How much subsidy is too much?

Two American pulp and paper mill owners are alleging that Nova Scotia has unfairly subsidizedPort Hawkesbury Paper Corp.

In documents filed with the United States International Trade Commission, they state that the subsidies have allowed the mill to dump supercalendered paper on the American market at prices far below what they can compete with.

“It is believed that Canadian producers export over 75 per cent of their production to the U.S. market,” read documents filed on behalf of the Coalition for Fair Paper Imports.

“The domestic industry is vulnerable to increased imports, and U.S. market demand remains depressed and is decreasing. The threat of material injury to the domestic industry is real and imminent.”

The coalition was formed by American supercalendered paper manufacturers Madison Paper Industries and Verso Corp. to lobby against Canadian subsidies to the paper industry.

Also named in the petition are Canadian mill owners Resolute Forest Products Inc.Irving Paper Ltd. and Catalyst Paper Corp. However, most of the petition’s print is saved for Port Hawkesbury Paper.

It is asking the American trade commission to place tariffs on imports of Canadian supercalendered paper — a glossy product used in magazines and calendars — to limit their competitiveness in the United States market. A preliminary injury inquiry will be held April 13 to decide whether to continue with an investigation.

Pacific West Commercial Corp. bought the Port Hawkesbury mill in 2012 after former owner NewPage Port Hawkesbury Corp. went bankrupt. In exchange for restarting the mill, which, at the time, pumped over $200 million annually into the Nova Scotia economy, the provincial government provided the new operators with a $124.5-million incentive package.

The deal included a $40-million repayable loan and $26.5 million in forgivable loans. The province also purchased back 20,000 hectares from the mill for $20 million and set aside $3.8 million a year for 10 years to support sustainable harvesting and forest land management.

This deal is directly referred to in the filings by the coalition.

As well, the coalition alleges — but admits that it cannot prove — that the province is charging the mill below-value stumpage rates for timber. Those rates are redacted in the 2012 forest utilization agreement between the province and the mill that gave the mill management control over all Crown land in northeastern Nova Scotia.

Port Hawkesbury Paper mill manager Marc Dube could not be reached for comment Friday.