Two Paper Companies Convicted of Being Canadian

Paper undergoing supercalendering

First there were the Black Liquor Boondoggles, now there’s the Supercalendered Scam. The U.S. government’s attempts to prop up the country’s ailing paper industry once again are going to ridiculous lengths, this time with U.S. consumers, printers, and publishers footing the bill.

Last week, the U.S. Department of Commerce imposed duties on imports of supercalendered (SC) paper from four Canadian companies, supposedly because the companies received unfair subsidies from governments in Canada

But DOC didn’t even bother to investigate two of the companies, Catalyst Paper and Irving Paper. In a case of pure guilt by association, Commerce's case against the two basically amounts to: "They make SC in Canada; therefore, they are guilty."

A Catalyst news release neatly summarizes what happened:

The DOC imposed preliminary countervailing duties on imports of supercalendered paper from four Canadian paper producers – Port Hawkesbury Paper, Resolute Forest Products, Irving Paper and Catalyst Paper – on July 27, 2015. Despite its statutory obligation to examine each of the companies, the DOC refused to examine Catalyst Paper and Irving Paper individually, and instead assigned them a preliminary “all-others” rate of 11.19%, which is the simple average of the preliminary rates assigned to Port Hawkesbury Paper and Resolute Forest Products.

Since August 4, 2015, based on this rate, Catalyst has deposited to the U.S. treasury approximately $1.3 million, representing sales of 17,000 tonnes of supercalendered paper to U.S. customers.

In its Final Determination, the DOC once again refused to examine Catalyst Paper and Irving Paper individually and instead assigned them a final “all-others” rate of 18.85%, which this time is a weighted average of the final rates assigned to Port Hawkesbury Paper and Resolute Forest Products.

Close-up of a supercalender

If you’re an American, you may be saying, “What the heck, let the Canadians pay.” But much of the burden is actually falling on Americans in the form of higher prices for paper and an unintended windfall for Canadian printers.

Because the duties are creating such a huge mismatch between the Canadian and U.S. prices for the same paper, some printing work that was done at U.S. plants is being shifted north of the border. SC paper, which is polished at high pressure through a series of rollers, is often used in magazines and newspaper inserts.

Also, Catalyst and Irving are not exactly foreign companies. Catalyst employs more than 1,000 people at its two U.S. paper mills, and Irving has extensive forestry operations in Maine.

You can blame the struggles faced by American SC manufacturers on the declining demand for magazine-quality paper. Or on the strong U.S. dollar. Or even on capitalism. But don’t automatically blame the Canadian companies that, as far anyone can tell, are merely engaging in good old American-style free enterprise.

Related articles:

• Boo-hoo!: North American Paper Companies That Enjoyed Black Liquor Subsidies File Complaint Against Foreign Competitors' Subsidies
• Black Liquor Hangover: U.S. Paper Industry Cheers GOP Victory After Gorging on Democrats' Handouts
• No Pulp Fiction: Strong Dollar May Mean Paper Savings for U.S. Publishers 
• 17 Years Later, Using SCA in Magazines Can Still Stir Controversy