Trade dispute results in tariffs that add significant cost for newsprint

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The U.S. Department of Commerce has decided to levy tariffs on imports of Canadian newsprint and other paper products – including paper used by many newspapers in Gatehouse Media.

By GateHouse Media Ohio

A petition by a paper maker in Washington state has resulted in a preliminary decision by the U.S. Department of Commerce to levy tariffs on imports of Canadian newsprint and other paper products – including paper used by many newspapers in Gatehouse Media.

The Commerce Department decision, which will result in the import tax being applied to those paper products starting on Tuesday, will increase paper costs for most newspapers in the U.S. The tariffs vary among the half-dozen affected manufacturers and would increase costs for all GateHouse Media newspapers, including this one, by almost 10 percent.

The two biggest costs in a newspaper operation are payroll and paper. GateHouse Media spends millions of dollars a year on paper, and an increase of almost 10 percent amounts to hundreds of thousands more in production costs.

“If this decision is allowed to stand, it will result in significant long-term cost increases for our company,” said Bradley M. Harmon, president of the GateHouse Media Central U.S. Publishing Operations and publisher of The Columbus Dispatch. “On behalf of our employees and our customers, we join with others in the newspaper industry to urge the Commerce Department to reconsider this decision, and barring that, for lawmakers to take action to override the decision.”

Industry representatives had urged Commerce Secretary of Commerce Wilbur Ross to reject the petition by the North Pacific Paper Company, or NORPAC, to investigate Canadian imports of “uncoated groundwood paper,” the grade of paper widely used by newspapers and other commercial publishers.

“We are stunned that a single U.S. mill in Longview, Washington, has been able to manipulate the trade laws to their gain, while potentially wreaking financial havoc on newspapers and other commercial publishers across the country,” said the News Media Alliance in a statement Wednesday.

“This decision and its associated duties likely will lead to job losses in U.S. publishing, commercial printing and paper industries,” said the Alliance, which represents more than 2,000 U.S. news organizations.

The Alliance said that the petition by NORPAC “does not reflect the views of the domestic paper industry and demonstrates a lack of understanding of the market.”

The American Forest & Paper Association, which represents a major portion of U.S. newsprint production, has come out against the tariff. The organization could not detail how many plants and employees are involved in producing newsprint in the United States.

“Several U.S. producers operate on both sides of the border creating manufacturing and market efficiencies through cross border shipments, said Donna Harman, CEO of the association. “We urge the Department of Commerce and the International Trade Commission to follow proper procedures to ensure free and fair trade for our industry’s products in North America.”

The News Media Alliance said, “The well-documented decline in the U.S. newsprint market is not due to unfair trade, but to a decade-long shift from print to digital distribution of news and information,” the industry group said. “Now, we will all literally pay for one manufacturer’s manipulation of our country’s trade laws. These tariffs will saddle publishers with additional costs that will hasten the newspaper industry’s shift to digital and, consequentially, accelerate the decline in both the printed newspaper and newsprint industries. There will be no winners.”

The trade group said it will “take every possible measure to fight this misguided case as it moves through the investigation process at the Department of Commerce and International Trade Commission.”

NORPAC was acquired in late 2016 by One Rock Capital Partners, a New York-based hedge fund. It has claimed that Canadian government subsidies are giving Canadian newsprint producers an unfair advantage over U.S. paper producers, and that the Canadians are dumping paper on the U.S. market at prices below the cost of production.

The U.S. newspaper publishing and commercial printing sector employs more than 600,000 people across the U.S., according to the Alliance. More specifically, the U.S. newspaper publishing sector employs more than 175,000 people in cities large and small. NORPAC, on the other hand, employs approximately 260 people at just one mill.

Commerce has been investigating the matter for the past four months. Its preliminary decision will be reviewed by the International Trade Commission for a final ruling, probably in March. Tariffs will be collected in the meantime and refunded if the final ruling reverses the Commerce decision.

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