A newsprint trade dispute is galvanizing the entire newspaper industry — publishers large and small, urban and rural, daily and weekly, are all fighting together to preserve the flow of news and information in local communities. Read on for an overview of what has happened, the process going forward, and how you can get involved, beginning this spring.
On August 30, 2017, the Department of Commerce (Commerce) announced the initiation of countervailing (anti-subsidy) duty and anti-dumping duty investigations of Canadian imports of uncoated groundwood paper, which includes newsprint. On September 22, the International Trade Commission (ITC), an independent, non-partisan, quasi-judicial agency, voted to move forward with these investigations after concluding that there is a “reasonable indication” of injury or “threat of injury” to the petitioner in the case, and to the domestic newsprint industry. This is a very low bar and, as a result, 90% of such cases advance to the final investigation round.
On January 9, 2018, Commerce released the countervailing duties on Canadian-manufactured paper, with tariffs ranging from roughly 4.4% to 9.9%, depending on the newsprint manufacturer. Preliminary anti-dumping duties are expected on March 8.
The sole petitioner in this case is NORPAC, which owns one mill in Longview, Washington with roughly 260 employees and no additional pulp or paper operations. There is virtually unanimous resistance to NORPAC’s petition; the growing ranks in opposition include the American Forest and Paper Association, the trade association representing the U.S. paper industry. So how can the action of one company potentially wreak havoc across the entire newspaper and printing industries?
The current protectionist environment in Washington, D.C. has created an opportunity for domestic companies—even small companies that operate regionally—to manipulate trade laws to either level the playing field or gain an advantage in the marketplace. Having been recently acquired by One Rock Capital Partners, a New York hedge fund, NORPAC’s petitions do exactly that. T hey seek to improve the short-term financial value of one mill without regard to the long-term ramifications on producers and consumers. The Department of Commerce is essentially “open for business” in receiving these types of complaints that lead to long and costly investigations. In the last year, Commerce has initiated 82 investigations. By contrast, in 2010, for example, there were fewer than 10 investigations.
Also, our nation’s trade laws do not allow for the ITC to weigh the harms to downstream users of the imported product—in this case, newspapers and printers. In conducting its final assessment, the ITC will examine such issues as newsprint demand trends, factors that differentiate U.S. and Canadian-produced newsprint, and how prices are set in the market.
We believe this is a unique case where any disruption in supply is likely to have an immediate, negative impact on newsprint prices, and will ultimately affect consumer demand for the end-product. This will materially injure the U.S. newsprint industry that has already experienced a free-fall in the marketplace. Since 2000, North American consumption of newsprint is down 75 percent, with an estimated continued annual decline of about 10 percent. Everyone in the newspaper and newsprint industries is acutely aware that it is a decades-long shift from print to digital—not imports from Canada—that has caused this decline.
Newsprint duties—which will be collected in the weeks ahead, even though they are still preliminary—may force newspapers to make painful decisions, such as reducing the number of days they deliver printed newspapers, significantly raising subscription prices or even shutting down operations. All three scenarios would accelerate the decline of the newsprint market and most likely will result in the loss of thousands of jobs in both the paper manufacturing and newspaper industries.
While the News Media Alliance was certainly disappointed by the Commerce Department announcement of countervailing duties on January 9, there was a silver lining. First, the range of duties were lower than we had anticipated. Second, in announcing the preliminary duties, Commerce Secretary Wilbur Ross said the decision took “into account the need to keep groundwood paper prices affordable for domestic consumers,” a rare statement for the secretary in this type of announcement. This gives us reason to believe our industry’s advocacy on Capitol Hill and at the Commerce Department has been working.
The fight on this newsprint case is entering its most critical phase. The final investigation by the ITC likely will take place from March to August and include such actions as consumer questionnaires, filing of briefs and testimony, and a public hearing. The Alliance—working with all national and state press associations—will help newspapers navigate this process.
Most importantly, newspapers, with the support of policymakers on Capitol Hill, must speak out against this case beginning in mid-March through the summer. (Comments submitted before March will not be accepted.) Our collective goal is to build a favorable, factual public record that gives the ITC no other choice but to conclude that the poor financial performance of the U.S. newsprint industry is due to declining demand and unique product features, not unfairly low prices for Canadian imports.
Newsprint tariffs will simply hasten the shift from print to digital—accelerating the decline in both the printed newspaper and newsprint industries. If this happens, no one will win, including NORPAC.
Paul Boyle is senior vice president/public policy for the News Media Alliance