner, president and CEO of Sappi Fine Paper North America, said in a statement.

Republican U.S. Sens. Olympia Snowe and Susan Collins also applauded last week’s action.

“This is good news for Maine’s paper industry, particularly NewPage and Sappi,” the senators said in a joint statement. “Our state’s paper mills and their employees can compete against the best in the world, but they cannot compete against nations that provide huge subsidies and other unfair advantages to their manufacturers.”

Asia Pulp & Paper, the leading exporter of coated paper from China and Indonesia, says it has not illegally dumped paper on the U.S. market and expects its position to be vindicated.

“We have seen unfavorable preliminary rulings in the past, only to have them rejected in the final analysis because a complete review of the paper market confirms the U.S. industry has not been injured and duties are unwarranted. That will be the end result here, too,” Terry Hunley, acting president of APP Americas, said in a statement.

Hunley said he was disappointed with the initial findings, but he predicted the preliminary tariffs would not stick.

In a similar case brought by U.S. paper makers in December 2007, the International Trade Commission blocked final duties from going into effect because the domestic paper industry had not been harmed, he said.

“This investigation has even less basis than the last one, since the U.S. industry is making more money and has benefited from enormous government subsidies in the form of environmental tax credits,” Hunley said.

The Commerce Department will issue its preliminary decision on those anti-dumping tariffs in the coming months, with a final determination expected in September.


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