Canadian supercalendered paper sold in the U.S. is now subject to a duties up to 20%, following a preliminary determination by the U.S. Department of Commerce. The investigation concluded that Canadian producers and exporters have received countervailable subsidies.

The affected producers are Port Hawkesbury Paper, which faces an interim duty of 20.33%, Resolute Forest Products, which faces a duty of 2.04%, and Irving forest Products and Catalyst Paper, which fall into the “all other producers” category and will have a duty of 11.19% applied.

Port Hawkesbury Paper (PHP) intends to vigorously defend against the finding of subsidies and the interim duty.

“This interim ruling is without merit and is unfair to other Canadian mills in addition to ours,” says Marc Dube, PHP’s development manager. “We are early in a long process, and we are intent on proving that the imposition of duties is not supported by the facts, and we are very confident in our ability to reduce these interim duties substantially, or eliminate them entirely, as part of the process.”
“Catalyst rejects the allegation that we’ve received government subsidies, and we’re confident a full and fair investigation would confirm this,” said Joe Nemeth, president and CEO of Catalyst Paper. “We will continue to work with the Canadian federal and provincial governments, and we will seek an expedited review of our case by the DOC.”

In its investigation, the DOC did not examine each paper company individually. The U.S. agency examined Port Hawkesbury Paper and Resolute Forest Products, and assigned each company a rate of 20.33% and 2.04% respectively, but did not investigate Catalyst Paper or Irving Paper. Instead, the DOC assigned Catalyst and Irving an “all-others rate” of 11.19%, which is equal to the average of the rates that the DOC assigned to the other two companies.

Port Hawkesbury’s Dube contends that “over 72% of the preliminary duty rate is based on an erroneous interim decision by the Department of Commerce that electricity purchased by PHP from a 100% privately owned electricity company was a subsidy because it was approved by a public utility commission – just as happens in most states in the United States.”

“The other subsidy findings are similarly flawed, such as the finding that money given to the Port Hawkesbury mill’s prior owner, NewPage Corporation (now Verso Corporation, one of the petitioners) while it owned the mill qualified as a subsidy to PHP,” he continues.

The DOC is expected to make its final determination on duties in mid-October, following which the ITC will make its final determination in late 2015 on whether the U.S. supercalendered industry has been harmed.

The Coalition for Fair Paper Imports, comprised of U.S.-based Madison Paper and Verso Corporation, petitioned the DOC in February 2015 and asked it to impose countervailing duties on imports of supercalendered paper from Canadian paper producers. The Coalition alleges that Canadian supercalendered paper producers are subsidized by the Canadian federal and provincial governments.