The Asian-American Paper War:
On March 2, 2010, the U.S. Department of Commerce (DOC) released a preliminary decision in a case that has the potential to rock the paper products industry. The DOC found that Chinese and Indonesian producers and exporters of certain coated paper received countervailing subsidies. As a result of this preliminary finding, and to level the playing field for the unfair advantage brought by the countervailing subsidies, DOC will impose tariffs on imported coated paper from China and Indonesia. What will this mean for you? Higher prices or fairer competition for Americans—or nothing.
How the Battle Began
On Sept. 23, 2009, three large U.S. paper makers, and the United Steelworkers Union (Petitioners), filed a petition with the DOC and the U.S. International Trade Commission (ITC), in which they accused China and Indonesia of "dumping" certain coated paper into the U.S. market and receiving unjust subsidies from foreign governments. "Dumping" occurs when a foreign company sells products in the U.S. at less than fair market value. Subsidies means that foreign companies receive financial assistance from foreign governments that benefit exportation of goods. The American paper manufacturers have alleged the U.S. paper industry is being hurt by foreign government-subsidized Asian coated paper.
The DOC commenced an investigation to determine whether manufacturers, producers or exporters of coated paper in China and Indonesia in fact receive countervailing subsidies. The products covered in the investigation included certain coated paper and paperboard suitable for high-quality print graphics using sheet-fed presses, such as paper used for books, magazines, envelopes, greeting cards and catalogues.
As noted above, on March 2, 2010, the DOC issued a preliminary decision finding that Chinese and Indonesian producers and exporters of certain coated paper do receive unfair subsidies. The DOC found that Chinese manufacturers and exporters received subsidies ranging from 3.92 percent to 12.83 percent, with an average subsidy at 8.38 percent, and Indonesian manufacturers and exporters received subsidies at 17.48 percent. As a result of these findings, preliminary countervailing duties have been imposed. Companies who import certain coated paper now will have to post bond or cash deposits in an amount equal to applicable margins relating to the foreign subsidies, thus adding to the cost of purchasing certain coated paper from Chinese and Indonesian companies.