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Sappi unhappy with decision by feds

Commerce Department will not look into trade claims against Chinese

By Doug Harlow dharlow@mainetoday.com
Staff Writer

Officials at Sappi Fine Paper North America expressed disappointment this week after the U.S. Department of Commerce said it had declined to investigate allegations that China unfairly subsidizes its currency to manipulate coated-paper sales.

The Commerce Department said in a release that the unfair trade charges brought by U.S. paper companies do not meet the legal requirements for an investigation.

Sappi Fine Paper, with a mill that makes coated paper in Skowhegan, along with NewPage Corp. of Rumford and Appleton Coated LLC of Wisconsin, requested the investigation last year.

Sappi is a leading North American producer of coated fine paper used in magazines, catalogs, books and high-end print advertising.

The paper companies joined forces with the United Steelworkers union in September 2009, filing unfair-trade cases with the Department of Commerce and the U.S. International Trade Commission, hoping to level the playing field on paper imports.

There are an estimated 1,200 jobs at Sappi mills in Skowhegan and Westbrook and about 700 to 800 at the NewPage mill in Rumford, but not all of the mills make coated paper and not all of the jobs are affected by Chinese paper dumping, Sappi spokeswoman Amy Olson said.

Olson said the company shares Maine Congressman Michael Michaud's disappointment with the Commerce Department's decision this week not to investigate China's alleged currency manipulation.

"While we believe we made a strong case on how China's currency manipulation has hurt the coated paper industry, the Department of Commerce has already preliminarily found that certain coated paper imports from China and Indonesia had been dumped in the U.S. market and that Chinese and Indonesian coated paper producers had received improper subsidies," Olson said. "We look forward to the department's final determination on these critical issues."

Michaud, chairman of the House Trade Working Group, slammed the Commerce Department's decision this week, saying China is "dumping" paper on the U.S. market at prices below the cost to make the paper.

"I am deeply disappointed in the administration's inaction on the China currency issue," Michaud said in a release. "Commerce's decision means they will not evaluate the effects of China's currency manipulation on U.S. paper manufacturers, even though it is clear China's undervalued (currency) puts these American businesses at a competitive disadvantage."

Michaud said inaction on China's currency is double trouble.

"In an economic downturn of this magnitude, it is crucial that the federal government do everything it can to protect our small businesses from unfair trade practices," Michaud said. "Because the White House has refused to take action to level the playing field with China, it is absolutely imperative that Congress do so as soon as it returns."

If the Commerce Department makes a final determination that Chinese exporters or producers received an unfair subsidy under international law, and the U.S. International Trade Commission determines that domestic industry was harmed, those imports would be subject to what officials call countervailing duties.

Countervailing duties are import fees imposed under World Trade Organization rules to neutralize the negative effects of government subsidies.

To date, none of that has happened, despite pleas for action to President Obama earlier this year from more than 100 members of Congress, including Maine Sens. Olympia Snowe and Susan Collins, and Reps. Michaud and Chellie Pingree.

The group asked the president to examine the "artificial and unfair advantage" they say China currently enjoys in the U.S. paper market and the impact it has on American jobs.

In the decision to not investigate the claim, Deputy Assistant Secretary for Import Administration Ronald K. Lorentzen said "today's currency decision was based on a careful evaluation of the specific legal arguments and evidence put before the department."

Doug Harlow -- 474-9534

dharlow@centralmaine.com