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Editorial: Pulp and paper trail

The Corner Brook Pulp and Paper mill.
The Corner Brook Pulp and Paper mill. — SaltWire Network file photo

Premier Dwight Ball said he was disappointed that American trade regulators have hit Corner Brook Pulp and Paper with countervailing duties.

What he didn’t say was that he was surprised — because there’s absolutely no way he could be.

The provincial government has been playing fast and loose with funding for the mill for years — coming up with money for everything from pension support to electricity deals — and the U.S. Department of Commerce began an investigation of that support in 2017, along with investigations of several other pulp and paper companies.

The investigation is nothing new; other Atlantic Canadian mills have already experienced the investigative touch of U.S. trade officials.

Late Tuesday, Kruger — which owns Corner Brook Pulp and Paper — found out it was the Canadian company hit with the highest countervailing duties, a 9.93 per cent interim duty, set to come into effect five days after the Tuesday announcement. (Even so, the actual decision from the Commerce Department seems to be targeting subsidies given to the Kruger Trois-Rivières operation in Quebec, but the department determined that Corner Brook was an affiliated company.) Fifty per cent of the Corner Brook mill’s newsprint currently is sold in the United States.

The provincial government has been playing fast and loose with funding for the mill for years — coming up with money for everything from pension support to electricity deals…

Telegram columnist Russell Wangersky wrote about the subsidy issue for paper mills in April: “Provinces, cities, towns and states — depending on large-scale employers like mills — do what they can to improve the chances of their own mills having success.

“That takes a lot of forms: governments loan money with few strings attached for upgrades, strike deals on power rates, take over reforestation responsibilities, relax pension rules — the list is almost endless, and everyone is doing it, whether they admit it or not. The trick is to find a way to give invisible assistance without it ever being identified as a subsidy — if your help turns out to be judged a subsidy, you run the risk of facing tariffs.”

Well, those chickens have come home to roost.

The latest investigation came after a complaint by one small Washington State paper producer, Norpac, which argued that more than 10 United States paper mills have closed in the last five years, throwing more than 2,100 American paper workers out of work.

Norpac’s complaint, according to the hometown Longview Daily News, argued that, “the federal and provincial subsidies include government grants, tax breaks, subsidized loans, raw materials at below-market costs and cheap subsidized electricity.”

Unfortunately, our provincial government has checked many of those boxes.

The interim duties will be in place until July, when the U.S. Commerce Department makes a final determination as to whether the duties will become permanent.

The only good news? At close to 10 per cent, the duties are at least lower than the 15 to 25 per cent some observers expected.

Small comfort.

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