American Forest & Paper Association (AF&PA) has announced its support for Senator Susan Collins’ legislation that will help Maine manufacturing companies fight unfair trade competition from overseas. AF&PA says it will work with Senator Collins to encourage Congress to enact the “Stopping Overseas Subsidies (SOS) Act,” which will give the U.S. government the legal strength to enforce fair trade laws against all countries that export goods into the U.S. It would revise current trade laws to ensure that all countries doing business with the U.S. are operating under the same rules that help to ensure fair competition for American manufacturers.
“I am pleased to receive the support of AF&PA in our efforts to fight unfair trade practices that are hurting American workers and closing American companies,” said Senator Collins. “Unfair market conditions cannot continue to cause our manufacturers to hemorrhage jobs. No state understands this more than my home state of Maine. According to the United States Department of Labor, 10,400 manufacturing jobs in Maine have been lost since 2001, a 14.8 percent decline.”
The Department of Commerce has recently accepted the first anti-subsidy duty petition against a non-market economy since the mid-1980’s. The case was filed against China by New Page Corporation, a coated free sheet paper company with operations in Maine, Ohio, and Maryland. Despite its efficient, state-of-the-art mills, skilled and dedicated employees, strong relationships with customers, strategically located mills and distribution facilities and growing markets for its products, New Page had to shut down an entire paper line as a result of unfair foreign competition. On Friday March 30, 2007, the Department of Commerce announced it would impose anti-subsidy duties against China in the New Page case. New Page is a member of the American Forest and Paper Association, which praised the decision.
The legislation introduced by Senators Collins has received the support of numerous other national manufacturing organizations and manufacturing businesses in Maine, including the Maine Forest Products Council, Maine Wood Products Association, and the NewPage Corporation.
The SOS Act will allow the United States to fully enforce its antisubsidy laws, including against nonmarket economies such as China. According to a 2005 study by the American Forest and Paper Association, China is using an array of subsidies to promote the development of timber and pulp production in China. These include government loans and loan subsidies for technology renovation, promotion of foreign investment in state?owned enterprises, and
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protection of debt?ridden state?owned enterprises that maintain excess or idle production capacity through local government “soft” loans and loan forgiveness.
The following is the text of AF&PA’s letter of support for Senator Collins’ legislation:
On behalf of the American Forest & Paper Association (AF&PA), please allow me to express our support for the overall objective of S. 974, the Stopping Overseas Subsidies Act. As in the past, AF&PA and our member companies support the extension of the U.S. countervailing duty (CVD) law to imports from non-market economies, including China.
AF&PA is the national trade association of the forest, pulp, paper, paperboard, and wood products industry. The industry accounts for approximately 6 percent of the total U.S. manufacturing output, employs more than a million people, and ranks among the top 10 manufacturing employers in 42 states with an estimated payroll exceeding $50 billion. Our industry faces significant international competitiveness challenges, including subsidized imports, and, therefore, supports your legislation as a means of leveling the playing field.
AF&PA and its members have supported free and fair trade policies consistently, including the extension of permanent normal trade relations with China. However, the Chinese government in recent years has provided a wide range of subsidies, including export subsidies, large grants, low interest loans, input subsidies, and the like to encourage the development and global competitiveness of favored industries, including the forest products industry. These subsidies provide Chinese exporters with an unfair' competitive advantage and significantly fuel China's growing trade surplus with the United States, which reached $232 billion in 2006.
To address these concerns, we support your legislation and agree that the U.S. Department of Commerce should not continue to exempt China from coverage under one of the most important trade laws, the countervailing duty law, which off-sets subsidy practices by U.S. trading partners. There is no reason, in light of WTO rules or U.S. law, for Commerce to continue to exempt China from coverage under the U.S. countervailing duty law. Applying the CVD law to China, which subsidizes its industries heavily, would alleviate some of the economic harm caused to U.S. manufacturers.
The U.S. forest products industry can compete successfully against anyone in the global marketplace if the playing field is level. We have plentiful fiber resources, a skilled labor force, and access to capital markets. However, when foreign governments provide direct and indirect subsidies to our competitors the playing field is tilted against our industry, with potentially severe economic and financial consequences to our companies and workers.
Your legislation will apply the U.S. countervailing duty law correctly to China and other non-market economies. As we have in previous Congresses, AF&PA is pleased to support the objectives of S. 974 and we offer to work with you and other stakeholders to ensure that the language of the bill is compliant with WTO rules. We look forward to working with you to enact this legislation so that the domestic forest and paper industry can compete on a level playing field within the global marketplace.
Regards,
Juanita D. Duggan
President and Chief Executive Officer