Add Newsprint to Growing List of Canada-U.S. Trade Disputes

(Bloomberg) -- There’s a new front in the Canada-U.S. trade war over trees: newsprint.

A Washington state paper maker is asking the U.S. government to impose duties on Canadian imports of uncoated groundwood paper, used in everything from newsprint to book publishing. North Pacific Paper Co., or Norpac, alleges Canadian imports are subsidized and are increasingly taking market share from domestic producers, according to documents filed Aug. 9 with the International Trade Administration.

The Washington, D.C.-based trade administration will announce its decision on whether to initiate an anti-dumping and countervailing investigation into Canadian imports on Wednesday, the agency said in an email Tuesday. The ITA enforces U.S. trade laws and ensures compliance of trade agreements.

The move comes as Canada and the U.S. remain at odds over softwood lumber, and papermakers are fighting U.S. duties on specialty paper. Canada is the world’s leading exporter of newsprint, and the U.S. is its biggest market with suppliers including Resolute Forest Products Inc. and Catalyst Paper Corp.

“It seems to be metastasizing,” ERA Forest Products Research managing director Kevin Mason said of the tree-related trade disputes with the U.S. “Given the climate in the U.S. for protectionist stuff, it would not be a surprise to see newsprint and other uncoated mechanical papers added to the trade files.”

Another trade spat involving forest products will add more uncertainty to a market that’s seen prices rise amid the discord, Mason said. Lumber futures in Chicago gained 15 percent this year through Monday.

The long-running softwood lumber dispute escalated in April when the U.S. imposed preliminary duties of as much as 24 percent on Canadian imports. Additional duties of as much as 7.7 percent followed in June. The U.S. imposed duties of as much as 20 percent on supercalendered paper in 2015 amid allegations that Canadian companies were receiving unfair subsidies.

The escalating trade dispute is bad news for Montreal-based Resolute Forest Products, the world’s largest newsprint maker, which is already caught in the crosshairs of the softwood lumber and supercalendered paper spats. The company is being forced to pay as much as $75 million in duties after the U.S. imposed tariffs on its exports of softwood lumber and supercalendered paper. The company declined to comment.

“A whole host of industries see this as an opportune time to file for these types of cases,” said Bloomberg Intelligence analyst Caitlin Webber. “The Trump administration is seen as being more supportive of U.S. manufacturing.”

Imports of uncoated groundwood paper from Canada were valued at $1.3 billion in 2016, according to the ITA.