American paper manufacturers, such as NewPage Corp. in Allegany Co., cleared an important hurdle toward getting anti-dumping and anti-subsidy duties slapped on cheap Chinese imports of coated sheet paper.
The Commerce Department on Thursday affirmed its decision made on March 30 to impose duties on glossy paper products from China, Indonesia and South Korea. It is the first time in 23 years the the department has agreed to apply its anti-subsidy trade law to communist or "non-market economies" such as China.
While the decision must still be approved by the International Trade Commission, U.S. companies that have long struggled to compete with imports from China are cheering the decision. And they have NewPage to thank.
The Dayton, Ohio-based company, which employs 950 in Luke, Md., lodged a complaint last year which launched the government investigation.
From 2005 to 2006, imports of glossy paper from China spiked 166 percent to a value of $224 million last year.
Meanwhile, NewPage, North America's largest manufacturer of coated or glossy paper used in textbooks, brochures, magazines and catalogs, shut down a production line this year and laid off 130 workers, blaming lost business to China.
In its investigation, the Commerce Department determined that companies from China were undercutting their American competitors with prices that were as much as 99.65 percent below fair market value - even cheaper than they would sell it at home. In many cases, they sold products here at prices that were lower than their own manufacturing costs, a practice called "dumping."
The companies were able to do so because they received subsidies from their own government that covered up to 44.25 percent of their costs.
The Commerce Department estimates that Indonesian and Korean manufacturers have undercut the prices of their American competition here by as much as 8.63 percent and 31.55 percent respectively.
Together, the anti-dumping and anti-subsidy duties would increase the cost of glossy paper from China between 40 percent and 100 percent.
NewPage Chief Executive Officer Mark A. Suwyn was in Washington yesterday to testify before the ITC in support of the duties.
"The most important part from our perspective is that we are on a level playing field," said NewPage spokesman Amber Garwood.
U.S. Customs and Border Protection began collecting anti-dumping duties after the initial Commerce Department decision was made, and the money has been stored in an account until the ITC makes its decision, which is expected to be about Nov. 30.
If the ITC agrees with the Commerce Department, customs agents will begin collecting anti-subsidy duties as well, which would amount to 20 percent on imports from China and Indonesia and 2 percent for imports from South Korea. If ITC disagrees, the investigation and duties will be terminated.
The move comes as the U.S. trade deficit with China ballooned to $230 billion last year. Bolstered by the Commerce Department's decision, manufacturers are hoping the government will look at other products imported from China, including steel pipe and nails.
"Our trade rules need to be enforced before China wipes out our manufacturing base, industry by industry," said Gary Hubbard, spokesman for the United Steelworkers, which represents workers at the Luke plant.