The U.S. International Trade Commission announced Wednesday that there was no evidence that Canadian paper imports were hurting the U.S. industry, striking down a 17 percent tariff the Commerce Department had imposed in January and additional tariffs of up to 10 percent on several Canadian paper companies.
The announcement was an unexpected blow to the Trump administration, which has sought to pressure Canada into making concessions as part of the ongoing renegotiations of the North American Free Trade Agreement and now has less leverage to do that. It was a win for the U.S. newspaper industry, which uses the imported Canadian product to keep print costs low.
The decision announced by the commission, an independent, quasi-judicial federal agency, kills the tariffs, which can only be issued if the ITC finds injuries associated with the unfair trade practices initially identified by the Commerce Department. The tariffs would have hit an estimated $1.21 billion in imports used primarily for book publishing and newsprint.
“U.S. industry is not materially injured or threatened with material injury by reason of imports of uncoated groundwood paper from Canada that the U.S. Department of Commerce has determined are subsidized and sold in the United States at less than fair value,” the ITC said in a statement. The announcement formally ends the department’s probes into the matter.
The department had claimed that Canada was subsidizing its paper industry by leasing its forests at a rate that would be below cost for privately-owned ones, in what Commerce Secretary Wilbur Ross called a “complicated and unique case.” An estimated 94 percent of the country’s forests are state-owned, and U.S. alleged that Canada was keeping logging costs artificially low. The administration has made similar complaints against Canada regarding subsidies for it milk and poultry industries. The complaint against Canada was initially filed by a hedge fund-owned Washington state-based North Pacific Paper Company.
The announcement comes the same day that Canadian Foreign Minister Chrystia Freeland is meeting with U.S. Trade Representative Robert Lighthizer in Washington to discuss the next steps in the NAFTA talks following the U.S. striking a bilateral trade deal on Monday with NAFTA’s third partner, Mexico. The move was widely seen as an attempt by the Trump administration to circumvent Canada in the trade talks. The U.S. has argued that Canada’s approval is not needed for the bilateral deal, a position Canada disputes.
Some members of Congress had sought to block the paper tariffs on the grounds that they were set to badly hurt the newspaper industry.
These tariffs were extremely harmful to our regional papers-the lifeblood of our local communities-& I worked hard to remove them. ITC made exactly the right decision to completely eliminate them. I will remain vigilant to make sure that they never return. https://t.co/OQBPeEMDHx
— Chuck Schumer (@SenSchumer) August 29, 2018
“These tariffs were extremely harmful to our regional papers-the lifeblood of our local communities-& I worked hard to remove them,” Senate Democratic Leader Charles Schumer of New York tweeted in response to Wednesday’s decision.
