Wyoming’s Congressional Delegation Opposes Paper Tariff

Lincolnway Cheyenne, Wyoming

By: Michael Iliano The Sheridan press Via Wyoming News Exchange

(June 1, 2018)

Members of Wyoming’s congressional delegation are lending their support to a fight against tariffs imposed on Canadian newsprint that newspaper publishers across the U.S. say are driving up costs and threatening to drive smaller papers out of business.

Last week, U.S. Sen. Mike Enzi, R-Wyoming, joined 16 other senators in co-sponsoring a bill that would suspend the tariffs until a study assessing their impact on the publishing industry could be completed. Rep. Liz Cheney, R-Wyoming, is scheduled to testify against the tariffs at a hearing of the International Trade Committee in July, according to Matthew Adelman, publisher of the Douglas-Budget and treasurer of the National Newspaper Association.

Adelman also said while Sen. John Barrasso, R-Wyoming, has not formally endorsed the Senate bill that would suspend the tariffs as of Thursday morning, he has expressed support for lifting the tariffs in meetings with Wyoming publishers. The tariffs were established in January and raised in March in response to complaints from a Washington-based paper manufacturer.

Last summer, North Pacific Paper Company petitioned the U.S. Department of Commerce and the International Trade Commission to impose duties on imports of uncoated groundwood paper, which is used for publishing newspapers, directories and some books, arguing that the Canadian government was subsidizing Canadian newsprint mills, giving those manufacturers an advantage in the U.S. market. To even the playing field, NORPAC called on the Department of Commerce and the International Trade Commission to impose counter-veiling duties — taxes on imported paper that would offset the Canadian government’s subsidies — on Canadian newsprint imports. The DOC released a preliminary determination that Canadian paper mills were being subsidized in January and levied tariffs that ranged from 4.4 to 9.9 percent on imports from those manufacturers.

NORPAC pushed for more, however. The company claimed Canadian paper mills were “dumping” in the U.S. market, which, in international trade, refers to the practice of pricing a product below cost to undercut a country’s domestic businesses. To protect the U.S. market, NORPAC insisted the DOC and the ITC impose further anti-dumping tariffs on Canadian paper imports as well.

According to the News Media Alliance’s senior vice president of public policy, Paul Boyle, the DOC investigated three Canadian paper mills and determined that one of them was dumping into the U.S. market and assessed a 22-percent tariff in response. Boyle added, however, that because the DOC cannot investigate every Canadian paper mill, it will take an average of the duties assessed and apply it to every other mill.

“The two mills that got 0-percent…they threw them out and took the 22 percent and applied that to every other mill,” Boyle said. “So you have mills that were not investigated…that are getting these anti-dumping duties.”

Combined with the counter-veiling duties placed on imported newsprint, the anti-dumping tariffs can increase the duties levied on imported newsprint by up to 32 percent. And the mills are passing those costs on to newspapers.

“We’re seeing a major disruption in the newsprint market where prices are high and some newspapers are having a hard time finding supply,” Boyle said. “In some cases, with small community newspapers, they might go out of business as a result of these duties.”

Publishers have become increasingly reliant on Canadian-imported newsprint in the past two decades as declining demand for newsprint has caused U.S. mills to close. Boyle said disruptions in the newspaper industry, caused mainly by the rise of the internet, have led to a 75 percent drop in the demand for newsprint.

“There’s really not a subsidy that is impacting U.S. mills; it’s a market factor problem,” Adelman said. “Newsprint usage is down, which is impacting newsprint price.”

Boyle estimated there are five paper mills remaining in the U.S. and 12 in Canada. Oddly, NORPAC is the only U.S. mill that is advocating for tariffs on Canadian paper imports; no other domestic mill supported the company’s petitions.

“The paper trade-group in the United States, the American Forest and Paper Association, has come out in opposition to [the tariffs],” Boyle said. “Those mills know that if you increase costs on newspapers, they’re going to take every step possible to reduce their consumption, which over the long-term hurts the U.S. paper industry.”

The Tampa Bay Times, Florida’s largest newspaper, has suffered the most severe consequence of the tariffs so far; in April, the paper announced it was cutting 50 jobs because the tariffs added $3 million to the paper’s budget. However, Boyle said the tariffs have led to countless smaller reductions throughout the industry.

“We’ve done surveys where 70 percent of newspapers said they would have to take measures to cut their consumption and about 38 percent said they were looking at laying off workers,” Boyle said. “And we expect to hear more stories of job losses and change in distribution and maybe some closures.”

If newspapers are forced to pay higher costs, the expenses could be passed on to other sectors of the state. Adelman explained that if papers see a drastic increase in their operating cost, they would have to increase all of their rates. That would mean an increase in the cost of public notices, which would affect schools, hospitals and local governments, as well as the cost of advertising, which limits marketing options for community businesses.

The ITC has scheduled a hearing for July 17 to weigh whether the tariffs are hurting or helping the U.S. paper industry.

If the commission decides in favor of the tariffs, it would not only cement the existing tariffs in place, it could impose further tariffs, which NORPAC is requesting, that could total a 50 percent tax on some paper imports.

Adelman said the tariffs have hurt papers in Wyoming, but if they are raised further, it could devastate them.

“At the three newspapers that I run, we’ve already cut pages, we’re cutting staff in the newsroom, and that’s just to accommodate a 22-percent increase,” Adelman said. “If it goes any higher, we’re going to have to look at much deeper cuts.”

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