Collins, King, Poliquin Urge Commerce Secretary To Investigate All Canadian Paper Producers In Trade Case

WASHINGTON, D.C. – U.S. Senators Susan Collins and Angus King, and Congressman Bruce Poliquin, sent a letter to Commerce Secretary Penny Pritzker, expressing concern that the Department of Commerce’s current investigation of unfair Canadian subsidies in the supercalendered paper market is overly limited in scope and could negatively affect businesses in Maine. The trade case, which was initiated by the U.S. Coalition for Fair Paper Imports and includes Madison Paper Industries, is targeted toward the extensive subsidies received by Port Hawkesbury Paper in Nova Scotia.

Senators Collins and King and Congressman Poliquin strongly support the ongoing investigation. “This investigation is vitally important to Madison Paper Industries, which produces supercalendered paper in Maine and employs 200 workers in a rural area of our state,” Senators Collins and King and Congressman Poliquin wrote.

In January 2015, Senators Collins and King and Congressman Poliquin wrote to Secretary Pritzker urging her to do everything legally within her power to address this issue and stop these unfair Canadian trade practices in the paper market. In February, Senator Collins questioned Commerce Secretary Penny Pritzker during a hearing about these ongoing subsidies. On the same day, the Coalition filed a petition seeking a countervailing duty investigation regarding supercalendered paper from Canada. In April, the lawmakers also wrote to the International Trade Commission in support of the trade case against Port Hawkesbury.

On April 10, 2015, the Department of Commerce announced that it would investigate extensive Canadian subsidies that are unfairly harming U.S. producers of supercalendered paper, including Madison Paper Industries (MPI) located in Madison, ME. At present, the Department will investigate Port Hawkesbury Paper in Nova Scotia and Resolute Forest Products in Quebec, but will not include the other two producers of supercalendared paper in Canada: Catalyst Paperin British Columbia, which recently acquired a paper mill in Rumford, Maine, that employs 800 workers, and Irving Paper in New Brunswick. Because they are not currently being investigated by the Department of Commerce, Catalyst and Irving are likely to be assigned a duty rate that is largely based upon the massive Port Hawkesbury subsidies.

“In support of a fair and fact-based investigation, we urge you to investigate all four Canadian supercalendered paper producers within the current timeframe… In doing so, we strongly encourage the Department to dedicate any additional resources as necessary to ensure that the quality of the investigation is not jeopardized,” the lawmakers continued. “We believe these steps are the surest way to protect the jobs at the Madison mill, ensure the financial health of the mill in Rumford, and provide an appropriate remedy for foreign subsidies that make it difficult, if not impossible, for American mills to compete.”

Click here or read the full text of the letter below:

The Honorable Penny Pritzker

Secretary of Commerce

U.S. Department of Commerce

14th Street and Constitution Avenue, N.W.

Washington, D.C. 20230

Dear Secretary Pritzker:

The Department of Commerce is currently conducting a countervailing duty investigation of supercalendered paper from Canada (Case no. C-122-854), an investigation we strongly support and ask to be concluded without delay. This investigation is vitally important to Madison Paper Industries, which produces supercalendered paper in Maine and employs 200 workers in a rural area of our state. We are concerned, however, that the Department has selected as mandatory respondents only two of the four producers of supercalendered paper in Canada. This decision could negatively affect the two businesses that were not selected as mandatory respondents, both of which employ hundreds of Maine workers.

On April 10, 2015, the Department announced that it would investigate Port Hawkesbury Paper in Nova Scotia and Resolute Forest Products in Quebec. Since 2012, Members of Congress have raised serious concern about the extensive subsidies received by Port Hawkesbury Paper that are harming U.S. producers of supercalendered paper, including Madison Paper Industries. We fully support the Department’s decision to select both Port Hawkesbury Paper and Resolute Forest Products as mandatory respondents. We are concerned, however, that the Department declined to investigate Irving Paper in New Brunswick and Catalyst Paper in British Columbia, which recently acquired a paper mill in Rumford, Maine, that employs 800 workers. If the Department fails to individually investigate Catalyst and Irving, these two companies will be subject to a duty rate that is unrelated to any actual subsidies that they may have received. These companies would instead be subject to what is known as the “all others” rate, which would reflect the average of the subsidies received by Port Hawkesbury Paper and Resolute Forest Products. To ensure that each company’s duty rate reflects any subsidies that company may have received, we respectfully ask that the Department investigate each Canadian producer of supercalendered paper and assess individual duty rates accordingly.

Moreover, we believe that the Department’s decision to limit its inquiry only to Port Hawkesbury Paper and Resolute Forest Products may be inconsistent with the law governing countervailing duty investigations. We understand that the Department is required by statute to calculate an individual subsidy margin for every known producer in a given country, but may select fewer respondents only if a country has a “large number” of producers. We respectfully disagree with the Department’s position that four – the number of supercalendered paper producers in Canada – is a large number. In fact, the Court of International Trade has ruled on three occasions that four respondents is not a large number.

It would be unfair and inconsistent with statutory regulations governing countervailing duty investigations, as well as Court of International Trade precedent, to select only two of four possible mandatory respondents in this case. In support of a fair and fact-based investigation, we urge you to investigate all four Canadian supercalendered paper producers within the current timeframe established for this investigation, which calls for a preliminary determination by July 27, 2015, and a final determination 75 days thereafter. In doing so, we strongly encourage the Department to dedicate any additional resources as necessary to ensure that the quality of the investigation is not jeopardized. We also urge the Department to reject any attempt to treat these subsidies as “upstream” or other efforts that would lead to any delay in the existing case. To that end, both Catalyst and Irving have affirmed to us, in writing, that they will not ask the International Trade Administration for an upstream subsidy investigation if they are accepted as mandatory respondents.

We believe these steps are the surest way to protect the jobs at the Madison mill, ensure the financial health of the mill in Rumford, and provide an appropriate remedy for foreign subsidies that make it difficult, if not impossible, for American mills to compete. Thank you for your attention to this urgent matter.