Dealing a blow to a major Western Maryland manufacturer, the U.S. International Trade Commission decided not to slap tariffs on cheaper Asian paper imports.
The 5-1 decision to overturn a decision by the Commerce Department to impose anti-dumping and anti-subsidy duties on coated and glossy paper from China, Indonesia and South Korea could have repercussions for NewPage Corp.'s Luke paper mill, with 950 employees the largest manufacturing plant in Allegany County.
NewPage had filed the complaint seeking punitive tariffs, claiming the imports were being illegally subsidized and sold at unfairly low prices. Last month the Commerce Department decided to impose the duties, the first time in 23 years the department has agreed to apply its anti-subsidy trade law to "non-market economies" such as China.
In its announcement of Tuesday's decision, the ITC said it had determined that the U.S. industry "is neither materially injured nor threatened with material injury" by the imports.
Copies of the ITC decision will not be available until Dec. 6. Until then the commission declined to comment.
The ruling was a bitter pill for workers at the Maryland plant, which has lost 350 jobs since 2002, and for executives of the Dayton, Ohio-based paper maker. Both sides had been elated by the Commerce Department's reaffirmation last month of its preliminary decision to impose the duties.
"My first reaction was total disbelief," Tom Caldwell, president of United Steelworkers Local 646, which represents workers in Luke, said yesterday. "I've seen what's happened at our plant."
He said workers who were laid off had very few job opportunities in the area and now commute more than an hour each way to manufacturing jobs in Winchester, Va.
"Everyone was thinking that everything was going our way," he said. "Then the door slammed in our faces."
He said he will urge NewPage to appeal the ITC decision.
NewPage spokeswoman Amber Garwood said the company was surprised by ITC's ruling.
"Obviously, we are extremely disappointed," she said. "We disagree with the decision."
She said the company will wait until the final report is available to decide what to do next. She said it would be inappropriate at this time to speculate about whether the decision would spur further layoffs.
In its complaint filed last year, NewPage blamed business lost to China for having to shut down a production line and lay off 130 workers earlier this year. The company makes the glossy papers used in magazines and catalogs.
In its investigation, the Commerce Department determined that Chinese companies were undercutting their American competitors by charging prices that were nearly 100 percent below fair market value and cheaper than they would sell their products at home. Companies from Indonesia and South Korea were selling product at prices that were as much as 8.63 percent and 31.55 percent lower, respectively.
In many cases, they sold products here at prices that were lower than their manufacturing costs, a practice called "dumping."
The companies could afford to so because they received subsidies from their governments that covered up to 44.25 percent of their costs, the Commerce Department said.
In 2006, Chinese exports of coated paper products to the United States shot up 177 percent over the previous year to $224 million, according to the Commerce Department. At the same time, the trade gap with China widened last year to $230 billion.
Together, the anti-dumping and anti-subsidy duties would have increased the cost of the imports between 40 percent and 100 percent.
After the Commerce Department upheld the duties last month, customs officers were told to collect the tax. The money was held in escrow until the ITC made its final ruling.
NewPage Chief Executive Officer Mark A. Suwyn testified before the ITC last month about how the duties would create a level playing field for American companies.
Tuesday's negative vote means the duties are invalid and all the money that was collected must be returned.
The United Steelworkers international headquarters and the Sierra Club backed NewPage's petition.
"Unfortunately, [Tuesday's] ITC decision means that no tariffs will be placed on the offending goods to counter the unfair trade practices that are costing American paper workers their jobs and jeopardizing the future of their manufacturing plants and the communities where they reside," USW President Leo Gerard said in a statement issued after the vote was made public.