A NAFTA panel has sided with Port Hawkesbury Paper in directing the U.S. Department of Commerce to reconsider issues on which the department based imposing border duties, including the electricity rate paid by the mill.
A North American Free Trade Agreement (NAFTA) panel recently ruled in favour of the Point Tupper paper mill in the latest step of the lengthy process that began in 2015.
The five-person panel was comprised of three officials from the U.S. and two from Canada.
“The allegations that were made by the Department of Commerce and our defence of them were shared with the panel and then the panel reviewed all of the facts … the decision was certainly in support of our defence that the allegations were in our opinion not accurate,” Marc Dube, business development manager with Port Hawkesbury Paper, said in an interview Monday.
The trade action came as the result of a petition filed by two American producers of supercalendered paper that say the Canadian paper goods are unfairly subsidized. In the case of Port Hawkesbury Paper, at issue was the aid package it received in 2012 valued at about $124.5 million from the province to reopen the mill after a year-long sales process, as well as a special electricity rate that it receives.
“In the opinion of the panel, it was a process that was done in the appropriate way,” Dube said. “It’s a very positive step in the process but now the Department of Commerce has a period of time to review the facts from the board and decide on their next steps.”
The department could appeal the panel’s decision or take the information from the panel and adjust the tariff, Dube said.
In October 2015, the Department of Commerce said it has determined that U.S. imports of supercalendered paper from Canada have received countervailable subsidies ranging from 17.87 to 20.18 per cent. The decision upheld, and in some cases increased, the tariffs first put in place after a preliminary ruling earlier that year. Under that decision, Port Hawkesbury Paper is subject to a 20.18 per cent duty.
Since the tariff was applied it has been in held in trust pending the outcome of the dispute. Dube said to date it has paid about $50 million in duties.
“We are going to continue to pay the duty, it’s going to be held in a trust fund, and if the duty is changed the mill will receive the moneys that are held in trust, appropriate to the change will come back to us,” Dube said.
Despite the imposition of the duty, he said the mill is continuing to work to be a low-cost and high-quality producer of supercalendered paper and the order book is strong despite market trends in paper use.
“We’re certainly holding our own,” Dube said.
Port Hawkesbury Paper has said the Department of Commerce’s position is unsupported by the facts or the law.
When the duty came into effect, Dube said the mill would focus on business as usual and would continue to make capital investments.
Supercalendered paper is primarily used in magazines, catalogues, brochures and advertising inserts.
About Port Hawkesbury Paper:
• Owned by Pacific West Commercial Corp.
• Directly employs 330 at the mill and supports 400-500 jobs in trucking and harvesting of wood
• Makes supercalendered paper for magazine and flyer market
• Represents about 20per cent of the North American capacity for supercalendered paper
• Manages more than 500,000 hectares of Nova Scotia Crown land
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