Home – Blog – Industry News: Newspaper publishers: Tax on Canadian-made newsprint would hurt U.S. businesses, readers
January 9, 2018
Newspaper publishers: Tax on Canadian-made newsprint would hurt U.S. businesses, readers
Rob Chaney, Missoulian
The wood war on the Canadian border has a new player: the U.S. newspaper industry.
The United States and Canada have been struggling for a year over claims that British Columbia sawmills unfairly price their softwood lumber exports to the U.S. housing market. Then last fall, a paper company in Washington petitioned the U.S. Department of Commerce to impose duties on Canadian “uncoated groundwood paper,” commonly known as newsprint.
That drew counter-requests from two coalitions of newspaper publishers and printers from across the United States, warning that punishing Canadian papermakers actually would cause more damage to thousands of small publishing companies and the readers who depend on them.
“(W)e urge you to heavily scrutinize the antidumping and countervailing duty petitions filed by North Pacific Paper Co. [NORPAC],” one group of 1,110 newspapers of wrote to Commerce Secretary Wilbur Ross on Dec. 4.
“We believe these cases do not warrant the imposition of duties, which would have a very severe impact on our industry and many communities across the United States … NORPAC’s petitions are based on incorrect assessments of a changing market, and appear to be driven by the short-term investment strategies of the company’s hedge fund owners.”
The signatories included Lee Enterprise-owned Missoulian, Billings Gazette, Helena Independent Record, Butte Montana Standard and Hamilton Ravalli Republic as well as the Gannett-owned Great Falls Tribune.
North Pacific Paper Co. of Longview, Washington, called for the investigation of Canadian newsprint import prices. The request was made in August, shortly after NORPAC cut wages and retirement benefits for its 400 workers. It also laid off about 50 workers after it shut down one of its three paper machines, reducing its output by a third. New York-based hedge fund One Rock Capital Partners bought NORPAC from Weyerhaeuser Corp. and Nippon Dynawave in 2016.
NORPAC claims its Canadian competitors use 65 separate government subsidies to reduce their prices, including tax breaks, loans, access to public forests and breaks on electricity costs. That allows the Canadian papermakers to export their newsprint at prices between 16 percent and 65 percent below American producers, NORPAC claimed.
The U.S. lumber industry has accused the Canadian government of allowing Canadian timber companies access to federal timber at much cheaper stumpage rates than are available in the Lower 48 states. Since the Softwood Lumber Agreement expired in 2015, the two nations have failed to craft a new agreement for Canadian pricing and access to the U.S. lumber market.
NORPAC argued the Canadian paper industry benefits from the same pricing inequalities. But the newspaper printers and publishers countered that other economic factors play more important roles.
“Facing increased costs of newsprint across all suppliers, many small-town papers will be at risk of failing,” a separate coalition of 54 small publishers (including the Havre Daily News) wrote. “To survive, some newspapers may resort to increasing print subscription prices, which would only exacerbate the severe challenges facing print newspapers.”
They also noted that the American Forest and Paper Association, a trade group representing U.S. paper industry, opposes the duty petition. Their letter was released on Jan. 4.
Montana Newspaper Association Executive Director Jim Rickman said newspaper companies generally don’t disclose what they pay for newsprint. Lee Enterprises is the state’s largest consumer of newsprint. Many smaller papers don’t have their own presses and contract with a larger publisher for printing.
“The impact of the tariffs would come through the Great Falls Tribunes or the IRs [Independent Record of Helena] or the Billings Gazettes,” Rickman said in an email.
The Missoulian’s printing presses unspooled about 75 metric tons of newsprint in December, producing editions of the Missoulian, Ravalli Republic, Missoula Independent and several local high school newspapers. That’s about 80 tons of paper, stretching more than a thousand miles.
“The print newspaper industry has experienced an unprecedented decline for more than a decade as readers switch to digital media,” the Dec. 4 coalition wrote.
“Print subscriptions have declined more than 30 percent in the last 10 years. Although newspapers have successfully increased digital readership, online advertising has proven to be much less lucrative than print advertising. As a result, newspapers have struggled to replace print revenue with online revenue, and print advertising continues to be the primary revenue source for local journalism,” according to the coalition.
“As to the U.S. paper industry, the industrywide shift from print newspapers to digital news consumption — not imports from Canada — has caused a decline in demand for uncoated groundwood paper. Conversely, in recent years, the market share of Canadian uncoated groundwood paper imports has actually declined.”